Functions of the Commission

• Registration of Companies, Co-operatives and Intellectual Property Rights (trade marks, patents, designs and copyright) and maintenance thereof
• Disclosure of Information on its business registers
• Promotion of education and awareness of Company and Intellectual Property Law
• Promotion of compliance with relevant legislation
• Efficient and effective enforcement of relevant legislation
• Monitoring compliance with and contraventions of financial reporting standards, and making recommendations thereto to Financial Reporting Standards Council (FRSC)
• Licensing of Business rescue practitioners
• Report, research and advise Minister on matters of national policy relating to company and intellectual property law
• Licensing of Business rescue practitioners
• Report, research and advise the Minister on matters of national policy relating to company and intellectual property law.

Contact Details:

Head Office:
The dti Campus, Block F77, Meintjies Street, Sunnyside, Pretoria

Call Centre: 086 100 2472

Click here for the CIPC website

Source: CIPC

1. PTY (LTD)
2. Non-Profit Company (NPC)

FOR PROFIT COMPANIES

Private Companies must have at least 1 director. At least one of the appointed directors must also be appointed as an incorporator. You cannot appoint an alternate director if a full director is not appointed.

Most common structures:

• Public (name ends in “Ltd”) or private (“Pty Ltd”) company
• Personal Liability Company (“Inc”)
• Partnership
• Business trust
• Sole proprietorship
• External company (branch of a foreign company)

These types of business offer directors protection from individual liability. A company can make shares available to staff as a Private company (Pty) or to the public as a Limited company (Ltd), and these are easily transferred from one owner to another.

(Pty) Ltd companies are subject to an annual audit. This is the best legal structure for people who ultimately want to sell their business to a large competitor, or to be listed on the stock exchange.

NOT FOR PROFIT COMPANIES

Non-Profit Companies must have at least 3 directors. All directors will also be appointed as incorporators. You cannot appoint an alternate director if a full director is not appointed. Only South Africans can be appointed as directors/incorporators using this channel, foreign directors must make use of the manual process.

COMPANY REGISTRATION

The CIPC (Companies and Intellectual Property Commission) registers Companies and Co-operatives.
It is not necessary for all businesses to formalise by registering with the CIPC. For some businesses, such as informal businesses and sole proprietors, there may not be sufficient benefits. Businesses that wish to transact with government and the formal sector, or that wish to access certain types of government support, are generally required to be registered with the CIPC. For these businesses, there may also be tax benefits to registration, as registered businesses have a lower tax rate than individuals. Even though you may not be registered with the CIPC, you will still have to be registered with the South African Revenue Services and will still be liable for tax if your turnover exceeds the prescribed threshold.

Registering a business is simple and inexpensive if you follow the steps outlined on the CIPC website, the first step being registered as a CIPC customer. However, it brings with it certain responsibilities, irrespective of whether the business is trading. For example, you will need to file an annual return and pay an annual fee.
In terms of the Companies Act, 2008, a company may be registered with or without a company name. When a company is registered without a reserved name, its registration number automatically becomes the company name. This is the quickest way to register a company.

Such a company may transact with a trading (business) name, or may apply to add a reserved name at a later stage. In this case, the company will need to first reserve a name and then apply for a name change, which constitutes a change to its Memorandum of Incorporation (MOI) (refer to Maintain a Business).

If your initial name reservation application is not approved, you will need to apply for new names. You may apply for between 1 and 4 names during each application process. Each name reservation application costs R50. A company registration may vary between R125 and R475 (R125 for a private company, R475 for a non-profit company registered without members).

Click here for Application forms from the CIPC

The difference between owning a business and working in one is significant – as an owner you’re directly responsible for every aspect of the business’s success.

The good news is that by following a few basic rules, it’s easier to start a business than you think – and the chances of success are much greater.

Business Partners, South Africa’s leading specialised added-value investment group for small and medium enterprises, has drawn up 10 Simple Rules for a Successful Start-Up to assist entrepreneurs:

1. Choose an option that’s right for you to start a business

When thinking of starting your own business, choose one that will suit your lifestyle and preferably one in which you have some direct knowledge and experience. For instance, if you want to work regular hours, opting for a fast food franchise isn’t a good idea. Similarly, if you’re thinking of buying a boat-building business, it’s important that you have some knowledge of what’s involved, even if you’re not a professional boat builder yourself.

2. Do your market research before you start a business

Market research does not have to be complicated. It’s important to make sure that there’s a need for your product or service, though. Check out whether there’s any competition already established in your area, whether your offering is unique or whether it fills a special gap in the market. If you can offer a product or service that people need and which doesn’t already exist, you’ll have a good chance of success. For example, you might be able to offer a scholar transport service in an area off the public transport route or develop a new form of health snack where there’s a demand, but no supply.

3. Draw up a business plan

Writing a business plan is like drawing up a roadmap. You’re not likely to reach your destination unless you know where you’re going and what you’ll need to get there. You will need the information that will give the business operational and financial direction. Business Partners offers a free business planning model for entrepreneurs  — click here

4. Choose a specialist investor

If you need investment, choose a company that has specialist knowledge of the challenges facing entrepreneurs, as well as of the sector in which you intend to work. This could be one of the most important decisions you’ll ever make – for yourself and for your business.

5. Employ the right people

Not all start-ups employ people from the start, but if you do, it’s important to choose carefully. In a small business, people spend a lot of time together, so you need to select employees that you feel you’ll be able to work with. Also, choose people that have experience in the business you’ll be starting – this will give you a valuable support system.

6. Market your business

Business doesn’t come to those who wait – it comes to those who go out there and tell people what they have to offer. Even the smallest business needs to market its services by, for example, placing ads in the local papers, distributing flyers, putting up notices in shopping centres, recreation centres and schools and developing special offers for special needs or occasions.

