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Six Important Business Lessons From The Coronavirus Pandemic

08/09/2020 14/05/2021

The coronavirus pandemic arrived like a thunderbolt and the unique situations it created found many companies unprepared and disorganised. Around the world, organisations began closing as it was found their emergency planning was not up to scratch and basic functions of the company could not exist in the new world.

Now that we are half a year into the outbreak some companies are still playing catch up and many will never manage. For those who have survived and even thrived, there are plenty of lessons to take away from COVID-19 that will hopefully change the way we do business and future proof our endeavours for the inevitable coming emergencies.

We discuss six of the most important business lessons we can all benefit from…

“Given the nature of the crisis, all hands should be on deck, all available tools should be used” (Christine Lagarde, President of the European Central Bank)

1.Working from home is possible

Ever since the creation of the internet employees have been pushing for more opportunities to work from home and the vast majority of companies have been resisting it, worried that productivity would plummet or that team culture would suffer. With their hands forced many will now admit that working from home is not only possible but also saves the company money.

Some of the largest businesses in the world are leaning into the trend. Twitter and Square have both notified employees that they may work from home permanently if they choose, while Google and Facebook have extended work-from-home options through to the end of the year.

South African Business and Automation Analyst Grant Buchanan explains, “We are going to see a shift towards shorter and more flexible leases as firms realise they actually require significantly less floor space than before. There will be an emphasis on collaboration spaces and desk sharing and this is going to have an impact on the demand for commercial office space.”

2.Understand your whole supply chain

What the pandemic has made abundantly clear is that businesses do not operate in a vacuum. Your suppliers, in turn, have other suppliers and a disruption to one link in the chain can result in your whole business suffering. It has therefore never been more important to understand just who your suppliers are, how their businesses operate and just what sorts of emergencies may impact them down the line.

Knowing what to expect is half the battle won, as you cannot plan for emergencies you were not expecting. It’s easy to control the issues and items within your own company only to be let down by the actions of others.

Buchanan says it’s important to understand which suppliers you are dependent on for your most critical goods and services. Do you understand how many supply options you have, and do you have plans in place for if they fail to deliver? How capable are your service providers of delivering when they are ill, trade wars kick in, or their key suppliers hit snags? What sort of emergency procedures do they have in place to ensure you will not be negatively affected?

3.Communication and crisis planning is essential

During the scramble of early lockdown a number of companies realised there were flaws in their communication and crisis management systems.

While email works perfectly well in an environment where in-house emergencies can be dealt with on a quick walk across the office, employees at home required other solutions.

Does your company have a way to communicate with all employees quickly and efficiently without relying on email? There are many stories of IT managers breaking curfew to try to fire up servers that had frozen, resulting in significant delays.

The same goes for crisis management. How do you secure your premises and assets? How do you notify your staff? What systems are in place to protect them in the event of a catastrophic incident? And how do you minimise the damage from a future pandemic or related drama?

Leaders need to put plans in place, introduce new technology and train their staff in these new processes before they become necessary.

4.Use the available technology

It’s easy to get caught up using systems that have always been in place. In smaller businesses particularly it’s common to use manual systems for accounting, payroll and other functions, and companies that did this were badly exposed by the virus.

Many smaller, local retailers and restaurants were caught off-guard by the pandemic. Where they should have been at the ready to serve online customers, and provide delivery or curbside pickup to keep afloat, they instead took many months of lost income to get there.

Technological uptake has been phenomenal over the past few months. The need to meet up has seen collaboration apps booming with Zoom experiencing a 1,125% spike, Webex 560%, and Microsoft Teams 108%.

The trick is to take that collaboration app approach across the board, look closely at what solutions are already out there and find innovative ways to use that technology to make your business work away from your desk before the next event strikes.

5.Build relationships with your accountants, bankers and lawyers

Some people only see their accountant, lawyers or bankers during a crisis or tax season but these relationships have recently played an integral part in the survival of many companies.

The COVID-19 business rescue loans were implemented via the banking system, and banks, which are overloaded with applications, are giving first preference to their current customers. Those companies that have a good working relationship with their bankers appear to have more luck with these applications and get them processed faster due the banker’s familiarity with their accounts.

Similarly company accountants and lawyers have been working overtime helping their clients interpret the regulations for obtaining disaster loans and TERS funding, as well as guiding them on seldom-used aspects of business such as suspending rent payments, delaying vendor invoices, and chasing non-paying customers.

“Understanding our clients’ businesses has been integral over the last few months,” says Robin Gerhold of Gerhold & van Wyk Attorneys in Sandton. “Knowing the details of how they operate has allowed us to tailor solutions and secure aid much more easily, efficiently and ultimately, cheaply, than if we were coming in cold without that information”.

