Financial crisis of 2008 still perceptible
Date posted: 01.08.2016 | Author: Harry Bovensmann
The global financial crisis has left a lingering mark on entrepreneurship across the globe, with the majority of entrepreneurs (95%) relying on their own funding for start-up ventures, a new study shows. The global financial downturn has left entrepreneurs more reliant on their own funding, while new sources of entrepreneurial finance such as crowd-sourcing are also gaining in popularity, according to a new report on entrepreneurial finance from the Global Entrepreneurship Monitor (GEM).
Despite the fact that the average cost of starting a business has dropped, say the authors of the GEM, access to finance is one of the most serious problems for businesses in many economies, with small and medium-sized businesses struggling the most. The GEM 2015-2016 Special Report on Entrepreneurial Finance studied entrepreneurial finance patterns across the globe.
This recent financial crisis of 2008, the worst of the last 80 years, has had a profound effect on the economic as well as the entrepreneurial landscape. Around sixty economies participate in the annual GEM research. The last special report on entrepreneurial finance, which draws on data collected during the annual research cycle, was released ten years ago. Since then, availability of funds, sources of funding as well as the cost of starting a business have all evolved.
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Savings strategy for small businesses
Date posted: 13.07.2016 | Author: Harry Bovensmann
In a tough economic environment, small businesses should implement a savings strategy to have enough cash flow during quieter periods. Business owners need to understand the cyclicality of their business and need to evaluate their cash flow and save accordingly. Businesses save for different reasons, like having cash flow for the daily management of a business, for capital expenditure to acquire assets and for long-term expansion in the future.
By reducing operating costs, small businesses can use their savings to cover unforeseen expenses and emergencies.
Ways to cut costs
1. Cutting travel costs to clients.
2. Cutting out unnecessary marketing expenditure.
3. Negotiating discounts for early payments or paying debt over a longer period with suppliers.
4. Using a consultant for a specific skill needed within the short term, as opposed to employing someone.
Ways to save
1. Pay yourself first.
2. Put money away in an investment account to make sure that you have money for quiet seasons.
3. To ensure that money is available for emergencies, have a short term investment account, where money can be withdrawn in short-notice.
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7 hints to keep your business running
Date posted: 29.06.2016 | Author: Harry Bovensmann
7 hints will keep your business running even in hard times. Business owners face a nerve-wracking time as economic and political crises continue to create a perfect storm fuelled by a weak rand, high labour costs and rising inflation. However, with some planning they can batten down the hatches and ride out the storm with their books firmly in the black.:
He outlined seven points for businesses to take into account:
1. Separate your business ‘must haves’ from your ‘nice to haves’
This might sound obvious, but it is worth thinking carefully about where you cut costs in tough times and where you keep spending. Spending on ‘must haves’ should include the assets needed to produce value, product, service and innovation, research and development, customer service training and staffing, as well as upskilling of employees.
2. Cash is king
In tough economic times, your pricing strategy is everything. And cash, as always, beats terms. So consider offering your clients discounts for cash – but don’t discount for the sake of it, do this only as part of a carefully considered pricing strategy.
3. Get tough on credit sales
For credit sales, businesses will need to implement a stringent policy to ensure that customers can service their debt.
4. Optimise the processes in your business
Spend time identifying any inefficiencies in the business and working out systems and processes to streamline these. Here, researching international best practices, working with specialists and networking with other business owners can offer invaluable insights.
5. Technology is your friend
There are so many ways that technology can make your business more visible, more efficient, more modern and more attractive. Don’t be afraid to embrace the change that good use of technology can make in your business. Keep your eyes open for advancements which will lead to your own advancement.
6. Upsell to your existing clients
It is cheaper and easier to sell to your existing clients than it is to attract new ones. By gaining a deep understanding of your clients’ wants and needs, you can tailor products and solutions to these and increase their spend with you in the process.
7. Manage bad debt proactively
Rather than getting a big fright when clients don’t pay you, factor bad debt into your business as a potential risk and plan for it. Chase up on unpaid bills early and offer payment terms to help clients settle debt when necessary.
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Retail to invest in SA
Date posted: 16.06.2016 | Author: Harry Bovensmann
Now is a great time for retail to invest in South Africa because of the weak rand, Steve Matthesen, global president of retailer services at research firm Nielsen said on Wednesday. He was a speaker at the 60th Global Summit of the Consumer Goods Forum, which is taking place at the Cape Town International Convention Centre (CTICC) until Friday.
Matthesen highlighted various strategies for success, while speaking about ways to navigate the new retail agenda. These include for retailers to still think about emerging markets, to build their brands, to realise consumers demand convenience, to realise online will continue to be the biggest disruptor in the industry but to see it as “the gift that keeps on giving” and to think about how to make the use of promotions more efficient.
Emerging markets are getting wealthier and the purchasing power in these markets is growing. Companies doing the best in these markets are the ones who have been there for a while already. Big brands cannot just think they can come in and take over. There are also local competitors who know the market and can move quickly. Emerging markets are complicated and retailers need to approach them with a variety of options.
In Africa and the Middle East traditional trade remains key in retail. It is, therefore, important for retailers to fit the lifestyle of consumers. There is also a trend of the modern meeting the traditional trade – trying to match the store format to the local fit. This is, therefore, an opportunity to create convenience by thinking local.
Another myth Matthesen cleared is the effectiveness of retail promotions to drive consumers to a store. A Nielsen survey showed that although consumers still regard price as important, it is only their number four top priority. The three more important factors are fresh and high quality produce, a conveniently located store and the products on offer and how they are set up.
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