John-Ernest Fogwell

Racism receives fatal diagnosis in Zambia

2012-01-18T15:24:00.002+02:00

Africa can be seen as the centre of racial conflict and divide since anyone can remember. South Africa had “apartheid”, white minority rule, Kenya had it “knight of the long knives”, white people killed in mass and Rwanda destroyed its local , mostly Belgium whites, population. More recently we saw ethnic cleansing across Africa and even in the beacon of transformation South Africa political parties are still mostly based along racial lines.

One cannot help but feel that Africa is an extremely racist continent. However the reality is starting to move in another direction. Competency and trust are slowly and in some cases aggressively becoming the norm and racial lines are starting to blur in this sunny continent. Now before the critics start bogging me down with slander and comparing me to some drug ridden hippie I believe the proof in the above statements lies in Zambia and with a gentlemen by the name of Guy Scott.

According to my, what may be limited knowledge, no African country has ever had a white president or vice president since it leaving colonial times, but Zambia is setting the example in the President Michael Sata appointing his trusted colleague and friend Guy Scott (White) as his vice president. I believe that this shows the world that Africa is starting to look for leaders that are passionate, trust worthy, capable and naturally deeply entrenched in their countries well being and not just his skin colour. I think it shows that Africans are fast starting to look towards a man’s heart, actions and activities towards its citizenship first and then towards his racial profile.

I would like to congratulate Zambia, I think it is small victory towards Africa becoming a the world leader in democracy.

Networking events in Africa

2012-01-13T15:47:00.002+02:00

As many of you know we are a firm specialising in assisting companies operating within the African continent. Many aspiring entries to this dynamic and fast growing market ask us about opportunities to network with African entrepreneurs and business people. We have therefore deemed it appropriate to list some of the years major networking events for the readers of this blog.

This list is in no way comprehensive and we will endeavour to keep it up to date with events, expo’s and conferences as we find out of them.

Jan 12-15 Medical Expo
www.medicalexpo-maroc.com

21 The Africa Cup of Nations
Gabon & Equatorial Guinea

Feb 6-9 Mining Indaba
www.miningindaba.com

7-8 Ghana Finance & Investment Conference
www.euromoneyconferences.com/ghana

20-23 Nigerial Oil & Gas
www.cwcnog.com

20-29 Urban Infrastructure & Real Estate Summit
www.ic-events.net/africa_urbaninfrastructure

March 27-28 Freight-Intra Africa Summit
www.fia-south.com

May 9-11 World Economic Forum on Africa
www.weforum.org

21-24 African Utility Week
www.african-utility-week.com

23-25 E-Learning Africa Conferenc
www.elearning-africa.com

June 20-22 Africa Round Table & Conference on Corporate Social Responsibility
www.ar-csr.com

Oct Poetry Africa
www.cca.ukzn.ac.za

Happiness and Joy over X-Mas time

2011-12-17T12:05:00.004+02:00

I once heard a saying that happiness is not based in what you have but it is rather based in the satisfaction of what you have. It is not getting what you want, but rather wanting of you have got. This saying cannot ring more true this time of the year.

The silly season, a time for binge eating, over indulging and swiping the credit card with such vigour and lust that it nearly explodes in the face of the happy vendor who only got half the customers he expected. The business world shuts down, companies are hosting year end parties and staff that normally drive sober have become one eyed monsters seeking a white line on the ever so windy road home. But rather than gain the "lost" pounds, drinking more than you can chew or spending money that we never had and due to this season never will have, lets rather use this time to reflect.
Lets reflect on what is truly great in our lives, lets reflect on what is real and what is fake. Lets evaluate the true sources of our happiness. Lets value the little things we have and the true friends that we have made.

Lets develop true satisfaction in who we are and what we are rather than the artificial dreams of who we want to be. Men face the fact that you are not going to have an infamous affair with Britney Spears or Jessica Biel. Ladies, Matthew and Brad.... they are not going to knock on the door next week. But is that the thing that would make you happy? Is that i-pad (that you can’t afford) going to really give you the monstrous satisfaction you desire and seek so badly? Is the short term satisfaction at least equal to the financial hangover in January and the stroke like feeling you get upon receipt of your credit card bill?

No I think not. Happiness comes firstly from within. When we tend to forget that, it is the little things around us that remind us. Our, not as handsome when married and slightly potbellied husband, giving us a kiss on Christmas morning. Our little child, who’s school fees are again in arrears, smiling at that big dinner on table, which is not as big as you wanted it, and the silly little R49-00 plastic swimming pool that he/she swam in today. It is your wife that wakes up with no make-up next to you and that feeling of utter joy when you realise, after a couple of seconds, it is her and not Hannibal Lector.

Let’s face reality, life and business is filled by pigs, con artists and little XYZ’s thriving on the hurt, discomfort and destruction of others. We lose a little faith, money and honour every day thanks to such cancerous oxygen thieving idiots. So, let’s not focus on the losses, it is part of being an adult. Let’s focus on the true joy others bring to us and the real joy we can bring to others. It is truly better to give than to receive.

Have a blessed Christmas and may the new year be filled with so much prosperity that you complete the lotto numbers incorrectly on purpose.

John Fogwell & The Team

Is South Africa still a democracy?

2011-11-23T17:00:00.005+02:00

Black Tuesday, as it was known in South Africa, came and went and even my wearing of a black shirt yesterday could not call government to apply reason to their proposed “Secrecy Bill”. It has been approved and it will be enacted into parliament within weeks. Many ask, what does this mean and every person with some sort of platform has rendered an opinion. Some of which to me stinks of ignorance, racism and even worse radical comments on both sides of the scale.

Some see this as a victory for black businessmen victimised by white media. How, my little mind cannot comprehend, as the act seeks to protect government officials and so called secrets.Some see it as the death of democracy in South Africa. How can one single act like this assinate a democracy that so many fought, suffered and died for? Firstly I one has to ascertain the true meaning of democracy.

U.S. president Abraham Lincoln defined democracy as: “Government of the people, by the people, for the people”. Winston Churchill’s opinion said: “No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time”. So in simple terms democracy is the right of the people to elect a government of their choice and to be governed, not ruled, by civil servants that are answerable to the people of the country.

In South Africa we have seen the quick death of the civil servant. Municipal worker, government officials (junior to senior) and ministers have conveniently forgotten their title of civil servant. The new term is Emperor. Once employed in government you are the boss, no one to answer to and the public are mere puppets to you and your seniors will and whims. It seems as if government officials have only one goal or aspiration: To have a job senior enough to be able to manage tenders. Who can blame them, it is the most lucrative job in SA.

So how does this secrecy bill destroy democracy?

It kills governments necessity to be accountable to its people, it allows officials to operate their corrupt business activities with impunity. It fosters and promotes secrets in a society that should be transparent and open. It gives government the ability to limit press freedom, to control mass media and to silence critics with one simple piece of correspondence. It empowers the strong to abuse the weak and hide behind a 20 foot wall with little to no risk. It effectively employs the wolf to protect the sheep and it is a travesty for a country that was once seen as the beacon of democracy.

