business – praag.org

How to accelerate your business during the crisis

The SARS-CoV-19 virus has changed the world. Millions are unemployed, a global recession is fast approaching, and our parks and playgrounds once teeming with life and laughter have been abandoned and forgotten. One wonders whether the world can return to how it formerly was this scourge is rooted out. And, as the virus is indiscriminate in who it affects, it will be no surprise then that we tell you that the world of business has also been affected, in fact, some may say the world of business has been affected worst of all.

This page will tell you how you can accelerate your business during this global health crisis and how you can remedy the damage caused by the SARS-CoV-19 virus. By following the strategies set forward on this page, you will be able to salvage what’s left of your business and take it to new heights.

Here is how to accelerate your business during a crisis.

Strategic Planning and Forecasting

Forecasting and planning are crucial elements of any post-COVID recovery plan. Globally, businesses are being closed left, right, and center, which for some businesses who can withstand the brunt of the social distancing restrictions and lack of income, can be very good. If you are the only business in your market still functioning – when things begin to recover you will be in the best position imaginable. Planning and forecasting for this are crucial. You can do this by hiring a professional strategist or forecaster, or by cutting costs and making use of a business simulation, which is an application that will develop projections and strategies for you. These projections and strategies can be of great benefit and can aid you in helping your business to recover from the virus’s financial implications.

Marketing

There are a few ways that you can market your business now with great success. As has been mentioned, we are on the verge of economic collapse; because of this, many are unemployed, and many more are furloughed. Those unemployed and furloughed, a large percentage of them at least, are sitting around at home searching for jobs and idly browsing social media. You can use this to your advantage. Social media is a very powerful tool for business marketing, and now, with billions using it at one time, you can market your brand directly to your key demographic. They may not be able to make purchases immediately [financial collapse considered], but they will still be able to follow you and keep you in mind. You can also use social media influencers to your advantage.

Staff Training

Sales are, without a shadow of a doubt, the lifeblood of your company. If you are not making sales you will unfortunately not last very long. Making sales at the moment may be difficult, but with the right tactics, is not impossible. You may only be able to make enough to keep you afloat – but at the moment that’s all that matters. The training offered now will ensure that when things do return to normal that your staff will be better equipped to go out and make sales, thereby improving your company and improving your body of staff. There are multiple ways for you to train your staff at the moment, but it is important to consider that because of social distancing guidelines imposed upon us by our governments, we are unable to meet up physically, which means training exercises must be managed online, rather than in person. You can try roleplaying; one-to-ones; pitch exercises; peer coaching, and sales exercises.

Undercutting Competition

Ordinarily, in a business environment undercutting is frowned upon. However, at this time when businesses are all trying to stay afloat, undercutting your competition could serve as the best way to accelerate your business and drive your competition out of business. It is not a moral practice, admittedly, but it is one that will keep food on your table, and the tables of your employees, and when the virus does fade into obscurity and all of this is just a nightmare long gone, you will still rule your market and your business will be in a great position.

Expand

Expansion into areas that may be developing – or areas of business that may be hot right now [such as the sale of PPE], can be a great way to accelerate your business. If the financial complications of the virus have not touched you, then this may well be an option for you to consider. Expansion and growth mean acceleration.

With the help of this page, you should now know a few ways for you to accelerate your business during these troubling times. The crisis will not [hopefully] last forever, so it is important that you just get through the coming months. Good luck and stay strong – this will all be over before we know it.

How to improve your chances of getting approved for a business loan

Running a business requires a lot, and it can be challenging. But, one thing all business owners want is to see their business grow. To see the business succeed, which can help generate sustainable profit that is stable enough to keep the business afloat, meet customer needs and have the financial capacity to pay healthy salaries to all their employees.

The journey to get to a point where your business brings in more than it takes out is not one without challenges. It requires effort and, most importantly, money. But the amount of money you need may not be easily accessible.

This puts business owners in a desperate position, where they need to seek financial assistance to put towards working capital, purchases of equipment, inventory, operation expenses and more. This is where a business loan comes in and can be helpful. It’s designed to provide you, as a business owner, the funds you need to start working towards your business goals.

With that said, business loans are not simply readily available to every business owner. There are specific criteria that lenders need you to meet before being pre-selected for a loan.

To ensure that you meet these requirements, below we’ll answer your most burning question, “what do banks look for when applying for a business loan?” We will also discuss tips to help you increase your chances of loan approval. This guide will have you prepared for the process in no time.

Check your business’s credit score

One of the first things lenders will do when considering providing credit to anyone is to perform a credit history check. The same applies when seeking business finance; they may require both your business and personal credit reports. The reason for this is because they need to learn about your repayment history. The minimum credit score required to qualify for the loan is dependent on each lender’s loan policy.

So, the first thing you’d need to do is check your credit history to find out where you stand. Read through the reports to ensure that there are no errors that you may need to rectify or dispute. Doing this will help you improve your credit score before you start the loan application process.