6.Broad-based skills are important

The tendency when hiring is to focus on getting in highly-trained niche experts for each position. The pandemic has, however, shown us that the organisations which were able to rethink their business model and pivot quickly had a much better chance of adapting to market conditions and surviving, and these organisations were also full of employees with broad skills, emotional agility and a wide range of competencies.

It is a well-known fact that companies should constantly be innovating, and the pandemic has shown us just why. Being able to shift quickly relies on an employee base of innovative and creative thinkers who are empowered by company culture to take risks and develop new ideas.

According to one of the world’s leading management thinkers and award-winning Harvard Medical School psychologist Susan David, organisations today, “operate within unprecedented complexity resulting from many forces including technology, globalisation, and strong competition. At present, organisations are also feeling the added impact of the COVID-19 crisis. All these pressures require companies to offer swift responses.”

However, she says, “organisations themselves can never be truly agile unless the people who work within them are agile.”

David advises hiring and rewarding out-of-the-box thinkers and supporting those who are risk-takers.

It’s impossible to ignore the difficulties of doing business in 2020. The lessons learnt this year have been hard won, but by putting them into practice, and reaching out for help when we lack the expertise, we can ensure the next set of challenges won’t be our last.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

How Chaos Sparks Business Innovation

08/09/2020 14/05/2021

The greatest innovation is created in times of chaos, when opportunity abounds. Many successful business stories began during times of recession, depression, chaos and crisis, such as Uber, Airbnb, WhatsApp, Slack, Pinterest, Square, Disney, Sony and iPod.

In the midst of the unprecedented chaos created by COVID-19 on a global scale, we have witnessed great and inspiring innovation, as local and global businesses innovate ways to stay relevant in industries completely disrupted, if not shut down, by the pandemic and the lockdown.

Find out how you can innovate in your business and industry with a simple three-step system that can transform a time of chaos into a catapult for creation and innovation...

“All great changes are preceded by chaos. The disruption we see in the world is the prelude to emergence.” (Deepak Chopra)

The greatest innovation is created in times of chaos. Many successful business stories began during times of recession, depression, chaos and crisis. Not paralysed by uncertainty or frightened into inaction, these business leaders and companies used chaos as a catapult for creation and innovation.

This was the message from actuary and innovator Dean Furman at SAICA’s recent complimentary virtual leadership series Leadership in a time of crisis.

Chaos creates opportunity

In a crisis situation such as COVID-19, people and companies’ needs have changed significantly. “Priorities have shifted and the way people and businesses operate on a daily basis has changed, creating endless opportunities for individuals and companies to cater to new needs with new services and solutions, or existing solutions offered in different ways,” says Furman. “And that is precisely why there is always so much opportunity where there is chaos and crisis.”

“In the midst of chaos, there is also opportunity” (Sun Tzu)

Business innovation in a time of chaos

Just some examples of innovations born in times of chaos or depression include Uber and Airbnb, WhatsApp, Slack, Pinterest and Square.

“While Uber and Airbnb, for example, did not necessarily plan on being founded during the Great Recession of 2007/2008, the timing worked in their favour. With so many people looking for extra revenue, it suddenly made sense to turn your car into a taxi, or to rent out your spare room – ideas that may have seemed crazy just a few months or years before.” Other examples of companies or products born in times of chaos include Disney, Sony and iPod.

In the last few months, in the midst of the unprecedented chaos created by COVID-19 on a global scale, we have also witnessed great innovation.

COVID-19-driven innovation

Harvard Business School Working Knowledge provides some recent examples of innovation driven by the pandemic: grocery stores installing plexiglass shields at checkouts, restaurants and groceries expanding to takeout and deliveries; video conferences replacing face-to-face meetings and professional consultations; and employee monitoring software ensuring productivity among teams working from home.

The need to mitigate contagion risk has also driven new products and processes, such as robots that deliver medicines and meals and collect bed sheets and rubbish in hospitals; electronic pre-booking to control customer flow for on-premises businesses; a drone program to drop parcels and spray disinfectant developed by e-commerce giant JD; and “Smart” helmets can identify anyone with fever within a five-meter radius.

Even in industries where digital and automation technologies were uncommon, the crisis led to drastic innovations. Teachers from pre-schools to universities digitised content and delivered it online or via phones. Retailers adopted Amazon’s Just Walk Out technology to eliminate the need for checkout. Galleries, cinemas, concert halls, independent musicians and artists found ways to create, perform and connect with their audiences through online platforms.

And out of Africa…

“There is always something new out of Africa” (Pliny the Elder)

Innovations by African businesses and individuals also abound. Earlier this year, the World Health Organisation (WHO) in the African Region hosted the first in a series of virtual sessions for innovators across the region to showcase home-grown creative solutions aimed at addressing critical gaps in the response to COVID-19. Eight innovators from Ghana, South Africa, Nigeria, Guinea and Kenya presented their pioneering solutions, all of which have already been implemented in their respective countries, with significant potential to be scaled up further across the region. The innovations ranged from interactive public transport contact tracing apps and dynamic data analytics systems to rapid diagnostic testing kits, mobile testing booths and low-cost critical care beds.