I am disappointed, estranged and bewildered by the fact that my country is showing more and more of the characteristics of a communist and military state. To see more and more that the government cares less for its weak and its poor than for the corrupt and the evil. My opinion aside, lets leave this post with a quote by one of the world’s biggest icons of democracy and peace.

"Press Freedom will never be under threat in South Africa as long as the ANC is the majority party." Nelson Mandela

Pigs get eaten

2011-11-14T13:20:00.003+02:00

As South African investors we are a community that is a bit fatigued. We have been battered by investment schemes, scams, overzealous directors and investment companies that has failed on a scale that makes Bruce Willis’s Armageddon look like a Disney channel movie.

Those of us that still have a bit of cash are sitting on it like old hens waiting for the eggs to hatch and we are tapping our feet on different hotplates everyday looking for an investment that is sound in the market that is driven more by news media headlines than investment strategies. Property used to be the ultimate and safe inflation buster, but with tenants defaulting and property sales and prices slowing that avenue has turned into an electric avenue and none of us are in the mood to get shocked.

We want to look offshore, but let’s face it, we are a touchy feely nation and struggle to deal with telephone operators millions of miles away. Even more the old safe havens like Europe and America are constantly fighting their own recession and are so close to being flushed down the financial toilet only their feet are sticking out. So were to then? Who can we trust with our hard earned money?

I think that anyone that has a simple answer to this is either Nostradamus, Da Vinci or just plain reckless. In a world economy where bank bankruptcy is starting to become as normal as taking a tan on the beach in the summer one cannot be blamed for feeling a bit like a headless chicken running all over. There are RSA retail bonds, but let’s not confuse government with optimal spenders and fantastic asset managers. When dead stadiums and defunct para-statels cannot pay back their debts where will the money come from? TAXES? You and me?

So where to go? Where do we go? Diversification is the answer! There is an age old saying: “In any market the bulls make money and the bears make money. It is the pigs that get eaten” Sadly as a nation we tend to invest like pigs. We place our entire investment capital into one product. Recently with Amatenda most of the investors interviewed by Carte Blanche was left destitute by the fact that all their investment capital was gone. With Sharemax we read and here daily of widows and pensioners that invested all their savings into Sharemax and they are now living in garages and looking at family to support them. We are the pigs that happily get eaten year after year after year.

So in this simpletons mind we need to, hedge currencies, invest in multiple asset classes and within those asset classes multiple promoters. That way if you get conned by one or two, at least you are not destitute. Be logical and think with a sober mind. Anything offering above normal bank interests has a risk to it, no matter what the promoter says. Let’s take charge of our destiny, lets invest as widely as possible and get our funds as diverse as we can. Lets either be bears or bulls and leave the pigs be.

Where is a countries wealth?

2011-11-10T12:18:00.004+02:00

In South Africa we are constantly battered with eloquent words of wisdom from our astounding politicians. In a country where 25% of the population is unemployed we are regularly bowled out by news of minister living in luxury hotels and recently R 180 Million again spent on our civil servants homes. Just as we thought that we got used to our governments impotency we see young scholars driven to death by blue light brigades, this blue light was not used to race to an emergency but rather a meeting for a VIP. Very Impotent Person.

Why then with such an impotent government are we as a citizenship then so surprised when Cosatu speaks of more aggressive reform and our ever-so-sophisticated friend Malema wanting to grab farms, mines and even the bottle store around the corner. Is this signs that the very voters for this government is losing faith in their leaders? Is this more radical, grabbing approach workable? Is this approach only viable as a short term erection for impotent government officials?

Categorically NO, it does not and will not work and yes, clearly our officials are in desperate need of something to rise in their favour, no matter how short term or even devastating. How can I be so confident that this grab-a-asset system will not work.

Simple let’s look at examples. In Uganda the leader, Idi Amin, chased many big businesses away and started or rather dismally failed in running them. In Zimbabwe the masterpiece of politics and intimidation, Robert Mugabe, took successful commercial farms and that now produce? Yes you are right, virtually nothing. In our own sunny South Africa there are virtually no success stories of commercial farms that was redistributed at huge burden to the tax payer. Why can successful business not just be transferred and run successfully? Why is it not as simple as just throwing all SA assets in one collective pot and then allowing every citizen a scoop of the pot?

Well putting corruption, nepotism and impotency aside. We are not all entrepreneurs and business tycoons. Some of us relish in a world where we can just wait for a pay cheque. In a seminar Warren Buffet was asked what investment would in any economy give you the best return, his answer: Education, in other words self investment, teaching yourself skills and bettering yourself. The wealty did not just fall on money, the big commercial farmers did not one day wake up to massive agricultural holdings. Surely no one believes the CEO's of our major mines just did a pretty waltz and got the job. No wealth is accumulated over time and there is a reason for it, you need to know how to handle and manage wealth, you need to have the knowledge, aptitude and ability to manage and grow wealth. Wealth, apart from some “tenderpreneurs”, does not just happen. As the saying goes: “A fool and his money will soon part”.

In essence one can argue that wealth does not vest in material things. It is seated in one’s ability to generate money and then manage the money that was generated. It therefore lies within the individual and not the assets of the individual.

So the big question still remains how to we aggressively transfer wealth in a country in desperate need of it. The only logical way in this simpletons mind is by generating more wealth. Develop patriotisms again amongst the wealthy, make SA citizens proud of the country they live and work in. Award tax incentives for development of communities and employing more people. Help the wealthy become wealthier and in turn the country and its economy will thrive.

I would like to leave you with one thought. The DRC made a special place for about 25 large commercial maize farmers from South Africa. In a short period of time, in a unknown country with limited support and structures, these farmers were able to turn the DRC from a net importer of maize into a net exporter of maize. Now imagine if the SA government awarded these same commercial farmers with the defunct land that is lying barren in our own borders and made them feel secure in their own country. That vast and fast economic growth would have been for our economy. Jobs would have been created and communities uplifted.

Africa - The land of milk and money

2011-11-02T14:40:00.002+02:00

Many entrepreneurs approach our firm, a specialist firm on assisting entrepreneurs entering Africa, to assist them in obtaining their big dreams in Africa. They all have eagerly wagging tails and eyes that glow like a wild buck in a spotlight. However, sometimes we feel like the evil dream dashers when we find an opportunity of a lifetime to be nothing more than an opportunity to shorten your lifetime.

A key fact to remember is that large corporate companies are attacking Africa like wild dogs with rabies, they are setting up shops and offices quicker than what we can comprehend.Who can blame them? With Europe’s head in the toilet and the US avoiding the enema that has to come Africa with an Annual GDP per Capita rumoured to be higher than that of India and a fast emerging middle class in excess of 400 Million has opportunities a plenty for the astute business man. However gone are the days of buying a product at your local store and selling at twice the price in Africa, at least as a sustainable business.