7. Put in financial systems from the start

Even if you’re not a financial expert yourself, put in simple but solid financial systems right from the start. There are excellent, user-friendly software packages that can be used to do this and it’s even worth contracting the services of a bookkeeper or other financial professional to assist you on a regular basis. Lack of financial discipline is often where start-up businesses go off the rails

8. Manage your cash flow

Cash is the life-blood of a business and it’s important to manage cash flow carefully. The right investor will be able to assist you in doing this.

9. Supplement your own knowledge with specialist skills

No entrepreneur can be a specialist in every aspect of business and it’s important to contract specialist skills and services when you need them. For example, if you’re thinking of setting up a small factory and don’t have much knowledge of the production process, an experienced production manager will be worth his or her weight in gold.

10. Enjoy yourself

One of the best things about owning and running your own business is that you have total independence. There’ll be good days and bad days, but it’s important to enjoy what you’re doing. Owning one’s own business is an adventure – enjoy it every step of the way.

(Content courtesy of Business Partners Ltd)

‘The golden rule for every business man is this: Put yourself in your customer’s place.’ – Orison Swett Marden 

A business plan helps to see your ideas and dreams through the lens of practical objectives, goals, strategies to start, grow and succeed, potential problems ahead and how to overcome them.

Until very recently, business planning has been seen as a necessary (and boring) chore for a new business founder to do before getting the business off the ground.

Mostly, this attitude is because Business Plans have always been viewed as obligations, something the banks or authorities or investors insisted on having. But planning is a necessary tool to help clear your vision, develop your skills as an entrepreneur and attract funding.

So instead of seeing planning as an old-school boring process, view it rather as an opportunity to generate new information and insights into your business. And it’s not something you do once and leave.

On-going planning can help you evaluate your own views and biases of your business, your competition, your skills and competence.

You will need a formal business plan if you are looking for investment into your company.

Every business plan should comprise the following 10 sections:

1. A cover or title page

2. Executive summary

3. Business overview

• business profile
• the product or service

4. Management

• the people
• the management structure
• franchise information

5. The Market

• industry analysis
• market analysis

6. Sales and Marketing strategy

7. Financial statements and projections

8. Legal and regulatory environment

9. SWOT analysis and risk/reward assessment (click here to see a SWOT analysis)

10. Appendices and supporting documentation.

Cover or Title Page

You want to present your business plan in as professional a way as possible. Avoid unnecessary decorations and borders and put forward your idea as clearly as possible.

Executive Summary

The executive summary is the MOST important part of the business plan — it has to sell your strategy for success to the investor.

The summary is an overview of the entire plan and must contain the highlights of the business plan and summaries of each section. Therefore, although it is at the beginning of the document, it is usually written last to capture the essence of the plan. The executive summary stands alone and should not refer to other parts of your document.

Business Overview

1. Write a business profile, including the following:

• Information on the background and history of the business
• The business type (proprietorship, Close Corporation, Company)
• Is it a new business, take over, expansion, franchise?
• The mission, and the company’s long and short term objectives in terms of business growth and development, as well possible exit strategies (for example: buy out investors, sell to larger company, go public, etc)

2. The product or service

Describe in full the product or services offered by the business and the innovative features of these products and services and the competitive edge they afford the business over rivals in the market.
the expected product life cycle where applicable.
Include descriptions of key technologies employed and current and future research and development

3. Describe the location, premises and — where applicable — production facilities

4. Production and technology

• Describe production processes and capacity, identifying any existing constraints and possible problem areas.
• Include a detailed analysis of the process of installing and commissioning any new technologies and production processes.
• Include information on quality assurance systems and procedures, and certification
  details of suppliers and sub-contractors, and any contractual arrangements governing the supply of key inputs

5. Elaborate on the business’s past achievements and strengths. Include past problems and weaknesses, as well as critical success factors.

Company Management

1. The People/Entrepreneurs

• Include a description of the skills and experience of the entrepreneurs. Include the key areas of technology and product development, production, sales, marketing, finance and administration.
• Describe the position and the specific functions and responsibilities of each entrepreneur and/or manager
• Attach a detailed curriculum vitae of each entrepreneur
• Indicate the financial contribution of each entrepreneur to the business, and the current shareholding structure.

2. The management structure of the business

• Show company ownership structure, business units and subsidiaries where applicable.
• Attach an organisation chart showing the functions and responsibilities of directors, key management and staff.
• Include remuneration, incentives, share options, and conditions of employment of key management and directors
• Include an analysis of any deficiencies in management and how these positions are to be filled.
• Comment on current and future employment levels, labour relations and union membership (if applicable)
• Include details of systems to be implemented: information technology, accounting, administration, management information and stock control systems.
• Include details of auditors, attorneys, bankers and professional advisers

3. Franchise information (where applicable)

• If the business is a franchise, include what is covered in the management package the franchisor provides in this section

The Market

1. Industry analysis

Summarise the industry in which you do or will compete. You can find most of the facts from government statistics and trade organisations. Discuss topics such as:

• current trends and developments in the industry
• large and important players in the industry
• how the industry is segmented
• problems the industry might be experiencing
• national or global events influencing the industry
• national and global growth forecasts
• how legislation affects the industry (for example, how the law limiting smoking in a restaurant affects the industry)

2. Market analysis

• Describe the existing market and its potential for growth.
• Include a detailed analysis of the size and maturity of the market, trends and seasonality exhibited by the market, and the business’s current and expected market share together with an analysis of the time, resources and actions required to achieve this desired market share.
• List existing and potential customers, supported by letters of intent, orders on hand, contracts, where applicable.
• Include a detailed analysis of competitors, the price and quality of their products, service, delivery, and their expected reaction to your activities.
• