3 obstacles Start-ups face in the first two years – BDO KZN Director

Starting a business and sustaining it is not easy, as anyone runs a thriving legitimate business would attest. The Director of BDO Kwazulu, Hayden Quinn, observes that only two in ten companies usually survive their first two years.
Quinn shares three obstacles that new entreprenuers face when starting and running a business:

1. The first hurdle is registering the entity itself. This is done through the Companies and Intellectual Properties Commission or CIPC. Applicants are well advised to arm themselves with patience and a competent service provider. With luck, it will not be too arduous a task to reserve a company name, appoint directors and allocate the required number of shares. It should be borne in mind that an annual duty is payable to CIPC on the anniversary of a company’s formation and that failure to pay will result in the de-registration of the company.
2. The next hurdle is registering for the holy trinity of taxes, namely Income Tax, PAYE and VAT. Sadly this is seldom an easy task; it’s an administration game, so one should be prepared for paperwork. If all requirements are met, it should be possible to get away with one visit to SARS. For those who get it wrong, the cold hard benches at SARS will become familiar whilst sitting with dozens of others eagerly waiting for their number to be called. It is important to listen to ones service provider and be thoroughly prepared.
3. Registering for UIF and Workmen’s Compensation should be done simultaneously with PAYE. Once again, this is a paper game and relatively straightforward.

Addressing the abovementioned factors only doesn’t not just suffice. The most critical factors the business should focus on are budgets and cash flow projects. This, Quinn argues, when plotted carefully, ensures that a business reaches the finish line ahead of the pack.
In a nutshell, a person can build a business in the following ways: be prepared for hard work and a modest salary; limit sureties in both amount and length; screen customers and ask for upfront deposit and negotiate payment terms in advance; and collect from suppliers on short terms and pay suppliers on long terms.
Many will fall on the race to the finish line – eight out of ten to be exact. However, others have proved that the rewards are out there for those brave enough to start their own business and to proceed with care, diligence, a little flair and a lot of hard work.