Yes we have clients making so much money from their African operation that buckets are too small for them to use, they had to switch over to the proverbial shovel and wheelbarrow system. However many fail and do so on a spectacular scale. Why then? Ignorance, greed and unwillingness? People believe Africa’s citizenship to be uneducated idiots walking around with pockets full of cash and that Africa is a cheap market to do business in. The truth cannot be more removed from this piece of fiction. Africa’s people are becoming more and more sophisticated daily and flights, accommodation etc is everything but cheap. Africa wants products and services that add value to their businesses and lives at reasonable rates and there are opposition companies in virtually every African country you go to. Greed or quick buck syndrome is also a big business killer with many entrepreneurs entering the market thinking they can go into a country make a fortune and retire in short space of time by selling at ridiculously high margins or acquiring assets, like land, at cheap rates. No true cost of delivery, market study or cost of developing the asset is taken into consideration. In Mozambique farmers flocked to large tracks of land that was virtually free, but they never looked at the massive lack of resources, spares and so forth . Normal business logic still prevails you have to tackle the pain before you can gain anything in business. You need to develop a business plan and make sure your facts are correct. You must be willing to commit to the country you work in and be willing to spend a lot of ”school fees”, time and sweat in learning how to do business the African way.

Business opportunities in Africa are in abundance, solid business strategies will be rewarded, it is truly that land of milk and money. That said, milk can go sour quickly if not taken care of in the proper way and honey can be sticky even if held in vast amounts. When obtaining advise it tends to more prudent to ask what not to do in Africa than on what to do in Africa. Also choose your partners wisely before that glow in your eye is in fact the light held to you by a hunter.

Regret - ETA one day to late

2011-10-31T12:31:00.002+02:00

My household is one in a constant battle for time. Time to sit down and relax, time to spend together and the last couple of weeks time to cook a plate of food during the week. I am sure that my family is not the only one bogged down by life and its crazy calendar. However this article is not aimed to be about me, just to bring into context the huge enjoyment when I for the first time in ages was able to watch Carte Blanche. What I saw was, in one simple term, WOW?

Story number two was about yet another pyramid scheme, no it was not run from spectacular offices in Sandton, but rather a small Karoo town Grahamstown. When one conjures mental pictures of this little town, or any small town for that matter, the last thing one expects is a master conman that was able to, allegedly, defraud pensioners, the disabled and widows out of R 60 Million. One is more likely to have mental pictures of dorper sheep happily grazing, no traffic jams and banks without long boring ques. But the truth is life has again achieved in giving us a solid jolt in our system.

I recently read an Afrikaans article by a colleague of mine “Spyt kom altyd te laat” (Regret always comes to late), and in viewing this Carte Blanche expose I clearly saw what was meant by this article and our nation’s ability to be gullible on a scale that one expects in fantasy novels. Why is it that we as a people trust glossy brochures, flashy vehicle’s and big houses blindly? Why is it that we are more than happy to part with our hard earned money on a simple meeting with a friendly face? Why do we never conduct due diligence's? Last question: Why are we totally utterly shocked when we lost our money, when our investment strategy characteristics have more in common with a gambling bug than sound investing?

I think it is actually a simple thing that motivates us. We read about people like Bill Gates, The Facebook dude, Steve Jobs (Apple) and our own Mark Shuttleworth. These are all people that have become sinfully rich in what is perceived to be an incredibly short time. What do all of these people have in common? They are innovators! They were 10 steps ahead of the curve and saw a future that most of us did not even imagine, the innovative thinking created them a stupendous amount of wealth. In contrast most of us are not innovators, we are mere mortals. Our desire is merely that life would throw us an opportunity, we merely want in. We would be more than happy to have just put R 10,000 in the initial Microsoft Shares and to just GET IN.

Therefore we get extremely excited when a “clever and passionate” entrepreneur arrives at our normal homes offering us an In. We get blinded by massive profits, success stories and being the envy of our friends earning massive dividends from no work effort at all.

I am not advocating pessimism, please do not misunderstand me, but I am advocating logic. Both in this new scheme and the Sharemax debacle one very logical question was clearly not asked. How can you develop property and afford to make monthly interest payments. How can you build something, expenses only and still have an income to pay investors? Sanity should always prevail.

The other item that was shocking to me was that the simplest of deed searches showed that the brochure lied, the brochure stated that the property was owned by Amatenda, the deed search showed differently. So the second question should be, why do we never ask for external advice. Is it because we fear the result? Is it because we regard the marketer sitting in our lounge as an advisor? For a simple R 2000-00 a decent investigator could have done a deed search and found that the whole Amatenda document was a scam, would you not rather “loose” R 2,000-00 or face financial destruction and emotional epidurals.

In conclusion and the words of Gareth Cliff. “No one wants a job, most people hate their jobs. We just want the money”. We sometimes act like sheep calmly walking to an abattoir of financial slaughter, just because we do not want to insult the promoter of a scheme. No true, honest business man minds having a due diligence done on them, so the one that you insult by asking the questions should be the one you should run from.

How confident are our professionals

2011-10-24T10:45:00.004+02:00

PPS, a South African insurer focused on the graduate and post graduate market recently released their confidence survey conducted with about 3000 of their members. This survey is aimed at showing the levels of confidence that graduate professionals, ie. Doctors, Lawyers, Accountants and Engineers have in South Africa and its economy.

84% remain confident about staying/living in South Africa. According to this report the successful hosting of the world cup, the sovereign debt crisis in Europe and the massive skills shortage in SA are the massive contributors.

In contrast 56% of graduate professionals are confident about SA's economic outlook over the next 12months, down from 64%. Also down from 64% to 56% is the confidence in the local equities market. With only 59% believing that the Rand will strengthen over the next 12 months against other major currencies.

There is also a clear indication that professionals do not believe the worst of South Africa's economic times are over with only 45% of respondents believing the worst has hit us and 71% believing a double dip is on the way.

Government's ability to address unemployment is also a major concern with only 29% of professionals believing that it has the capacity to bring change in this important facet of our economy.

The massive hurdles in the SA economy are Crime, Health care and Education, and here professionals are clearly not very confident.On health services sentiment under graduates was low with only 46% believing that health service provision will be better under the NHS system. Only 45% believe crime rates will drop over the next five years and 48% expected better education levels over the next 5 years. The very interesting statistic that came across as that 89% of the top earners in SA are worried about the sharp escalation in costs of education.

In conclusion. One can extract that there is optimism about South Africa, its people and the private sector's ability to grow under tough circumstances, however the ability of government to address critical issues in our economy does not bolster much confidence.

Today we great a giant good bye - Oom Willem Nel

2011-09-28T16:21:00.003+02:00

It is with great sorrow, unbelievable pain and an excruciating sore heart that I and the world great a true icon.

"Oom Willem" was not only a role model, icon and a personal hero to me but more importantly he was Father figure.

"Oom Willem" you will be missed! We will always carry and cherish YOU in our hearts and remember you for the person you truly were. You are with your Father now and we thank and honour him for the opportunity to have been part of Your life.

Rest in utter and total peace, you deserve it !!!

