The Essential Finance Handbook2018-11-01T15:01:39+00:00

The purpose of this step is to help you define how your business is going to help you to achieve your financial goals and what measurements you need to put in place to ensure that you’re on track to reach these goals.

a) Key Action and Principals

  • Decide what you want
  • Dream BIG without limitation
  • Link your personal goals to your business
  • Design financial goals that are SMART
  • List reasons why this is important to you
  • Establish your current financial status
  • Develop strategies to achieve your financial goals
  • Monitor your goals by being accountable and coachable

b) Key Tips, Strategies and Exercises

  • 5 questions to determine your personal needs or define your standard of living
  • 6 ways to solve problems even when you cannot develop strategies
  • 9 things you must do to achieve your financial goals
  • 8 ways you can be held accountable
  • How to replace fear with faith
  • 4 things to change so you start getting the results you want

c) Templates and Tools

  • Action list to get you started
  • Financial Goal Template
  • Personal Budget Master – Monthly and Annual
  • One hundred things that you want to have, do, be, feel, touch, see, change, experience, etc

d) Further Reading

  • You were Born Rich by Bob Proctor
  • Goals by Brian Tracy
  • The Success Principles by Jack Canfield

This step will help you understand that as the founder, you define the structure of your business and how it will function.  We offer you the options as well as the pros and cons for different environments and industries so that you can make an informed decision.

a)Key Principals

  • Know yourself
  • Clean up your messes
  • Choose a role that compliments your talents and skills
  • Understand, in depth, the 4 most common business structures – as well as the advantages and disadvantages of each
  • Understand tax and legal considerations, including contractual arrangements between owners
  • Understand financial requirements based on size, growth plans and the nature of business
  • Study key leadership traits required to be successful, and
  • Contemplate the industries in which each structure works best

b) Key Tips, Strategies and Exercises

  • Five things I need to have to succeed
  • A free personality test – using DISC profiling
  • Four money principles that are never taught in business schools

c) Templates and Tools

  • Personal development plan
  • Summary of common characteristics of various business structures
  • Partnership Agreement
  • Association Agreement

d) Further Reading

  • How to Win Friends and Influence People by Dale Carnegie
  • Your network is your Net worth by Porter Gale
  • Five additional resources

The purpose of step three is to enable the entrepreneur to understand the basic legal framework as a registered entity, employer, taxpayer and trader. It covers all basic legislation that an entrepreneur needs to implement in order to create a legitimate business and how to manage these legal obligations.

This step helps you to understand the basic principles of all forms of legislation in a transaction (the purpose and when each applies), compliance considerations when getting started and all the forms required for registration.  We make sure you’re clear about the documents that need to be retained, how long they need to be kept and the implications of non-compliance.

a)Key Principles

  • Learn what qualifies and disqualifies you from becoming a director
  • Learn how decisions are made i.e. meetings and resolutions
  • Study how directors should conduct themselves including dealing with personal financial interests including remuneration and insurance
  • Know the steps that need to be followed to remove a director
  • Identify 6 different types of taxes governed by the Income Tax Act
  • Learn 4 requirements to qualify as a Small Business Corporation (SBC)
  • Understand how the National Credit Act (NCA) protects customers
  • Understand VAT basics, like registration, different categories, and submitting returns
  • Know what documents need to be kept for VAT and the retention period
  • Learn about the requirements of the Promotion of Access to Information Act (PAIA)
  • Learn and understand employer rights
  • Understand the laws that protect employees at work and how to comply
  • Understand how employee tax works – PAYE, UIF and Skills Development Levy (SDL).

b) Key Tips, Strategies and Exercises

  • 5 exclusions when creating a business name
  • 8 flexible provisions of the Memorandum of Association
  • 10 decisions that can only be made by ordinary resolutions
  • 13 decisions that may be made by special resolutions
  • 9 items to ensure company compliance ito accountability and transparency
  • 13 Companies Act Documents you are required to keep for 7 years (or indefinitely)
  • A quick test for turnover
  • 9 fundamental customer rights
  • 25 prohibited unfair business practices
  • 9 key areas for your terms and conditions
  • 7 things credit providers have to do – according to the NCA
  • 9 customer rights protected by the NCA
  • 8 requirements for Tax Invoices exceeding R3000
  • 8 duties of a VAT vendor (i.e. registered supplier)
  • 8 zero rated VAT items
  • 10 supplies that are VAT exempt
  • Best practice to create an organogram that does not get you into trouble with employees
  • 7 employee rights you cannot afford to infringe
  • Five documents you need to keep for the Basic Conditions of Employment Act (BCEA)