Locally, a Vodacom and Discovery partnership has made free COVID-19 Online Doctor Consultations available to all South Africans. To meet the demand for alcohol-based sanitiser, South African Breweries (SAB) adapted its operations; Sasol developed a new unique blend of alcohol-based chemicals to be used in manufacturing of hand sanitisers; and L’Oréal South Africa began producing hand sanitisers under its natural beauty brand Garnier.

Further local innovations range from virtual wine tastings and game drives, and restaurants that deliver all the ingredients so customers can make their favourite cuisine at home, to local craft markets gone virtual and digital yoga, dance and art lessons.

How to innovate – a three-step system

It is inspiring to read how businesses are innovating ways to stay relevant in industries completely disrupted, if not shut down, by the pandemic and lockdown.

But how do you innovate in your business and industry? Furman provides a three-step system to innovation –

Focus on your clients – meet their changed needs, make their lives better and listen to them.
Challenge the way you do things – develop new products or services, and offer existing services in new ways
Explore the world around you for new possibilities – including the many new enabling technologies that can digitally update old ways of doing things and even extend your client-base globally.

As countless companies have proven before, the chaos of a crisis such as COVID-19 can be a catapult for creation and innovation.

“Just like a catapult, the more you get pulled back, the further and faster you can go forward,” says Furman. “When chaos happens, spend time thinking how it can be used as an opportunity for growth and innovation. This is your time to move forward.”

Protecting your Company’s Reputation When Staff Work from Home

11/08/2020 14/05/2021

The number of staff working from home has surged with the lockdown, and many office-based employers now plan to keep most or all of their employees working remotely for the long term. There are of course many advantages to allowing those staff members who can work effectively from their own home offices to do so, but be aware also of the business risks that this “new normal” exposes your company to.

One of these is the increased risk of reputational harm to your business, particularly whilst the pandemic and its economic fallout continue to threaten staff morale and uncertainty is the watchword of the day. We analyse those risks and suggest some positive steps you can take to address them.

“It takes a lifetime to build a good reputation, but you can lose it in a minute” (Will Rogers)

Whilst many employees enjoy working from home, this is a time of uncertainty for them. They read of people being retrenched or furloughed and wonder if they are next. The isolation of working from home can fuel this uncertainty.

Yet it is these employees who daily interact with customers and other stakeholders. If staff have negative feelings about the company, this can be quickly picked up by customers. Social media can spread this quickly and suddenly management have to start undertaking damage control. Recently, an English business decided to not pay staff until the government’s wage subsidy kicked in. Following an outcry, management swiftly reversed this and paid the staff.

Contrast this with Quickbooks who kept their cleaning staff on full pay despite empty offices. L’Oreal have made a point of paying small suppliers quicker than usual.

Don’t think short term

The decisions you make send out signals to your staff and they are much more likely to view you favourably if you are showing fairness to your stakeholders.

Think also of your investors – they tend to support businesses where carefully considered long-term decisions are made by management. Don’t forget having a holistic outlook and making the environmental, social and governance (ESG) criteria part of your strategies.

Communicate effectively

In a recent case, staff supported management putting them on furlough after they were persuaded by management that this was the best long-term strategy to preserve jobs in the business.

Staff are more motivated if they know they have commitment and active support from their bosses.

IBM have started a program of supporting employees who need to take out time to educate their children or look after family members. They have also encouraged their staff to raise any individual difficulties they have with their managers. Introducing this type of flexibility makes managers’ jobs harder to do and IBM have created separate online chat channels for managers to network with their peers and find solutions to employees’ problems.

Other companies with diversity in the workplace have openly supported Black Lives Matter and have made sure that when there are pay cuts or retrenchments, there is no discrimination against minorities.

The world has changed and become more uncertain and more flexible. You need to plan carefully and act to ensure you stay on top of the situation and keep the support of your staff.

Tips for Managing your Staff Working from Home

21/05/2020 14/05/2021

One of our new realities in this topsy-turvy world of global crisis is the many businesses that have had to close their offices and work remotely.

The resultant explosion in the number of people working from their home environments brings with it many serious challenges for businesses. Fortunately however there is a lot of guidance available on how to maintain high levels of morale, loyalty and productivity amongst your work-from-home employees.

For example, researchers at Harvard University have identified five main areas as key to achieving the best possible results from a remote working situation. Read on for some thoughts on them…

In this brave new world of COVID-19, many people are working from home. Even after there is a cure for the virus, this trend will likely continue.

Researchers at Harvard University have come up with some good ways to ensure you get maximum productivity and loyalty from your employees working remotely.

Key points

Both managers and staff miss face to face meetings – managers worry how effectively their people are working and employees miss the support and guidance they get from managers.