Have consistent cash flow

Lenders won’t have much confidence in your ability to pay back the loan if your balance sheet is inconsistent and has a lot of negative balance days. A consistent cash flow paints a clear picture of your ability to repay the loan while also covering all of your business expenses.

Have all of your financial statements ready

A registered credit provider wants to see all of your business financial statements, including past and current ones. It’s therefore vital to carefully study them to ensure that everything is accurate and aligns with the past and current business performance. Moreover, you should have a clear understanding of what the numbers on the statement mean. You need to be able to answer any questions related to your business, such as turnover, profit margins, cash flow forecasts and more.

Avoid getting multiple quotes from several lenders

Connecting with different lenders to get a quote sounds like a sensible thing to do. However, this could hurt your credit score, particularly if you don’t already have a great rating. This is because some lenders make a hard inquiry when checking your credit score.

Unlike a soft inquiry, a hard inquiry plays a huge role in your credit rating and can only be removed after two years. A hard inquiry refers to an action where lenders ask for your credit report file to thoroughly go through your credit history to determine exactly how much of a risk you pose as a borrower.

Your best option is to choose a lender that has your best interest in mind. You can assess this in their processes. For example, WesBank offers business asset finance to businesses looking to secure commercial vehicles. But their approach to this is specifically customised to meet your needs. They ensure to get structured terms that take your requirements into account. Overall, this provides you with a clear idea of how they navigate lending for businesses.

While you can explore different lenders through research to learn about their offering and what options align with what you need, you will need to narrow them down to a considerable few to ensure that you do not risk a fall on your credit score.

Have collateral leverage

Lenders are taking a risk by offering you credit, and to build their trust for worst-case scenarios, you may have to offer up collateral.

Collateral is any valuable business asset that can be sold to the lender to pay up the loan if or when the worst-case situation reveals itself. It could be anything from business equipment, inventory, vehicles, account receivables or a personal house. But you must completely understand what you’re getting yourself into when you offer collateral. If you default on loan repayment, you’re risking losing an asset.

Final thoughts

We hope that the above guide will help you maximise your chances of getting approved for a business loan. Once your documents are in order, consult lenders and discuss your options. When you’re ready to apply for a business loan, ensure that you know how the whole process works from start to completion. Additionally, learn about the repayment terms and conditions, specifically how long your term is to adequately prepare for the repayments. Try not to default on your repayments; otherwise, you risk losing assets you’ve put up as collateral.

China comes to the Free State

The Free State province in South Africa aims to hold China Week in April with the intention of strengthening business relations and to draw more investment opportunities into the province.

Spokesperson Makalo Mohale says China is well advanced in terms of technology and business growth and by having strong associations with them can lead to a positive economic influence on the province.

The provincial is set to spend R7million on the week long programme, which will be on April the 13th until the 19th.

Mohale says more than 500 Chinese delegates will be in the province during that period.

Detroit bankruptcy: a cocktail of white flight and black corruption

A house in Detroit, mirroring the black city's decay — A house in Detroit, mirroring the black city’s decay

by Tom Krishner and Dee-Ann Durbin

The city of Detroit, which for years paid its bills with borrowed money, is the largest city in U.S. history to file for bankruptcy protection. Here’s a look at how the city spiraled into financial ruin and why it’s in so much trouble:

What happened?

For decades, Detroit paid its bills by borrowing money while struggling to provide the most basic of services for its residents. The city, which was about to default on a good chunk of its $14 billion-plus debt, now will get a second chance in a federal bankruptcy court-led restructuring. Detroit’s budget deficit this year alone is estimated at $380 million, and Kevin Orr, its state-appointed emergency manager, chose bankruptcy over diverting money from police, fire and other services to make debt payments. The move conserves cash so the city can operate, but it will hurt Detroit’s image for years. It also leaves creditors with pennies on the dollar and places in jeopardy the pension benefits of thousands of city retirees.

Mayor Kwame Kilpatrick, after his federal indictment on corruption charges

Why did it happen?

It took decades of decay to bring down the once-mighty industrial giant that put the world on wheels. The city grew to 1.8 million people in the 1950s, luring them with plentiful jobs that paid good wages to stamp out automobiles for sale across the globe. But like many American cities, Detroit’s fall began late that decade as developers starting building suburbs. Then came the 1967 race riots that accelerated the number of white residents who moved to the cities north of Eight Mile Road, considered the region’s racial dividing line. At the same time, auto companies began opening plants in other cities, and the rise of autos imported from Japan started to cut the size of the U.S. auto industry. Detroit’s property values fell, tax revenue dropped, police couldn’t control a growing murder rate, and many middle-class blacks fled the city for safer suburbs with better schools. By 2009, the auto industry collapsed along with the economy as a whole, eventually pulling the city down with it. Government corruption under former black Mayor Kwame Kilpatrick only made things worse. In the 2000 census, Detroit’s population fell under 1 million in as the exodus continued. Today it’s barely above 700,000.

Did the auto industry’s fall drag down Detroit?

