NEWSLETTER SEPTEMBER 2014

SERVICES WE OFFER:

· Auditing

· Tax planning

· Due diligence

· Special investigations

· Accounting

· Registration of trusts and companies

· Management and financial advisory services

· Planning and installation of information systems

1

Trading Under Insolvent Circumstances In terms of the Companies Act, 2008, there is a greater risk of directors incurring personal liability arising from actions which contravene the Memorandum of Incorporation (MOI) of a company or contravene the provisions of the Act. In this regard a company must not carry on its business recklessly, with gross negligence, with intent to defraud or trade under insolvent circumstances.

This is generally accepted to mean that a company does not meet the “solvency and liquidity test” criteria. There are many trading companies which are liquid, meaning they can pay their debts as they become due, but not necessarily solvent as defined in the solvency and liquidity test. In terms of Sect 4 of the Companies Act, 2008, there is a solvency and liquidity test. Solvency relates to the assets of the company, fairly valued, being equal or exceeding the liabilities of the company. Liquidity relates to the company being able to pay its debt as they become due in the ordinary course of business for a period of 12 months. The solvency and liquidity test applies to the following:

• financial assistance for the subscription of securities • loans or other financial assistance to directors • distributions to shareholders authorised by the board • capitalisation of shares • company or subsidiary acquiring company’s shares • amalgamations or mergers

Directors (which include board members) are held personally liable to the company for various acts and omissions as set out in Sect 76-77. Section 218 (2) specifies that any person who contravenes any provision of the Companies Act is liable to any other person for any loss or damage suffered as a result of the contravention. A director may be held liable to a company for any loss suffered by the company while trading under insolvent circumstances (Sect 77 (3)) and may also be held liable to any third party who have had dealings with the company and suffered loss as a result of the director’s actions.

If you have any concerns regarding your status as a director of a company, we strongly suggest you seek professional advice in this regard

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2

Why You Should Be Asking Your Clients What They Think There are many strategies for encouraging repeat business and referrals, but this article focusses on one method which, if you do it right, can be very beneficial. This method involves getting feedback from customers or clients. Big companies and brands invest a lot of time and money in understanding their customers’ needs and opinions, but SME’s aren’t so good at getting feedback. This is probably because it is so time consuming. Often we are simply afraid to ask for it, for a variety of reasons. Well, this article should change your mind. Here are five reasons why asking for feedback will be beneficial to your clients.

1. It shows you care - Asking your clients what they thought of your service, and how you can improve, shows that you value their business and want them to come back again. Clients who feel valued are more likely to be loyal, and to encourage their friends to do business with you.

2. It helps you to improve - On the basis that there is always room for improvement,

obtaining constructive feedback enables you to identify areas that need work. The key word here is “constructive” - superficial or rose-tinted feedback is unlikely to be much help.

3. You get testimonials - If you do it right, the feedback should contain some good

testimonials, because what your clients are doing is explaining why they like doing business with you.

4. You can start a dialogue - Whether your system consists of feedback cards, online

surveys or direct interviews, it’s an opportunity to keep in touch with clients and to open a line of communication that might not otherwise exist. Now you have the opportunity to get to know them a bit better, to identify other needs or problems that they may have and to show them how you can help.

5. You learn the language of your client - As you read through your client feedback, it

is unlikely that they will talk about your services in the same way as you do. The reason for this is very important. Whereas most people, when they are describing what they do, tend to speak in terms of the features of their service, your clients will be talking about the benefits that they received from doing business with you. When you learn what those benefits really are, and how to communicate them to your clients and prospects, it becomes easier to sell other services and to charge more for them.

So don’t always assume that business growth must come from new enquiries and expensive marketing strategies. The best opportunities might be right under your nose, you just need to ask!

3

Changing Behaviour by Making Your Ideas Stick

Change is tough. That's why most people resist it at all

costs. So, how do you get people to change an ingrained

behaviour, such as switching from a competitor's product

to yours?

Changing behaviour starts by impressing an idea on

someone's mind and the first step of that process is making

that idea "stick”. But how do you do this?

It's simple: Focus, and start small.

Start small, and communicate clearly

When you're encouraging a customer to switch brands - whether it's their hair shampoo or

motor vehicle - you're asking for the same thing: change. And according to human nature,

the best change is closest to no change at all.

That's why it’s better pushing for small changes over time rather than going after one drastic

change. Why? Because it's easier to ask someone to act similar to how he's acting now than

it is to ask him to act very different.

So create a path that's simple to follow, and communicate clearly. After all, how can people

alter their behaviour when they're not sure why they need to in the first place?

Change one thing at a time

The next step is to focus on changing one behaviour at a time.

For example, Google wanted its employees to eat healthier food. After conducting research,

it noticed that people chose foods located in the front of the cafeteria. Google moved the

salad bar so that it would be the first thing people encountered when they walked into the

room.

Google watched people, developed a strategy, and nudged them toward the behaviour it

desired by making change easy for employees.

For a change to be implemented successfully (to change behaviour), a business must

change the situation.

Connect with consumers

Put your consumers' education, needs, and emotions first. If you tug at your customers'

emotions, their minds will soon follow.

Don't just create a campaign that tells consumers why they need your product; connect on

a level that resonates with them with anecdotes, metaphors, testimonies, and pictures.

Creating change isn't easy. But with these principles guiding your efforts, creating campaigns

that stick with your customers is possible - and simpler than ever.

4

How to Maintain Business Growth

If you have a company that wasn’t founded that long

ago but is on the rise, you can help to keep your success

going with a few careful business practices.

The following tips aim to give you the tools you need to

work toward ongoing success.

The Importance of Good Leadership

Businesses often rise and fall based on the quality of their

leadership and that is why you must strive to be the best

you can be. Build up a good team of people who work

well together, and learn to listen to your team and take

advantage of their skills and experiences.

Brand Reputation

As your business grows, your brand will grow with it. It is very important to make sure you use

the strength of your brand to your advantage in the market. You may want to consider and

rethink the ethos of the brand when you’re developing the business and whether it can grow

in its own way as well. React to consumer feedback and do your best to communicate your

brand to your current and potential client base.

Innovation

Don’t think of your company as simply a source of profit, but as a family aiming to bring

something better to the world. This is the reason why you need to focus on finding talented

employees who share your vision, fine-tuning your team to the point where they can work as

a unified whole. This is a key to the moment when you will have a chance to create

something amazing and improve your profits in the process.

Financial Planning

To handle the growth and expansion of your company you may need to take on more staff

and acquire new stock and equipment. At the same time you will be managing payments to

creditors and chasing up cash from debtors. Many otherwise successful businesses have

failed due to running out of cash. Make sure yours is not one of them by projecting cashflows

up to six months or a year in advance. This will allow you to identify potential problems and

put in place solutions early enough to prevent a crisis.

Should you require assistance in developing a financial plan please contact us for assistance

in this regard.