Managers should introduce structure and discipline into their interactions with their staff – setting up a time each day (or whatever is needed) to connect to each other and, possibly, the team the employee is in. This can cover all the employee’s and team’s work requirements, bringing them up to date with events in the company. Not only does this improve productivity but it increases staff morale and loyalty.

Access to information can become difficult between staff members – for example, a relatively new employee asks a staff member for information who initially ignores the request until the new staff person starts sending out more aggressive emails.

Managers need to be aware of this type of conflict and focus on new employees to iron out any potential difficulties.

Employees get lonely and can over time feel they’ve been cut adrift which is bad for their stress levels and can lead to a drop in productivity.

If managers don’t have good listening skills and empathy, then they need to add these to their armoury and be on the lookout for loneliness manifesting in people who report to them. In the initial stages, it may pay to also have Human Resources contact employees working remotely.

Home distractions. Working from home can lead to distractions of members of staff by spouses and family.

The company needs to ensure that the employee has the required technology and IT security in his or her home. Having a separate office in their homes is also important.

Staff need time to catch up with their colleagues’ personal lives and the manager should allow time for this when there are video calls. This will reinforce that employees belong to and are part of a team.

There is much to learn in terms of skills and keeping staff morale and productivity at high levels, when employees work from home.

Logista Gerat vir die Toekoms

21/05/2020 14/05/2021

Promosie

Jacques Coetzee, besturende direkteur van Logista, en Heinrich Regenass, direkteur, die bestuurspan by Logista is gerat vir die veranderinge wat die vierde industriele revolusie meebring. (Foto: Jeanie de Klerk/Verskaf.)

Die vierde industriële revolusie (4IR) bring baie veranderinge mee. Sommige bedrywe soos die finansiële bedryf, kan heeltemal vernuwe word en baie beroepe wat ons vandag nog ken, sal wegval terwyl nuwe geleenthede weer geskep sal word.

Die bestuur van Logista, ’n suksesvolle ouditeursfirma in Pretoria-Oos, is egter nie bekommerd oor die veranderinge wat dié nuwe era inhou nie.

“Ons maak gereed vir die behoeftes van die volgende generasie,” sê Heinrich Regenass. Hy is tans die besturende direkteur van Logista, maar gee binnekort die leisels oor aan Jacques Coetzee wat tans een van die direkteure is.

“Dit is tyd om plek te maak vir iemand met vars nuwe idees.”

Regenass meen dié besluit is nie ligtelik gemaak nie.

“Ons is reeds vir meer as twee jaar besig met opvolgbeplanning en het vir Jacques stelselmatig voorberei om sy pos vol te staan as nuwe besturende direkteur.” Hy glo die besluit demonstreer die firma se toegewydheid aan innovasie en verandering. “Ons wil uiteindelik ’n firma ontwikkel wat steeds in die toekoms relevant is, daarom is ’n goeie opvolgplan deel van ons strategie om as firma volhoubaar te bly.”

Heinrich Regenass, voormalige bestuurende direkteur van Logista is reg om bietjie meer gholf te speel en fiets te ry, alhoewel hy steeds nou betrokke by die firma gaan wees. (Foto: Jeanie de Klerk/Verskaf.)

Coetzee prys Regenass vir sy bydrae tot die firma se sukses.

“Hy is ’n baie goeie leier en het die firma reeds so geposisioneer dat ons die besigheid, gegrond op integriteit en vertroue, verder kan bou.”

Regenass gaan gelukkig nie die firma verlaat nie, en bly steeds aan as ’n mentor vir Coetzee.

“Ek sal seker so ’n bietjie meer gholf speel en fietsry, maar ek wil graag steeds deel wees van die firma en Coetzee verder bystaan.” Hy sal ook nog die bestaande lojale kliënte soos altyd met goeie raad bedien.

Regenass en Coetzee is dit eens: hulle is nie bang vir die uitdagings wat die vierde revolusie inhou nie.

“Die sleutel tot sukses is die vlak van aanpasbaarheid wat ’n besigheid kan handhaaf,” sê Regenass. “Ons wil deel wees van die era waar tegnologie ’n groter rol speel. Ek glo mense se vaardighede gaan altyd nodig wees om stelsels doeltreffend te bestuur – dit is die insameling van inligting en bestuur van data wat belangriker gaan word, maar syfers en data beteken niks as ’n kundige dit nie kan ontleed nie.”

Regenass glo Coetzee se internasionale ondervinding in die bedryf sal handig te pas kom in sy nuwe pos.

“Dit is vir ons belangrik aangesien Logista reeds ’n lid is van BKR International, ’n wêreldwye organisasie van onafhanklike rekeningkundiges en besigheidsadviseurs. Ons wil ook graag ons mark verder uitbrei en ons vlerke sprei.”