With Love,

John Fogwell

Political Will

2011-01-10T14:36:00.001+02:00

Necessary "Evil"

2010-12-25T14:26:00.002+02:00

In an article posted in the New Age Newspaper on the 14th of December 2010 unions are purported to seek a total ban on Labour Brokers in South Africa and that the demands are building in strength and momentum. So much so it has been dubbed “The Mother of all Battles”. The method to be used by the Unions is the demand for Section 189 of the Labour Relations Act to be repealed. This section directly deals with temporary employment. Although one does have empathy for the plight of the Unions, in the article they specifically mention Labour Broker’s unwillingness to do salary deductions for unions, and the so-called extorted workers one has to review the impact that such critical changes will have in the job creation front.

One has to understand that life has to occur in balance. Once the one side of the scale is packed to heavy life responds by acting “aggressively” to balance the scale. A typical example of how life and people in South Africa has responded to heavy handed government intervention is in the illegal cigarette market which, at least according to British American Tobacco’s advertising campaign, is spiraling out of control and has suddenly become the largest funder of other more violent and “less profitable” crimes like robbery, gun running and drugs. Is the assumption that this is like a gateway crime.
We cannot at all be surprised by the growth of this “market segment”, as approximately 50% of cigarette turnover (not profit) is passed on to government in the form of exorbitant sin taxes. These excessive taxes make it virtually impossible for competitors to enter into the market with cheaper alternatives, without breaking the law. Therefore heavy handed government involvement has created an economy conducive to trading, smuggling and selling illegal cigarettes whilst protecting and building a monopoly state in this R 25 Billion per annum industry.

Indulging me to use the above as an example, one has to ponder if such over protectionism in the labour market will have a positive or negative effect and what the direct effect will be on job creation. All our major job creation industries are currently shedding jobs at a massive scale. In Novembers figures an approximate 18,000 jobs was shed in the formal industry(Banking and Manufacturing the largest culprits). However agency work or labour brokering (governed by Section 189) has been creating jobs at a rate of 5%+ per annum. Is this not already a sign that an over regulated environment is creating opportunities for business men in South Africa? Is it not proof that additional regulation may, as in the cigarette industry, cause a form of illegal labour operations? Before you laugh out loud, be prudent in considering the fact that the Mafia controlled US Cities and even states, due to the ”ownership” of unions.

It cannot be ignored that about 7% of South Africa’s workforce is currently employed in the Labour Brokering environment and that this amount is only set to grow, if left to operate. However if this industry is going to be declared illegal would the Private Sector, in reality, absorb these employees? What would business to do repair the scales of balance? Another point that is prudent to investigate is true and honest temporary employment. If Project Management, the agricultural industry or contract based businesses are not going to be allowed to align their staffing strategy with their actual demands, which by default varies from time to time, it may very well cause these industries immense damage and, at least in my mind, cause these industries to seek alternatives to employing people. Items like mechanization, automation and technology deployment would become the leading factor in business success and not staff deployment and training. This does not show a rosy picture for the blue collar worker the union is so set to protect, or at least protect salary deductions from.

In conclusion, it should be considered whether the “evil” of labour brokering is not a “necessary evil” to stimulate our economy’s most dire demand, job creation. Maybe better and focused regulation of temporary workers and labour brokers would be a more viable option. Maybe more emphasis on training and social investment by these firms may protect our economy from the short term damage of job losses, whilst encouraging future growth for our unemployment figures.

My sincere condolences to Uganda and its people

2010-07-13T10:25:00.001+02:00

I would like to extent my sincere condeliences and best wishes to all people affected by the bomb blasts in Kampala.

May we soon live in a world with humanity, honour and compassion where outrageous acts like these do not have any place in the world anymore.

My thoughts and prayers are with all those that have lost family and friends and may prayer is that the peacefull and loving nature of the Ugandan people remain intact as an example to the rest of the world.

What is Invoice Discounting

2010-06-11T11:36:00.002+02:00

Invoice discounting is a common finance tool or arrangement with a finance company or bank. It allows the bank to advance monies to a business against its debtors (customers) thus helping cash flow.

This very attractive option in financing your business is somewhat overlooked, however it is a safe, cost effective and fast way to insure that your company has a good and solid cash flow.

This could be an extremely viable funding option available to companies that provide a product or service on credit terms to their customers. The purpose of the finance is to give you access to immediate funds, without having to wait for the customer to pay the invoice. This is particularly beneficial to those of you who are in a growth period and committing more working capital to customer credit \ debtors.

The company lending you the money will agree that for all invoices raised you will have a certain percentage available of the value of the invoice at you disposal. You do not necessarily have to utlisie the full available amount (credit limit) immidiately but have the assurance that you can draw on the facility when needed.It can therefore act similar to an overdraft just with the added advantage that it is not directly influences by collateral as per bank requirements.

The process of getting a credit limit in place is actually very simple: The ‘factor’ (the lending company) is disclosed to all of your customers, with your customers paying the factor direct. The factor will collect all amounts due and offset this amount against your account. The balance of the invoice will be paid into your account, less the fee and interest.

To obtain such a facility you can log onto www.fogwell.co.za

How to calculate your break even

2010-05-29T20:16:00.002+02:00

Many business owners do not understand the financial side of their business and actually do their best to avoid it, as it is perceived as a complex and dificult process. In this article the author aims to address just one of the most business criticial financial analysis that needs to be done for you to better understand your business. Whether you are in financial services, selling products wholesale or run a consulting business. Knowing when your business actually breaks even is extremely critical. What is the break-even point? The break even point is defined as the point where business sales or revenues (your income) is equal to your business expenses. Therefor there is no profit made nor no loss incurred at the break-even point.

This figure is imperitive for any business owner in the managing of the business since the break-even point is the lowest limit of profit when setting prices and determining business margins. Obviously the break-even point becomes very important when calculating a strategy for net profit or quoting on new projects or even introducing new products to your business. Calculating your break even amount is actually extremely simple, you merely calculate your operational expenses. However I believe it is prudent to take the following factors into consideration when calculating your break even and I have my own little break even calculator, although it may not be academically correct it has worked well in every business I saw it introduced. Break Even = Operational Expenses + Contigency Provision + Cost of Re-Capitalisation + Minimum Entrepreneurial Fee required. Now lets unpack that in a little more detail:

Operational Cost = The total running cost of your business.
Contigency Provision = An amount of money you put aside to isnure break even in the immidiate future. Either by being able to use it to address some unforseen circumstances or to have surplus capital available to "cover" yourself.
Re-Capitilisation = How do you cope with growth? How do you replace that machine you bought cash. You recapitlisation savings is used to insure that when old machines are reduntant you do not need to suddenly scramble for cash.
Entreprenerial Fee = The minimum entrepreneurial fee is the minimum amount required by the entrepreneur to keep himself going. Do not place your wanted income hear, but the minimum income required.

Now that you have a true break even margin you need to work out how you are going to get there. This is done by calculating your break even margin.The break-even margin is a ratio and this ratio shows the gross-margin factor for a break-even condition. The formula is also fairly simple. You take your total expenses and divide by net revenues and multiply this by 100 to get a percentage. This ratio is extremely helpful when setting your selling prices, in the tendering process and when negotiating contracts with vendors and accounts.