c) Templates and Tools

  • Directors responsibility statement
  • Eleven-step action list to implement the Consumer Protection Act
  • BEE affidavit form
  • Thirteen BCEA implementation plans
  • Employment contracts template
  • Once-off compliance checklists
  • Periodic submission compliance checklists
  • Attendance and Visitors Registers

d) Further Reading

  • Eight great resources to assist you with implementing the above principles.

This step focuses on finance as the key business function that measures your success with simplified explanations to help you navigate your way around the world of money, understand how to interpret the financial aspects of your business and determine how it is performing.

a) Key Principles

  • Three corporate finance principles and how they apply to your business
  • How to track microeconomic factors
  • Four types of accountants and their respective roles in your business
  • Basic elements of finance and how they relate to each other
  • Business language and its meaning
  • How information is classified by accountants and why

b) Key Tips, Strategies and Exercises

  • Five key questions that you need to answer as a shareholder
  • Nine analytical questions to understand the impact of microeconomic factors
  • Seven questions you should ask weekly to improve your performance
  • Seven transactions found in financial statements – enabling you to read your finances (a case study)
  • Nine money principles that are not taught in business schools
  • How to set a goal and design action plans with an understanding of your environment (a– strategic planning case study)

c) Further Reading

  • The Aladdin Factor by Jack Canfield and Mark Victor Hansen
  • The 50th Law by 50cent and Robert Greene

The fifth step provides details about the key role players in financial reporting such as bookkeepers, accountants, tax practitioners, and auditors.  It also outlines the expected qualifications, experience and appropriate arrangements to enable you to select the best service providers for your business.

a) Key Principles

  • Understand pros and cons of the various types of financial reporting
  • Understand the split in responsibilities between practitioners’ and the directors, in financial reporting,
  • Understand the content of contracts when relating to the terms of services provided
  • Understand what documents are needed to perform the four types of financial reporting

b) Key Tips, Strategies and Exercises

  • When should you use each type of financial reporting
  • Questions to be answer when evaluating various practitioners

c) Templates and Tools

  • Calculate you Public Interest Score (PIS)
  • Eleven professional accounting bodies and their respective services
  • Four versions of Terms and Conditions for practitioners
  • Information about how tax practitioners need to conduct themselves

Step six deals with risks and controls and how they influence each other.  It addresses the actions required to set up a business that has sound controls – to ensure that you have a solid grip on your business and are able to achieve your financial goals.

a) Key Principles

  • Learn what internal controls are and how they help you manage your business
  • Understand common risks that exist in any start up
  • Learn to analyse Monthly Financial Management Reports
  • Understand the possibilities when analysing management accounts
  • Create Policies and Procedures

b) Key Tips, Strategies and Exercises

  • Five considerations when designing internal controls
  • Six factors that limit the effectiveness of internal controls
  • Eighteen general controls to help improve your controls
  • Forty-three financial accounting controls to enhance the reliability and accuracy of your records
  • The five key questions to ask when designing procedures

c) Templates and Tools

  • Risks Management Template
  • Permanent and Monthly Filling System

d) Further Reading

  • Porter’s 5 Power Forces by Michael E Porter (first published in the Harvard Business Review in 1979)

 The final step addresses financial evaluation, which includes financial statement analysis and interpretation.  Here you learn how to determine what is happening when the ratios increase or decrease, what your key focus areas should be and guidelines on taking corrective action to keep your business on track, when it is required.

a) Key Principles step 7 will teach you:

  • Understand three key stages of business growth and what you need to focus on at each stage
  • Understand the four areas of financial statement analysis
  • Learn to calculate six profitability ratios and the factors that influence them
  • Study five ratios that monitor your asset utilization effectiveness
  • Understand the five liquidity ratios and how they work
  • Identify six solvency ratios and learn how to improve your performance

b) Key Tips, Strategies and Exercises

  • Eight strategies to improve your profitability
  • Four key controls to improve your collection period
  • Twenty-two financial ratio formulas
  • Five factors that contribute to gross profit

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