Die firma is bekend vir die persoonlike aandag wat hul kliënte ontvang en die hoë gehalte professionele dienste wat hulle aanbied. Logista het oor die jare ’n aanpasbare struktuur van gespesialiseerde kennis saamgestel wat dit maklik maak vir hulle om kliënte se spesifieke behoeftes te vervul.

Die organisasie het in twee dekades soveel gegroei dat hulle tans een van die markleiers in die bedryf is en hulle spog met ŉ lang lys van tevrede kliënte in verskeie sektore. Logista se bestuursmodel bestaan uit sewe direkteure wat deur sowat sestig tegniese, en administratiewe personeel ondersteun word.

Jacques Coetzee, nuwe besturende direkteur van Logista, sien uit daarna om die firma na nuwe hoogtes te neem. (Foto: Jeanie de Klerk/Verskaf.)

Coetzee sien uit daarna om Regenass se skoene vol te staan.

“Ek wil graag voortbou op dit wat hy reeds tot stand gebring het. Ons wil graag markleiers bly en steeds aanpas by die besigheidswêreld wat so vinnig verander. Met al die nuwe verwikkelinge kom nuwe uitdagings, maar ook nuwe geleenthede. Ons is voortdurend op soek na maniere om die uitdagings in geleenthede te omskep. Ek is bly om steeds te kan leer by een van die bestes. Iemand wat uit die boks kan dink en nie bang is om te innoveer nie.”

Coetzee is oortuig daarvan dat Logista vir die toekoms gerat is. “Ons gaan nog lank hier wees.”

Logista great for the future

Promotion

The Fourth Industrial Revolution (4IR) brings with it many changes. Some industries, like the financial industry, can be completely renewed and many careers we still know today will fall away as new opportunities are again created.

However, the management of Logista, a successful auditing firm in Pretoria East, are not worried about the changes that this new era will bring.

“We are gearing up for the needs of the next generation,” says Heinrich Regenass. He is currently Managing Director of Logista, but will soon give over to Jacques Coetzee, who is currently one of the directors.

“It’s time to make room for someone with fresh, new ideas.”

Regenass said the decision was not made lightly.

“We have been doing succession planning for more than two years and have systematically been preparing Jacques for his position as the new managing director.” He believes the decision demonstrates the firm’s commitment to innovation and change. “We ultimately want to develop a firm that is still relevant in the future. That is why a good succession plan is part of our strategy to remain sustainable as a firm.”

Coetzee praises Regenass for his contribution to the firm’s success.

“He is a very good leader and has already positioned the firm so that we can continue to build the business, based on integrity and trust.”

Fortunately, Regenass will not leave the firm and will continue as a mentor for Coetzee.

“I will probably play a little more golf and cycle more, but I still want to be part of the firm and continue to assist Coetzee.” He will also continue to provide existing loyal clients with sound advice.

Regenass and Coetzee agree: they are not afraid of the challenges of the Fourth Revolution.

“The key to success is the level of adaptability a business can maintain,” says Regenass. “We want to be part of the era where technology is playing a bigger role. I believe people’s skills will always be needed to manage systems effectively – it’s the collection of information and data management that will become more important, but figures and data mean nothing if an expert can’t analyse it.”

Regenass believes Coetzee’s international industry experience will come in handy in his new position.

“This is important to us, seeing as Logista is already a member of BKR International, a global organisation of independent accountants and business advisors. We also want to expand our market further and spread our wings. ”

The firm is known for the personal attention their clients receive and the high-quality professional services they offer. Over the years, Logista has put together a customisable structure of specialised knowledge that makes it easy for them to meet customer-specific needs.

The organisation has grown so much in two decades that they are currently one of the market leaders in the industry and boast a long list of satisfied customers in various sectors. Logista’s management model consists of seven directors supported by around sixty technical and administrative staff.

Coetzee looks forward to filling Regenass’s shoes.

“I would like to build on what he has already achieved. We want to remain market leaders and continue to adapt to the rapidly changing business world. With all the new developments come new challenges, but also new opportunities. We are constantly looking for ways to turn the challenges into opportunities. I am happy to continue to learn from one of the best, someone who can think outside of the box and is not afraid to innovate. ”

Coetzee is convinced that Logista is geared for the future. “We’re going to be here for a long time.”

COVID-19 Lockdown: Relief Programs for Businesses and SMMEs

17/04/2020 14/05/2021

The National Lockdown, due to end on 16 April, presents businesses of all sizes with an unprecedented set of existential challenges.

Of course sooner or later this crisis will end, but for now it is a case of survival for many businesses, and particularly for those smaller enterprises forced now to close for 21 days.

Don’t despair, help is at hand! We list the various relief initiatives announced to date. The list will change, as will the details of and processes for accessing each initiative, but be aware of, and take advantage of, the assistance that is out there – or will be out there shortly.