By understanding your business break-even point and the required break-even margin business owners can truly understand the impact of decisions. In purchasing, costs can be lowered by bulk purchasing, negotiating price/ terms or finding new suppliers. Revenues can be improved by increasing value to the customer or offering non-price concessions. It must at all times be remembered that increasing profits by simply increasing margins, therefore selling price, could be a very risky strategy. Unless the consumer perceives higher value from the product or service, the consumer may not be willing to pay these higher prices.

A Dynamic Group that cares

2010-05-26T16:16:00.001+02:00

Yesterday I had the privilege, nay honour of doing a seminar to the people of Dynamic Vision Optometrist network on Finance for non financial people. I would like to say that it was without a doubt one of the most pleasant experiences in my training career.

Not only did I enjoy listening to a couple of other dynamic speakers that have an incredible passion towards their business but I was fortunate enough to get an insider’s view of how this industry ticks and works. The most impressionable part of the experience was the caring nature of all the parties attending. Caring for their patients, caring for other and caring deeply about their businesses, and it was reassuring to see this high level of care and passion in such a large organisation.

I would again like to thank Dynamic Vision for the opportunity and the kind words after my little accident the morning.
You guys are fantastic.

Outsourcing vs Labour Brokering

2010-04-12T16:19:00.002+02:00

Especially in South Africa labour brokering is often confused with outsourcing and the biggest culprits in promoting this myth is the labour brokering industry itself. Now I would like to state very clearly that I am not against labour brokering and I am a firm believer that there is an important place for the industry in South Africa. That said I think it is prudent to ensure that the two very different industries are not confused.

Firstly, labour brokering is the provision of staff on an outsourced basis, whilst outsourcing is the fulfilling of a function within which a staffing solution may be provided. The methodology and profit generation of these industries is vastly different. Allow me to explain in slightly more detail.

A labour broker earns its revenue from employing and deploying as many staff members as possible. The profits are generated from invoicing their clients more than what they pay the employee. The biggest reason a company is willing to pay a premium for this service is the “passing-on” of risks associated with employing staff and in some cases the increased costs, if any, can be justified by the decreased administration requirement.

A true outsourcing company, on the other hand, generates its revenue from addressing the need of the company within a function at as low a cost as possible and charging the client a premium for that service. Usually at a lower rate than employing staff to fulfil that function. The focus of the outsourcing company is therefore not on their clients staffing requirement but rather on the function that needs to be fulfilled.

So in other words the outsourcing company generates its margin from increasing its efficiency and by leveraging the intellectual capital within the company. For example using better software and more expensive staff than what its clients could afford and sharing these resources with more than one client. On the other hand the labour broker generates its margin from its administrative abilities and from decreasing legal risk.

So which one should your company choose? Simple, it depends on your need. If you require a warm body and do not want litigation risk and the administrative head ache of employment, labour brokering is a viable option for you. If you on the other hand require a function within your company to be managed more effectively and at lower cost outsourcing should then be looked at.

In conclusion, both industries have an important place in the South African economy and address the needs of companies to reduce risk and potentially costs. That said they should not be confused or pit against each other.

Proper Corporate Governance still a big obstacle for Africa

2010-04-01T13:01:00.001+02:00

Africa has seen massive failures in Public Private Partnerships, donor funding that was misappropriated on large scales and project that have all the hopes and dreams of creating jobs and prosperity for its people never being implemented passed the planning phase.

At least this is the thought of most international investors and donors. The successes of many projects are sadly far over shadowed by the failures of others and some of these on spectacular scale. In a fairly recent trip to Uganda I was asked to become involved in a government backed fund raising scheme for Hydro Electricity, the shocking reality is that these projects have been available to investors for years with virtually no takers.

One has to wonder why? The reality is that Africa has ignored Corporate Governance and it is costing the continent growth on a spectacular scale.This is even apparent in South Africa, where we have some of the most progressive codes in corporate governance in the world, in the form of the old King II and now the King III codes. By applying these codes one can effectively manage projects, organisations, partnerships and companies with exquisite corporate governance. The failure to apply these codes is clearly visible in the failures of most state owned company boards, I don’t think it is going to take an avid news reader to think of at least five “para-statels” who’s boards have failed dismally and in the private sector it could also be visible in the board failure of Pioneer Foods.

With the entire continent requiring massive inward investment, donor funding and progressive projects it is clearly time for leaders in both the business and the government sector to embrace proper corporate governance and to take the plight of all stakeholders involved seriously. Africa needs to instil faith in itself and grow trust and respect from the outside community. The only way this can be achieved is by implementing proper corporate governance even in its most basic activities.

Up and coming

2010-03-16T15:16:00.003+02:00

My new website will be launching soon. Please watch this space for new information, I look forward to getting my 2010 underway and assisting you, my business friends, with advice, training and support where you would like that I can assist.

Please feel free to contact me if you require any additional information.

The pleasantries of the unpleasant

2010-03-16T14:39:00.003+02:00

Owning and running your own business can sometimes be as much fun as a root canal and with the constant changes it feels like we are running to the dentist every second day asking him to please provide us with this liberating procedure over and over again.

From Eskom kindly giving us an electrical epidural in price hikes, exorbitant sin taxes making the basic pleasures, like smoking a cigarettes to avoid insanity, un affordable for most of us “other fellla’s”. One can be excused for thinking that most of us should rather spend our time in a hospital for the clinically insane. We are banging our heads against a brick wall anyway !
But let’s face it, once you had your own business you struggle to find an incentive (apart from the massive luxurious thing called a pay check) to go back to the 8-5 breaker of innovation.

But then every now and again a light appears, and then we understand the reason why we chose this insane life. For the couple of people that know me and have been privy to the last couple of months of corporate sabotage and obvious and blatant attempts to block my business and its sale. Will know that I was seriously considering the that en-suite room at the local clinic for the insane. More shockingly the rider on the white horse did not come in any expected form, but from a segment of the industry that I always regarded as my opponents. A trade union. Yes, you heard me correctly a trade union.

To close off, thank you to all that supported my during this last couple of months. Thanks to all that was considerate and understanding and even empathetic. Now we are going to enjoy the spoils of our labour and the reward for coping during this time.

P.S. – This may be personal but I thought it prudent to share.

Using the Small Claims Court

2010-01-29T11:00:00.003+02:00

In many cases a lot of us feel like justice is far from reach. It feels like we have no recourse against poor workmanship, friends lending money and even in the case of micro business, defaulting creditors. To prove my point, how many times have you decided not to act on a claim of R 4000-00 or so because the lawyers costs more....?

Little of us know about the cheap, easy and simple process available to all South African citizens needing civil/financial recourse. This prince coming to save us from the evil micro bad guys is found in the form of the small claims court, and as stated it is available to all SA citizens.

