March 2002

Welcome to Bizland News - Edition 5

Editor's Note

For those of you NOT in Cape Town - sympathise with us. I am sitting at my desk with the fan going full blast, eyes drying out, brain par-baked, trying to think of a term strong enough to describe the incredible heat wave that has plagued us for the last couple of weeks - "sweltering" doesn't cut it. I have just had a look at the weather bureau's website, and I see that we are not the only ones experiencing this heat wave! Anyway "beach weather" is no excuse to sit back and relax, so let's get on with it...

It has been an interesting week for me, having the opportunity to meet not only with tax experts at Ernst & Young to discuss the new budget, but also Allen Ambor, the man who started Spur - one of the most popular family restaurants in South Africa, now also making headway in Africa, the UK and Australia. What an interesting man - a true entrepeneur with an energy about him that puts me, a twenty-something, to shame! But certainly a motivation to lead a healthy lifestyle and keep exercising to reduce stress - something a lot of small business owners forget about in the hussle and bustle of trying to get things done! Do you know of someone who is equally inspirational? Email us and we will try and get their story! As always, feel free to send this newsletter on and encourage your friends and associates to subscribe - removal instructions at the bottom.

In this month's issue:

Feature Article: Tax and Administrative Relief for Small Business Corporations - by Michelle O'Cuinneagain, Ernst & Young Tax Consulting, Cape Town

Trevor Manual, in his Budget Speech of 2002, stated that Government is very conscious of the needs of the small business sector and in the unfolding tax reform programme recognises this sector's strategic role in economic growth and employment. His statement is really a continuation of the commitment first shown to development of small businesses in 2000, when special tax rates were first introduced for small business corporations.

Currently, a small business corporation is described in the Income Tax Act as being a close corporation or private company (other than an employment company) where its gross income does not exceed R1 million, the entire shareholding or membership of which is held by natural persons. Further none of the shareholders or members, may at any time during the year of assessment hold shares in any other company (other than listed companies). In addition, not more than 20% of the gross income consists collectively of investment income and the rendering of any personal service by members or shareholders.

In Manual's Budget Speech of 2002, he set out that Government proposes increasing the existing threshold of the first R100 000 of taxable income, which attracts a 15% graduated company tax rate to R150 000. (i.e. a small business will only be liable for 15% tax on the first R150 000 of taxable income, with any excess taxed at the normal company rate of 30%). Furthermore, the qualification threshold of R1 million annual turnover, has been increased to R3 million for companies with years of assessment ending on or after 1 April 2002.

Further, Government recognises that tax and regulatory compliance are burdens which adversely impact on small businesses. South African Revenue Services (SARS) have undertaken to review, with the aim of simplifying tax compliance, existing administrative procedures and existing penalty provisions. Consequently, SARS aims to reduce the penalty burden for first time offenders, simplify tax forms and reduce the number of returns that must be filed.

In addition, SARS will be investigating the merits of introducing a VAT retail method to simplify the VAT obligations for small food retailers who provide both zero-rated and fully taxable supplies. The method would likely provide a formula to calculate the ratio of zero-rated sales to fully taxable sales.

Furthermore, Section 12E of the Income Tax Act, allows a 100% deduction of the cost of plant and machinery brought into use by small businesses on or after 1 April 2001. The plant or machinery must have been brought in for the purpose of the taxpayers trade (other than mining or farming) and used directly by the taxpayer in a process of manufacture carried on by the taxpayer. Costs of moving assets, which may qualify for an allowance under this section, from one location to another are allowed in full.

By introducing tax breaks for small business corporations in 2000, Government recognised this as an area of the economy where encouragement of entrepreneurs may result in great potential economic growth. In this year's budget, Government continues to promote this area of the South African economy by encouraging investment through increased thresholds and a commitment to review certain previously mentioned, cumbersome procedures and provisions.

Disclaimer:
The information contained in this note is intended to provide general guidance. It is not intended to replace the specific advice which should be sought from an appropriate professional advisor before taking any particular course of action

Visit Ernst & Young's website at www.ey.co.za

*Want to read up on the 2002 budget? Visit http://www.bizland.co.za and click on the link on the left for our free guide and commentary!

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Bizland News

NEWSFLASH! We are famous! Thanks to Matthew Bowden of Around the Web, we received a mention on SAFM last Sunday night. Matthew reviewed our website on his weekly newsletter, and had the following to say:

"I enjoyed the site and feel that it is worth the visit. The site is relatively new and we can all look forward to new additions like a web board and chat interface; also a whole lot of interesting marketing info. I will definitely be back to see how the site improves. Overall a great browse."