The President, telling the nation that “We will prioritise the lives and livelihoods of our people above all else, and will use all of the measures that are within our power to protect them from the economic consequences of this pandemic”, has announced a variety of initiatives to assist SMMEs (Small, Medium and Micro-Enterprises) that will need assistance in surviving the three week lockdown and economic disruptions flowing from the COVID-19 coronavirus.

Please note these are new initiatives, so expect delays, changes to schemes, new proposals and differing interpretations. Everyone’s patience will be tested!

Some of the announced measures discussed below still need to be enacted and may be different when they are finalized. Expect ongoing changes and keep Googling for ongoing lists of proposed and implemented avenues of business relief.

1^st: UIF Money

The UIF has an estimated surplus of R180 billion and this is the logical first port of call when looking at incentives, especially as money given by the UIF is not a loan, and thus doesn’t have to be repaid. There are two routes to access this money – using the traditional UIF method (National Disaster Benefit) or making use of the new Temporary Employer/Employee Relief Scheme (TERS) which is discussed below.

For either method, the employer must be registered with the UIF and be making monthly contributions. If you are behind on contributions, you can pay in any backlog you have.

National Disaster Benefit

Temporary shut down
If the employer temporarily shuts down the business, then the UIF will pay out R3 500 per employee per month for up to three months.
- Requirements:
  - A letter from the employer confirming the operation is temporarily closing down due to the coronavirus
  - A copy of the employee’s ID
- Forms to be Completed:
  - UI19 and UI12.7 (employer to complete)
  - 1 – application form
  - 8 – Confirmation of bank account

Reduced work time
The payout is the difference between what the employer pays and UIF benefits.
- Forms to be Completed:
  - UI19 and UI2.7 (completed by Employer)
  - UI 2.1 (application)
  - UI 2.8 (bank form completed by the bank)
  - A letter from the Employer confirming Reduced Work Time is due to the coronavirus
  - Copy of ID document

Quarantine and illness
In cases where employees are put in isolation for 14 days or more.
- Requirements:
  - Letters from the employer and employee that the person is in quarantine. No medical certificate is needed
  - If the quarantine is longer than 14 days, a certificate is required from the employee’s doctor, along with the form UI3
- Forms to be Completed:
  - UI19 and UI2.7 (completed by Employer)
  - 2 (a portion of which is completed by the Doctor)
  - UI 2.8 (bank form completed by the bank)
  - Copy of ID document

Death benefits
If the employee dies, the UIF will pay the funds to beneficiaries.
- Forms to be Completed:
  - UI19 and UI 53 (completed by the Employer)
  - UI 2.5 or UI2.6 (deceased application)
  - Death Certificate
  - ID of deceased and applicant
  - UI 2.8 (bank form completed by the bank)
  - Copy of ID document

You can also download the UIF’s “Easy-Aid Guide for Employers” here.

Temporary Employee/Employer Relief Scheme (TERS)

This applies to businesses who temporarily shut down – a three-month period is envisioned but this could be extended. The UIF then pays salaries to all staff, based on the current UIF pay outs – a maximum of R6 731 p.m. for staff earning R17 162 or more down to the minimum wage of R3 500.

There is quite a bit of documentation here – send an email to Covid19ters@labour.gov.za and you will get the forms to be completed and other requirements needed.

A Memorandum of Agreement is signed and the employer submits (in the required format) a spreadsheet of employee details and salary, proof of payment of the last 3 months’ salaries, bank confirmation of the applicable bank account.

You will need to open a separate bank account for this and prove each month that all staff have been paid.

There is quite a bit of work here and getting the forms accurate will prevent delays in payment.

Which of the two schemes to choose from depends on your business – there is some crossover, for example, quarantined employees can claim under the National Disaster Benefit (see Quarantine and Illness). On the face of it, TERS looks more lucrative but it is very admin intensive in setting up, and as a new scheme it may be subject to teething problems. Ask your accountant for advice in doubt.

2^nd: The Department of Small Business Development (DSBD)

R500 million has been set aside to help SMMEs due to the impact of the coronavirus. The money will be in the form of loans at prime less 5%. Assistance falls into two categories:

Business Growth/ Resilience Facility: This applies to businesses whose products are aligned to helping to combat the pandemic. Examples are making hand sanitisers, medical protective clothing, medical supplies etc. SMME logistics companies may also apply for funding.Funding will cover bridging finance, asset finance, stock and working capital needs.
Debt Relief Fund: Companies will need to show how the coronavirus has impacted on their business. The relief focuses on purchase of stock and other operating needs. Funds will be released based on the company’s cash flow requirements.

The starting point is to register on the DSBD’s portal (www.smmesa.gov.za) – the registration entails staff breakdown between males and females, the number of youth employees and racial classification of staff. There is also a section on who owns the business and annual turnover. The business needs to be 100% South African owned and the work force is to be 70% local.

The DSBD is setting up an SMME database which will be used in future interventions.

Once registered follow the application process which opens on 2 April. How much each business gets is still unclear.