So how does it work? Simple the small claims court allows smaller civil disputes to be resolved with out the expensive and slow process of taking normal civil action using the magistrates court. It operates outside of business hours and the "judge"is a practicing attorney. You do not need a lawyer, in fact they are not allowed! You do not need to speak legal! You do not need to file expensive papers in latin of "high" english. All you need is to contact your local small claims court, obtain the relevant notice drafts and wallah you and the person you have a dispute with can slug it out (man-2-man) in the small claims court where an attorney will give a judgement that is just as powerful as that of the magistrates court.

Who can use the small claims court? Any natural person with a claim smaller than R 7,000-00 (this amount is being reviewed) can approach the small claims court for relief.

What can a person sue for?. Any civil dispute, in other words any dispute that has a desired end result of financial relief. Broken equipment, bad workmanship, debt, outstanding invoices (only in the case of Sole Proprietors & Partnerships, no CC's or Companies).

Who cannot sue?. A juridictional entity is not allowed to seek relief from the small claims court. Again in more simple terms no CC's, companies or trusts. That said as an individual you can call your dispute to the small claims court against any legal entity.

What can I not sue for?. As a legal entity (CC, PTY or trust) you cannot approach the small claims court. You cannot approach the small claims court for financial relief higher than R 7,000 and you cannot send your lawyer on your behalf. The aim of the court is to resolve small disputes between individuals to insure justice is accessible to all.

What happens if my claim is more than R 7,000?. In the event that your claim is fractionally higher than the prescribed limit, as stated it us currently under review, you can choose to forfeit your right to the balance. As an example: If your past room mate leaves your house without paying his portion of the rent and the lovely fella also decided to take the washing machine causing you damages of R 8,350-00. You can approach the small claims court and choose to forfeit your right to the balance. If you therefor get a successfull verdict the judgement will only be for R 7,000-00.

Who do you approach to have a dispute settled by the small claims court?. Any good attorney or legal services company will be able to provide you with the contact details of the small claims court in your area. Do not use intermediaries or consultants, it is a total waste of money. However if you want consult with an attorney about the process and facts of your case.

Direct Insurance, is it the right move?

2010-01-07T16:10:00.002+02:00

We as consumers are being bombarded with advertising, mock TV shows s and call centre telling us that it is better to insure directly and cut out the “expensive” middle man. A large emphasis is placed on the fact that they are irrelevant in the short term insurance realm and even more that they are a pure burden to the consumer. A recent advert comparing a broker to a fish and chip sales person is a clear indication that little regard is being placed on the role of financial advisors and brokers within the short term insurance industry.

The prudent question I believe we need to ask ourselves is whether we believe this propaganda and whether we would want to trust a call centre operator with insuring our valued assets and now even our lives. Let’s take the following points into consideration when unpack direct insurance for ourselves, ignoring propaganda.

It does not take a rocket scientist to understand that the very call centre operator assisting you in obtaining your insurance is in fact a low level employee, irrelevant of earnings, within the company. They are selling high volumes of policies and therefore making it impossible to remember a little thing like your name. If you have a dispute on your claim who would you speak to? The answer is very simple, their legal department. One young man, who alleges on Hellopeter.com that he was effectively bullied by a large direct insurer’s in house legal team into signing documents that eventually led to his claim being denied is proof of that.

Now no one is claiming that the young man is talking the truth about the matter or that the insurance company is in fact bullying clients into not paying claims, the fact that is being brought across is merely that when a dispute arose his communication point was moved from the friendly voice at the call centre to the legal department, an intimidating place for any non legal professional.
Now bringing that into comparison with a broker environment one needs to understand that your broker would be your port of call, not his legal department. If it is warranted that a legal department of an insurer has to get involved you would at least be “protected” if not just escorted by your broker. Your broker is also an individual with a larger vested interest in your well being and naturally concerned with you cancelling other policies with him. He or she is not just a voice.

I would like to re-iterate that this article is not aimed as an attack on direct insurance, although I must convey my surprise that the broker industry has not attacked back with similar vigour. It is merely aimed at providing some perspective within the propaganda.

Have a merry 2010

2009-12-28T17:13:00.001+02:00

To all my friends and associates. I wish a fantastic 2010. May the winds of good fortune blow behind you with such vigour that your ears whislte.

Leading by Example

2009-12-10T12:49:00.001+02:00

We all lose faith in our idols and they all disappoint us at some stage. Let’s look at world golfing sweetheart Tiger, who by latest count, is already 11 over par with extramarital affairs, Joost “powdering” his nose and a myriad of senior people drunk driving suburbia into a “non-walled” community. However I do think it is prudent that we look at ourselves. We literally gulp up gossip and so called failure of moral value stories but when a Government companies are crumbling left right and centre we just shrug and say something like “This is Africa”.

Julius Ceaser, was renowned and respected for the many battles he fought in the front lines, draped in his customary (very visible) red cloak. Many battles was perceived as lost till Julius arrived with a couple of men and turned the spirit of his soldiers and by that, the outcome of the battle. South Africa is currently fighting a battle against poverty, low moral fibre, despondency and a reputation of fraud and quick fix mentalities. In the forefront on this is the catastrophic board failures at the SABC, Transnet, Athletic SA and basically every state owned enterprise. Is this still the overflow of the Zuma/Mbeki power shift leaving us destitute and confused or is it just pure poor management and poor corporate governance. The more prudent question in fact should be when is our leaders going to put on a red cloak and turn public moral and allow us to win this battle.

Corporate Governance??? This is one of the new buzz words that is uttered over our airways, business corridors and board rooms. However can we see proper corporate governance within our institutions? The red cloak in this instance can be worn in the form as the newly published King III report and the simple application of it. With so many new boards being elected in and so many interim boards heading our transport infrastructure, judiciary, our television broadcasts and even our sports the implementation and application of proper corporate governance via King III should be simple mind set to entrench in these new boards. With the promulgation of the New Companies Act, which is due to come into effect in 2010, we as a general public should actually challenge the Government to take the proverbial tree out of their own eyes before investigating the small thorn in the private sectors eyes.

So to conclude. Make proper ethical, transparent and honest business the norm of government institutions. Make open communication with ALL stakeholders mandatory and stop hiding behind bureaucracy and eloquent language. Is it not the very government that made Plain Language a requirement under the National Credit Act, The Companies Act of 2009 and the Consumer Protection Act.

Having a will?

2009-12-08T09:56:00.002+02:00

A Will is a simple, straightforward yet incredibly important document in your personal life. During 2009 seven friends passed on and only 3 had up to date wills. This has left the other four's families and friends destitute and struggling to understand how they should wind up the estate.

Most of us are hitting the roads from this week onwards, the sad reality is that this season has the highest road death ratio for the year and the reality that one of us may not return home after our holiday is very real. It is extremely reckless of all of us to believe that it will not happen to us, as this is what everyone of the "other people" in accidents also believed.

In conclusion, contact your financial advisor, attorney or accountant and get your will up to date. It will be the best Christmas present you can give your loved ones.

Plain Language

2009-11-03T12:44:00.001+02:00

Plain Language is now a requirement under the National Credit Act, The Consumer Protection Act as well as the Companies Act of 2008. The only problem is that the definition, as contained in these acts, are in anything but plain language. Although writing a document in plain language sounds incredibly simple, it is however not that simple.

All South African Banks made a commitment to distribute their documents in plain language years ago, with a self imposed target for October 2000. Now not to venture a guess, but I dont get my correspondence in what I term as plain language. So why is it so difficult to write a document in plain language?

Well firstly lets look at the authors, and lets face facts most of them are legal professionals. From the first day at varsity they get taught to write all there documents in Legal English (a sepreate subject for your LLB). This is basically to teach students to write in "high" language and to create ambigious statements, allowing multiple interpretations. So is it our tertiary education system letting us down or is it the ego of our legal profession? I will leave that decision up to you.

That said the important thing that all of us must recognise is that Plain Language correspondence is no longer a mere virtue. It is a requirement in terms of 3 seperate pieces of legislation. This changes the ball game dramitacally within the corporate business world.

S0 I would like to humbly request the legal profession, tertiary eduction services and business owners to focus correspondence and training to write correspondece towards plain language. Paying a fine, having a contract rescinded or losing accreditation is just not worth looking clever in my mind.

Ignorance or Ignoring

2009-10-16T15:11:00.001+02:00

King III, the good for proper corporate governance, was published on the 1st of September 2009 and the codes apply to all entities. This is very different to the old King I and King II reports that was only applicable to public or listed entities. The question I however want to ask today is whether the property syndication industry are working along these ethical guidelines.
I firmly believe that they are probably not. This, to me, is evident from the constitution and guidelines of the Public Property Syndication Association (PPSA) that does not mention compliance to any of these codes. Two of the syndication companies I have had dealings with namely Blue Everest Investments and City Capital (Capital Investments), both of which are now defunct never conformed to King I or King II and it did directly apply to them as public companies. Further the Financial Services Board (FSB) also does not mention it at all as one of the 1.8 licence requirements.

Now the next question we have to ask is why? Is it ignorance or just ignoring it. Is it because the cost of compliance is excessive? Well before you answer that question for yourself, let’s look at why compliance to these codes are, at least in my opinion, important.
The King reports are all about conducting an ethical and transparent business. It is about disclosing all the facts to all stakeholders, giving access to required information, it is about accountability of company directors, it is about thinking of others. The codes also places strong emphasis on independent directorship and active shareholder participation. In conclusion it is about playing open transparent cards and honest commentary to everyone involved and respected writers like Bruce Cameron and Deon Basson has been claiming that is the last thing that they are doing.

Now that you have some information to make up your own mind on why the property syndication industry may not be applying these codes let’s focus on being active in demanding the application of the codes. Financial Advisors, Regulators and the public in general should demand the application of King III in all syndicated companies and fractional ownership schemes so that we insure that it is not avoided by ignorance. This will then make it extremely clear which promoters is ignoring ethical, transparent and honest business practices.

If you want to find out more about King III, the New Companies Act or the Consumer Protection Act visit http://www.sinkorswim.co.za/ or contact john@sinkorswim.co.za

People, Planet & Profit

2009-10-05T11:23:00.005+02:00

The new King III report puts a much larger emphasis on so called Triple Bottom Line reporting for businesses. Business is not just about making money anymore as it is about how you make the money and whether you take from the people and planet or give to the people and planet.

Obviously as King III applies to all entities it is placing a bigger burden on smaller business to also comply to these codes and therefore we are seeing a bit of resistance to King III. That said King III has an apply or explain approach and therefore I am off the opinion that this approach makes it accessible to most businesses. But what does apply or explain mean? This basically means that you need to apply your mind on how you can comply, do the best you can do to comply and explain why you can’t do more. So basically it is a soft and positive approach rather than the traditional comply or else like in the US system. With the recent global meltdown I am sure we can debate for hours on the success of the more aggressive approach taken by the US government in governance.

I do however believe we need to ask ourselves a more prudent question. Is it good business to comply to King III? Well let’s not debate the legal issues around it but the pure advantage that it will offer you, if any. I think the answer is a resounding YES. Most of us as directors spend 110% of our time working IN our businesses focussing on our functional role within the company and we don’t spent any time working ON our businesses focussing on strategic and long term visions. When complying and applying King III into your business you will force yourself to spent at least some time ON your business and just in that the advantage of compliance is massive.

In conclusion, every change brings opportunity and risk and compliance to King and THINKING about Poeple, Planet and Profit will give more opportunity to you to manage your business effectively. Non compliance only brings risk. So my opinion is: Lets apply King III.

To find out more about King III, the New Companies Act or the Consumer Protection Act please visit http://www.sinkorswim.co.za/

Property Syndication and King III

2009-09-28T12:20:00.000+02:00

Although King III was only “launched” on the 1st of September this year we have to already start asking whether the Property Syndication is gearing towards the compliance of King III. That said it may even be extremely prudent to ask if they have ever been King I or II compliant. As the aim of the King reports was directly related to Public and Listed companies.

A lot has been said about the Property Syndication industry with a wave of allegations made against the operators. Some warranted and some maybe not. I believe that most of the attacks have been along the wrong avenue. We have seen some esteemed writers hammering the syndication industry about shareholder communication, so called inflated returns and poor and expensive management principles. Although these items are obviously extremely relevant and more than just idle points of discussion I believe that more emphasis should be placed on whether property syndication promoters subscribe to the King II and now King III rules of governance.

The basic reality is that most may not even know of the King reports. For example the directors of the now defunct Blue Everest Investments never even attempted to subscribe to King I and II and I believe that this was due to ignorance to its existence. Is that an excuse? I don’t think so, Asset Manager City Capital also never attempted compliance to King. Why not? Is it pure ignorance from the public, the promoters and from brokers alike? Is it that the so called governing body ,the Public Property Syndication Association better known as the PPSA, does not even mention compliance of King in their constitution? Or is it because we never demanded it?

In an industry that is bombarded by negative press brokers still keep selling their products and we are led to believe that it is merely the high commission being paid that motivates selling the products. I am however of the opinion that the concept behind the industry is solid and could be a fantastic investment for investors, but only if the syndication industry is more aggressively regulated by us, the public. Having an FSB number is no longer enough to protect the public, as clearly evident in the Capital Investments debacle. Capital Investments was/is a fully licensed Asset Manager and millions of rands are alleged to have been lost in this investment platform.

The focus for the immediate future should be to look at items like proper governance, ie. King III and the broker industry should demand compliance to these codes.

To find out more about the New Companies Act, King III and the Consumer Protection Act please visit www.sinkorswim.co.za

Are Financial Advisors ready for the new challenges?

2009-09-21T14:35:00.000+02:00

The New Companies Act brings opportunity the Consumer Protection Act brings some additional strain whilst the proposed Protection of Private Information Bill will place additional strain on marketing methods and additional responsibility on database management within the financial services practice. This is a clear indication that 2010 and 2011 is going to be a very interesting time for financial advisors and business owners alike.