It’s a big factor. The city is littered with abandoned factories built in the postwar boom years, most of which have multiple stories. As the Japanese auto invasion began cutting into Detroit’s sales, General Motors, Chrysler, Ford and hundreds of auto parts companies looked outside the city to build one-story plants that could handle modern assembly lines. With every downturn, more companies abandoned the city, leaving the hulking buildings to squatters. Detroit’s tax base continued to erode. By the time the auto industry melted down in 2009, only a few factories from GM and Chrysler were left. GM is the only one with headquarters in Detroit, though it has huge research and testing centers with thousands of jobs outside the city.

Where else has this happened?

Before Detroit, the largest local government bankruptcy filing was in Jefferson County, Ala., in November 2011. The county cited more than $4 billion in debt, mostly from corrupt deals involving sewer financing that fell apart when the home mortgage crisis hit in 2008. The county is still trying to clean up the mess. Last month, commissioners sought a compromise that calls for paying creditors a little over half the money they’re due and raising sewer rates. They hope to exit bankruptcy by December. Jefferson County has nearly 700,000 people, which is similar in size to Detroit, and includes the city of Birmingham. The economic crisis also caused bankruptcies of smaller cities. The California cities of Stockton, San Bernardino, and Mammoth Lakes all filed for bankruptcy last year. Stockton and San Bernardino were hit by plummeting home values during the recession, which cut property and sales taxes, while Mammoth Lakes was overwhelmed by a $43 million breach-of-contract judgment brought against it by a developer.

General Motors rebounded after bankruptcy: can Detroit follow?

Maybe. In GM’s 2009 government-funded bankruptcy, the company was split in two, with money-making assets staying at GM and decrepit plants and billions in debt going to a separate company. GM reduced its debt from $46 billion to $8 billion and used the bankruptcy to close factories, shed brands and get more concessions from union workers. The new, leaner company has since racked up $17.2 billion in profits and added jobs in Detroit. For the city, the comeback will be much harder. Its decaying neighborhoods can’t be sent elsewhere. But creditors whom Detroit owes more than $14 billion will have to take pennies on the dollar. Thousands of retired city workers could lose at least part of their pension benefits. Concessions could be forced upon dozens of city unions, including pay and benefit cuts. Free of these financial burdens, Detroit will be able to concentrate its limited dollars on services such as basic police and fire protection. Better services could bring more people and lure more business investment. Already the downtown and an area to the north called Midtown are seeing business and residential growth — signs that Detroit has a future. – AP

South Africans top the global list for entrepreneurial capacity

Possibly as a result of extra pressure from anti-white discrimination due to affirmative action and Black Economic Empowerment, South African self-made entrepreneurs top the global list.

The creation myth of American wealth is almost always rooted in the entrepreneur.

It’s the two kids who start a computer company in their garage or dorm room. Or the former standup comic who creates form-shaping undergarments, or the South African immigrant who creates a new electric car and private space program.

But despite the high-profile examples, America may actually be falling behind the rest of the world when it comes to creating entrepreneurial wealth. A new study from Barclays, “Origins and Legacy: the Changing Order of Wealth Creation,” finds developing countries now lead the U.S. when comes to wealth creation by entrepreneurs.

(Read More: Entrepreneur Asia: A CNBC Special Report)

Worldwide, 40 percent of millionaires (which is defined as those with investable assets of $1.5 million or more) cited a “business sale or profit” from their business as their source of wealth. Only a quarter of the millionaires cited inheritance as their wealth source.

In the U.S., only 21 percent of millionaires cited business sale or profit as their source of wealth. A much larger percentage cited saved earnings or personal investments as their sources of wealth.

Where the entrepreneurs are: South Africa comes out on top, percentage-wise

In the Asia-Pacific region, 57 percent cited business sale or profit as a source of wealth—far more than in the U.S. South Africa (68 percent) and Latin America (58 percent) were also higher.

So is America losing its entrepreneurial mojo? There is some evidence that entrepreneurial activity is flagging. The latest data from the Kauffman Foundation found that there were 514,000 new business owners a month in 2012, down from 543,000 in 2011. The 2012 numbers marked the lowest in five years.

(Read More: Key to Wealth: Work, Risk or Luck?)

A report from the Hudson Institute found that brand-new companies added 2.34 million jobs in 2010 compared with an average of about 3 million a year dating back to 1977.

But the Barclays report said another difference between the U.S. and other countries could also be one of basic wealth cycles. Wealth in developing countries is newer, and therefore there is more wealth from freshly minted companies than from savings or investments.

“These [developing] markets have a much shorter history of widespread wealth creation and many of the high-net-worth individuals in these markets are first generation wealthy,” the report said.

Entrepreneurs were also more likely to increase their fortunes during the recession compared with those with inherited wealth or those who made their money from investments and savings.

They are also more prone to taking risks, given that risk-taking is key to entrepreneurial wealth. As a result, their fortunes are more volatile than the wealth made from savings and earnings.

“Entrepreneurs need to embrace volatility and recognize that fortunes can be lost as quickly as they were made,” the report said. – CNBC