Call the DSBD’s hotline 0860 663 7867 or email info@dsbd.gov.za to check what kind of government support you qualify for.

3^rd: Department of Trade and Industry

R3 billion assistance has been set aside with a main focus on providing funding to “vulnerable” businesses and to provide financing help to companies involved in the battle to roll back the coronavirus. It’s not that dissimilar to the DSBD’s approach but it serves all business, not just SMMEs. Of the R3 billion, R500 million will be for importing needed medical products and R700 million will be for financing equipment and working capital requirements. Guidelines as to how to apply are forthcoming.

4^th: The Solidarity Fund

This has been set up with R150 million from the government (www.solidarityfund.co.za) and it is designed to help stop and detect the virus, look after the people with it, plus help those people who are vulnerable as a result of the coronavirus. Mary Oppenheimer has pledged R1 billion to this fund and Naspers has committed R500 million.

You may wish to donate to the fund or apply for help for struggling staff members.

5^th: Private and Corporate Funds

The Rupert and Oppenheimer families and the Motsepe Foundation, have each pledged R1 billion. Motsepe’s money will go towards helping poor communities fight the coronavirus by supplying them with hand sanitisers etc. The Ruperts’ and Oppenheimers’ funds will be to help struggling small businesses and employees, as a result of the coronavirus. In addition, Naspers has pledged R1.5 billion (in addition to the R500 million to the Solidarity Fund) to source medical supplies and protective equipment, from China, for health care workers. .

The Rupert funds will be disbursed by Business Partners and application forms will soon be released – although details are not yet available, the money will be a loan.

The Oppenheimer money will be paid out from the “South Africa Future Trust” through the major four banks in the form of a five-year interest free loan – for details see SAFT’s website. SMMEs will apply to their bank which will then pay salaries directly into employees’ bank accounts. No liability will be incurred by employees – the business will be liable for repayment. Speak to your bank manager for how to apply – the system begins operating on 3 April.

Details on the Motsepe and Naspers disbursements are still outstanding.

6^th: SARS Relief Measures

The Employment Tax Incentive (ETI) has been extended to include all staff earning less than R6 500 per month from ages 18 to 65 – they will qualify for an additional R500 per month which can be claimed via the monthly PAYE return.

All staff members currently receiving ETI benefits will get an additional R500 per month.

These measures will apply for four months from April to July this year. The ETI has been paying out twice a year but this will now be monthly.

Tax compliant companies with turnover of less than R50 million will be able to hold back 20% of their PAYE payments and a portion of their provisional tax payments, as follows:
- The business must be tax compliant and using eFiling.
- PAYE returns due May 7, June 7, July 7 and August 7, you only pay 80% of your PAYE liability
- From September 7 and for the next five PAYE returns, the 20% reduction is to be paid back in equal amounts e.g. if you received a R30 000 reduction in PAYE for the months April to July, then you will repay an additional R5 000 each month on your PAYE return.
- Provisional Tax payments due from April 1 to September 30:
  - The first payment at 15% of the estimated tax liability
  - The second payment at 65% of estimated tax liability (i.e. 50% is due on the second payment)
  - In your top up payment you will be required to pay your full tax liability.

Note: the above applies to companies – measures for individuals will be announced later.

7^th: Competition Act amendments re banks and retail tenants

The Competition Act has been amended to allow banks to work together to come up with solutions to help indebted companies and people. The major banks have announced cash flow relief measures – these will have to be repaid. Speak to your bank for more details and see a summary of bank-by-bank relief as announced to date here.

The Competition Act has also been relaxed to allow retail tenants to get together and present a unified negotiating position to landlords in the areas of evictions, rental discounts and rental “holidays”. This is already happening with “active” negotiation and demands between retail landlords and tenants.

8^th: Tourism sector relief

A R200 million fund has been set up to help SMMEs in the tourism sector (Read “COVID-19 interventions for the tourism sector” here).

It applies to SMMEs with R2.5 Million or less. 70% of pay outs will be to Black owned Businesses with a bias towards rural areas.

9^th: Other

The CIPC have extended the deadline for submission of the Annual Return, if you are required to submit during the lockdown process to April 30.

Government is considering suspending employers and employees UIF contributions and employer payments to the Skills Development Fund.

To date most businesses are reportedly finding that Business Interruption Insurance claims are not being considered by insurance companies.

Expect more initiatives to emerge as we move deeper into the coronavirus crisis. How much these measures will cushion the shock to the economy is unknown. They are, considering how little fiscal space there is, a creative and welcome attempt to help business and people affected by the lockdown and other restrictions. Nevertheless, the economy is virtually certain to enter a deep recession, particularly following the downgrade by Moody’s on March 27.

Remember we are facing desperate times and the nation, led by President Ramaphosa, has shown courage and determination in facing down the coronavirus.

