The objective of the fund will be to make loans in the range of R250 000 and R75m – the fund will commence operations in July 2011. Companies contributing to the Fund will earn credits towards their Black Economic Empowerment Codes.

“The NEF will use the money from big businesses to help SMMEs to be well-developed and sustainable, operationally and financially independent,” said Mensah , who will administer the Fund.

This is another vehicle being created at the NEF to stimulate SME growth with a focus on black business , however initial response seems luke warm to the idea with black organizations welcoming the move with business being more restrained in their enthusiasm.

The idea does have several shortcomings and is unlikely to play a role in stimulating SME growth or the creation of more jobs , these include:

• Is it just another tax on business
• What criteria will be use to consider loans , if a proposal has profit potential then surely the market will allocate capital.
• Racially based – only targets black SMEs – Don’t bother applying for a loan if you are white , however SARS till wants your VAT and PAYE money paid on time.
• NEF is notoriously incompetent and will no doubt mismanage the Fund

Enterprise Development Fund is a post from: Start-up

This is a big response fro a major crisis facing the country – levels of unemployment especially amongst South Africa’s youth are at unacceptable levels and if this problem isn’t addressed we could all be faced with social and other problems.  It is believed that 42% of South African’s between the ages of 18 and 29 are unemployed. This initiative hopes to address this problem. For more information on applying you can visit the  Jobs Fund website .

This is a positive development from Government and there are some huge upside benefits for small business entrepreneurs. If you considering an expansion to your current operations or planning a new venture you should consider applying for a grant. You will need to motivate in your application exactly how many jobs you are likely to create. Specifically targeting young employees should make it a lot easier to succeed with the application.

The fund has the potential to help create many badly needed jobs in South Africa however in our opinion there are possible pitfalls that could hamper the creation of jobs by the Jobs Fund:

• Poor allocation of grants that don’t take into account the job creation potential of a particular project. The way in which Government awards tenders comes to mind
• Administrative bottlenecks and red tape at the application phase
• Lack of suitable skills in evaluating projects
• Lack of skills and work ethic amongst the targeted group – one of the major causes of unemployment in South Africa is the skills shortage. Its a fact that you need talented skilled people to create jobs.
• A focus on funding projects by large corporations , the key to growing the South African economy is to encourage SME development. Leveraging this sector can reduce unemployment is a short time. Corporates are notorious for actually destroying jobs and a major concern is that the Jobs Fund may target larger applicants as they perceive this as a way of generating more jobs.

If Government is to succeed with its employment targets over the next few years it will have to energetically empower the SME sector which could be a major engine of growth , using the Jobs Fund successfully will help with this objective.

Jobs Fund is a post from: Start-up

Before deciding on selling your business you might want to consider what are the reasons for doing so and who will be affected by the sale of your business.

Here are some of the reasons that entrepreneurs want to sell:

• Death, disability or serious illness can have an impact on your ability to continue
• Relocation of your family to another area , town or even country
• The business isn’t generating sufficient income for your need
• Personal reasons such as death in the family or divorce
• You have received an excellent offer that is just too good to turn down
• The business is losing money
• You wish to change careers and do something different.

How to go about selling your business?

Specify exactly what is being sold  , what assets and liabilities are included in the sale Use the services of  professionals such as accountants and lawyers. You may want to get the help of a professional to assist you in the complex selling process. Hiring a professional valuator, business broker or even a lawyer to assist you with the sale can make the process a lot easier and help you obtain a better price.Plan the sale carefully so that you are able to present the business in a favorable light.

Two factors important in the sale of any business would be finding willing buyers and sellers and agreeing on a fair price for the business. Selling any business is largely defendant on marketing  marketing. There is a need to properly position the  business in order to attract interested buyers.

Using Business Brokers To Sell The Business

Hiring a professional to help you out in selling your business is easier than selling by yourself. Since selling a business is a complex process, asking for assistance would be a pretty smart option for you.

Advantages of using a broker include,

• They have access to a network of qualified buyers who are seriously willing to buy
• Assist with the preparation of contracts and legal documents
• Provide a valuation of the business
• Provide valuable advice that facilitates the sale process

The role of an intermediary broker is crucial in the selling process of the business. They act as the middle man between the seller and buyer. They help sellers to find potential buyers and negotiations with them.

How To Value Your Business?

Valuation of business worth are frequently complex and a number of methods are used in doing so. Employing experts like financial advisers makes the process a lot easier.

There are a number of ways to value your business. The most common would be discounting future cash flows and valuations based on multiples of future earnings.

Asset business valuation – is usually used if your business is not profitable and is sold in liquidation. It measures the worth of your assets including equipment, inventories and real properties less any liabilities. It is the easiest method of valuing a business and is commonly used.

Discounted cash flow – An estimated based on discounted future cash flows to determine the present value of the business operations. It is fairly complex and the most accurate method as any business is only worth its ability to generate cash and profits.

Market business valuation – compares the value of the business to prices obtained for similar businesses. Similar to the method used by estate agents to value a property. Typically used for small business – it is fairly subjective.

Earnings based multiple – also termed as earnings business valuation. This method determines the value of your company based on historic earnings. Companies with strong intangible assets usually use this type of method for valuing their business, however it does not differentiate worth of tangible and intangible assets.

The factors that affect the value of your business consist of its ability to generate positive cash flows and profits plus certain external factors like state of economy and market the business is in. Obviously if a number of interested buyers are interested in buying then you will be able to get a premium over the valuation.

Most entrepreneurs will at some point be faced with the decision to sell the business – ideally you should have your exit strategy in place when you start off your business.

When Is The Right Time To Sell Your Business? is a post from: Start-up

Whatever the case may be, good economic times, a good job performance, and being employed by a large corporation or business does not ensure that you have a secure job. The only sure what to never get retrenched is to be the boss and to be the boss, you have to start your own business.

Now before you get excited and quit your job, you must know that the majority of new start-up businesses fail within the first year of business. This is not meant to scare you, but rather prepare you so that you will not make the same mistakes that the others have made in the past. The number one reason why businesses fail is simply because they do not take the time and effort it takes to properly start and plan a business. They run out of patience and jump ahead of themselves. To start a healthy business, you will have to learn from these other’s mistakes, and do it correctly.

You may have some fears when it comes to starting a business and with good reason as starting a business is a major life change. With a normal 9 to 5 job, you are able to leave at 5 o’clock and not think about work again until you arrive in the morning. This is not the case when you are self-employed and more often than not you will only leave once the job is done. You will soon find that your are much harder on yourself than any boss can ever be.

Now, there are many ways you can learn the process of setting up your own business. This website being one as well as the many business startup books available at your local business store . These books, provided that they are not “get rich quick” schemes, will provide you the detailed information that you need to start a business properly. Alternatively, you may want to talk with a person experienced in this field, whether it be another successful business owner, or even discuss it with your bank. You would be surprised at the type of knowledge they would have and the willingness they will have in helping you as well.

It is also important to remember that businesses are not successful overnight. In fact, it may take many years for you to build up your business until it is profitable. You will want to make sure that you have enough income to not only support the business until it is successful, but also have enough to support yourself and your family. This may mean that you will have to keep your day job for awhile.

Starting Your Own Business is a post from: Start-up