That said, I had to ask the question are Financial Advisors ready for these paramount changes and the opportunity and challenges that it holds. The extremely interesting part is in a quick survey, conducted with 40 companies that have attended the Sink or Swim Seminars, only about 15% of them had a active relationship with a financial advisors and most of these were merely related to pension funds and medical aids on not to any other business critical issues.

Even more over I was surprised that in a phone call to about 20 brokers only one offered business risk insurances, and I am not referring to asset insurance. Now the question I have is why don’t business owners have relationships with financial advisors and why don’t financial advisors focus on providing these key risk insurance instruments to their client base.

In recent years we have seen how the pendulum have swung in favour of the consumer and I have to wonder if Financial Advisors will now also be found wanting if their clients are not properly insured for these business critical risks. Never mind the massive opportunity that lies in this market segment.

2010 and beyond

2009-09-16T15:47:00.000+02:00

Nostradumus, in his lost book of images, allegedly predicted the end of the world and humankind in 2012. Although I am no psychic nor do I care much for predictions it does not take much psychic powers to predict the end of the business world as we know it in 2010 for South African business people.

The promulgation of two critical acts namely the Consumer Protection Act and the New Companies Act does change everything we know about corporate and business law in South Africa but even more over the more aggressive prosecution of the Employment Equity Act and the criminalisation of the Competitions Act is also set to make your life as company director more strenuous and just plain scary.

It is rumoured that the commission has been instructed to fine a minimum of 270 companies during 2010 for non compliance to the Employment Equity act and to prosecute aggressively whilst critics believe that the criminalisation of the competitions act will have extremely negative effects on business. Another portion of the New Companies Act is Section 6,Business Rescue and Compromise with creditors, and I am off the opinion that it will have a massive impact, at least in the short term, on the credit environment in South Africa. Where does this leave company directors?

Simply it places a huge burden on company directors and officers and does open them to a tsunami of potential litigation, regulatory fines and stakeholder scrutiny. Therefore I am of the opinion that Financial Advisors are going to play a more vital role in the daily business life of directors. In a recent “survey” done by Sink or Swim only 15% of the respondents have a trusted and active relationship with a financial advisor. Similarly in a couple of phone calls to brokers it became apparent that they do not offer nor understand business and intangible insurance products that they require.

Now the important questions that we need to answer is, can I as a financial advisor be held liable if my clients business is not properly insured for these risks? Is it the prudent move to avoid the issue? Am I ready for the changes? Financial Advisors already have a tough time with the need to comply to FICA, POCA, FAIS and soon the consumer protection act. How will this impact your business and the inherent risk that you take in your daily activity.

To find out more about the New Companies Act and the Consumer Protection Act visit http://www.sinkorswim.co.za/

The New Companies Act opens opportunity for Financial Advisors

2009-09-11T12:22:00.000+02:00

The New Companies Act, due to be promulgated in 2010, is changing the face of corporate business in South Africa and as we all know change brings opportunity. The aim of the act is to modernise and streamline current outdated legislation as well as promoting good corporate governance in association with King III which is now applicable to all entities.

The New Act also places a very strong emphasis on continuity planning and liquidity of a company as well as allowing stakeholder scrutiny for the extraction of capital from a company. This places a much larger emphasis on company insurances and company investments.

Insurance: Traditionally people insure tangible items a lot easier than the intangible ones. Although the act does not radically change the role of directors it does bring to the forefront the roles and responsibilities. “New” needs that will be more evident to directors will for example be Key Man insurance, Litigation Insurance and Contingent Liability Insurance. Business Rescue will also make directors view Credit Insurance with a much more positive view.

Investments: Traditional investment products will now also play a much stronger role in the mind of the smaller business owners as items like deferred compensation for key management and staff as well as capitalisation plans will be taken a lot more seriously.
Whilst The Consumer Protection Act will place more pressure on brokers and insurers the New Companies Act opens up a more responsible client to the insurance broker.

To learn more about the New Companies Act and King III visit www.sinkorswim.co.za

Consumer Protection Bill and the Services indusrty

2009-09-10T11:57:00.000+02:00

The Consumer Protection Bill will set the benchmark in responsible marketing for service providers in South Africa.

The consumer protection Act, due to be promulgated in October 2010 in South Africa, is aimed at setting a national benchmark for high standards of marketing and responsible sales and advertising. The act affords a myriad of protections to the consumer with a strong emphasis on the previously disadvantage participants that have been exploited by some business sectors.

Companies providing service to the public have to start now to get themselves in line with the new Act as the consequences of not being in line could be dire.

Just some important provisions in the act for service providers

A contract would be interpreted in favour of the consumer, in the event of ambiguity allowing for more than one reasonable interpretation. Although this reflects the existing law, it is now an unalterable right.
Any exclusion within the contract would be measured against whether a reasonable person in the position of the consumer would have expected such exclusion, taking into account the contract's contents, the manner in which it was presented and the circumstances around concluding it. Contract exclusions must to be drawn to the consumer's attention.
Service Providers will not be allowed to take advantage of the fact that the consumer is unable to understand the terms of the contract being concluded with it as a result of either physical or mental disability, illiteracy, ignorance or inability to understand the language of the contract.
The Terms of the contract may be ruled as unfair, unjust or unreasonable if they are excessively one sided, contain terms so adverse to the service provider as to be inequitable, or if the consumer was misled by the service provider company.
The terms of the contract must be in writing and in plain language (see definition of plain language at bottom).

In conclusion, the New Companies Act places a huge responsibility on service providers to act responsibly with there consumers and to ensure that all contracts are easily understandable and properly explained.

To find out more about the New Consumer Protection Act visit www.sinkorswim.co.za for seminar dates.

Plain Language – In essence plain language means that you should write documents (advertising or other) in such a manner that it can be understood by the lowest potential target market.

King III Anounced

2009-09-09T23:49:00.000+02:00

“Governance in the past was about board effectiveness, currently it is risk management whilst the future of governance is King III” Lindie Engelbrecht of IODSA (Institute of Directors South Africa).

On the 8th of September Webber Wentzel in association with IODSA gave us a brief overview on the newly launched King III and the methodology and mindset behind creating it. The two most powerful messages, in my humble mind, was the fact that King III has taken an “apply or explain” approach and the fact that we in South Africa will now enter into an “All inclusive stakeholder environment”. The key question is was does this mean.

Apply or explain effectively destroys the “tick the box” concept as was the norm in compliance and governance. This change in mindset from “do or else” is definitely an aim at giving governance a more positive approach. The part that I personally enjoyed the most was the fact that it now forces company officers and directors to actually think about every aspect of King III in their compliance. Thus not comply or explain, but the apply your mind and explain what and how you did it.

It is international standards that all stakeholders in companies are regarded as important in the business. However the shareholders rights come first !!! The New Companies Act changes that all together. All stakeholders are now equal and their rights are protected in line with Constitution and the Bill of Rights.

Overall King III is not only a new international benchmark in corporate governance but also a progressive look at responsible directorship and elevating the position of directors into a more and more professional world.

Fore more information about King III and The New Companies Act please visit www.sinkorswim.co.za