Matthew also offered us some constructive advice as to how to improve our website, which is prompting us to have a brainstorming session in the near future to get some ideas. But at the end of the day, it is you who will be using the site, so we invite you to offer us any feedback as soon as possible as to how we can improve and make your surfing experience easier. We urge you to email us with your suggestions which we will certainly take into consideration, or alternatively add your comment to our discussion forum!

Labour Seminar in Cape Town - 14th March 2002

Our labour partners, Chennells Brümmer & Associates, in conjunction with Bev Ingram & Associates, are conducting a labour course in Cape Town on the 14th of March 2002, offering a critical overview of the Labour Relations Act and Basic Conditions of Employment Act. The course normally costs R950 all inclusive, however as a special Bizland promotion, if you mention Bizland when you book, you will receive a 10% discount. For more information about this course click here.

What's new on the website?

Our Discussion Forum is finally up and running and since you are the first to officially know about this, we invite you to be the first to add your point of view. The board is there for you - ask fellow SME's for advice, air your opinions or answer someone else's question. Keep coming back to read replies and keep the discussions going - anything goes. You can find it easily from the homepage or using the link above.

We have added a new online guide to on our website, How to Buy and Sell a Business by Mike Hindle of Aldes Business Brokers. Read up on everything to do with this topic, and make sure that you have all your bases covered. If you have any questions about this, email Mike directly.

We will be adding new features on a regular basis, so keep visiting http://www.bizland.co.za to keep up!

*Got something to sell? Why not submit to our free classifieds section?

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Success Story

This is YOUR space. We want to know who you are, what annoys, inspires or impresses you in small business, funny stories, advice, or how you got on the road to success. Please share with us and we might publish your stories or comments in the next issue. Send your contributions to success@bizland.co.za - we look forward to hearing from you.

This week's Success Story: Spurring Ahead - Allen Ambor of the Spur Corporation
Life is like surfing - you have to stay ahead of the wave or risk getting dumped!" Allen Ambor, Spur Corporation

Allen put himself through university by working in a steakhouse in Johannesburg, where he developed an interest in the restaurant business, and a dream to eventually own his own restaurant. This was put on hold however, and he took up a position in the Personnel Department of a shoe company. It was on the last of many business trips to Cape Town, on the verge of taking up another position, that he met a builder who was building a shopping complex in Newlands. At age 23 with R2000 in his pocket and no surety, he signed the lease to open the restaurant. The complex took some time to build, during which time he took on various ad-hoc positions, including waitering, teaching, soccer coaching and restaurant management.

The Golden Spur, as it was to be named, was opened in 1967. Allen's hard work and dedication paid off, and from day one the Golden Spur was a success, due largely to Allen's high standards of customer service and quality food. Little did Allen realise at the time that this was the beginning of a multi-store franchise. He went in with a partner and opened a Spur in Sea Point, however after 18 months he bought his partner out when the branch started showing signs of poor management and neglect. He worked hard to build it back to the standards of the Newlands branch, and when another friend approached him to open a branch in Bellville, he decided to franchise him rather than go into partnership.

So successful was the family-orientated sit-down restaurant concept that Allen soon found himself opening several more stores in quick succession. By 1986, the franchise had grown to 43 Spur Steak Ranches, and since then that number has more than quadrupled, with approximately 15 new Spur Steak Ranches developed every year. Many outlets have been opened internationally, with plans for further expansion already under way. As Chairman of the Spur Corporation, Allen is still extremely involved in the franchise organisation. Allen remains what he calls the "Brand Custodian", in that he still maintains control of marketing and development of the corporation.

Allen attributes his success to his sheer grit and persistence. He believes that one should always maintain one's caring and humility, and never to become arrogant. Customer service is of the essence, as he believes that "Your competition don't bankrupt you, your customers do." He also stresses the importance of maintaining a good relationship with franchisees, allowing for an open flow of information.

Allen exudes an aura of high energy and intelligence, which could be attributed to his healthy lifestyle and strict exercise regime. He sets aside a third of his day for yoga, walking and cycling - and still finding the energy to keep up with his seven year old son! He enjoys travelling and being active, and says that he will always remain involved in the business: "I am not an old person, and will never retire. Life is like surfing - you have to stay ahead of the wave or risk getting dumped!"

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Next month…
Next month we will be talking about Human Resource issues, so send us your comments or questions about this topic to comments@bizland.co.za.

Until next time...

Sally & Piers

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