Directors: Be Careful, You Will Be Held More Accountable In 2020

13/02/2020 14/05/2021

Being a company director (or a senior manager) comes with onerous duties and risks which require constant management.

And 2020 is shaping up to be a year in which you will find yourself under increasing scrutiny, with the NPA now showing a distinct appetite for charging delinquent directors criminally, and with the ongoing risk of personal liability and class actions by trade unions and other stakeholders.

We discuss the standards to which you are held by the Companies Act and remind you of several specific and growing risk areas, not all of them immediately obvious but all of them important.

The past few years have seen scandals emerging in both the private and public sectors. Steinhoff, State Capture, Eskom, the Guptas and Bosasa, to name a few, have revealed how endemic corruption has become in South Africa.

The National Prosecuting Authority (NPA) is now beginning to charge those who have been involved in these scandals. This has been greeted with relief by the public, who have become increasingly frustrated that perpetrators have appeared to have escaped from accountability for their actions.

Clearly, the directors and senior managers of these affected entities are being scrutinised and face potential prosecution.

Your obligations and your risks

The Companies Act places onerous obligations on directors and senior managers who are to perform their duties:

Having the necessary skills and experience to make informed, independent decisions,
Keeping themselves up to date on the plans and activities of the company,
Having sufficient data to make carefully considered and impartial recommendations to all issues raised at directors’ meetings, and
With no conflicts of interest. If a director has a conflict or potential conflict, then that director(s) shall make full disclosure of the conflict to fellow board members.

Failure to adhere to these standards opens directors to the possibility of being liable for any damages or losses incurred. In certain instances they face the potential to be held criminally liable and directors who transgress by failing to meet their obligations can also be disbarred as directors either permanently or on a short-term basis.

Additionally stakeholders, such as unions, may undertake class action against directors personally.

Other danger areas

Now that all directors are under increasing scrutiny, you also need to bear in mind issues such as your company causing environmental damage, trading in insolvent circumstances (for example SAA directors face potential litigation here), failing to ensure your business is protected against hackers, poor accounting policies and being party to the company suffering reputational damage which leads to a collapse in the share price (Tongaat directors risk exposure to this).

As a director, remember you are in the public’s and the NPA’s sights. Be extra careful that you execute your duties in line with the dictates of the Companies Act.

If in doubt, use your accountant as a sounding board and advisor.

Small Businesses: How to Survive and Thrive

13/02/2020 14/05/2021

SMMEs (Small, Medium and Micro-Enterprises) play an integral role in our economy, and it is alarming therefore to read recent research showing that a massive 70% – 80% of South African small businesses fail within five years.

Why the high failure rate? What factors contribute to the success or failure of small businesses? Why are some entrepreneurs more successful than others, and what characteristics should you have (or develop) to maximise your own chances of success? What can government contribute?

Read on for the answers to these questions and more…

“Why do approximately 70% – 80% of small businesses fail within five years? Why are certain entrepreneurs more successful than others?” (Extract from UWC article below)

Recent research by the University of the Western Cape on the rate of failure of small businesses makes for interesting reading and provides insights that we all really need to take on board, particularly in these hard economic times.

SMMEs, their importance and their failure rates
Globally 60 to 70% of jobs are found in SMMEs (Small, Medium and Micro-Enterprises) but in South Africa this figure is only just over 28% despite more than 95% of businesses in South Africa being SMMEs.

South Africa has a higher failure rate of SMMEs than elsewhere in the world (70% – 80% of our small businesses fail within 5 years). In previously disadvantaged communities only 1% of businesses progress from employing less than 5 people to having staff of 10 or more.

6 factors that can make or break an SMME business
The research indicates that in terms of success factors, 40% can be attributed to the entrepreneur. The characteristics of this person are crucial and they need to show:

Persistence, being proactive and being a self-starter,
That they do not react to events but are continually planning (good planning is an important success indicator), innovating, having an ability to learn and apply this learning and having a culture of achievement.

The factors contributing to failure are ones we are aware of:

Lack of skills – government and large corporates snap up almost all of South Africa’s limited skills,
Difficulty in accessing finance – lending institutions require a track record before providing funding to businesses,
Poor accounting records and limited information systems,
Late payment by state institutions and large corporates (Kenya is considering passing legislation that compels paying SMMEs on time).

There are others too like corruption crowding out legitimate SMMEs and low bargaining power.

Entrepreneurs – what can you do?
Have a look at the 6 factors listed above. Maximise the positives, and do something about the problem areas. Remember, your accountant is there to help you succeed so don’t be shy to ask for advice.

What can government do?
Clearly the country is missing a sizeable opportunity to grow the economy and to reduce our 27% unemployment rate.

One way to get this going is through mentoring and training. Government programs are having a limited impact and there is space for business to also play its part. Why not interview some SMME owners and determine if they have the characteristics as shown above? Those that have the attributes can be successfully mentored to get good accounting records and systems, skills can be addressed as well as access to finance.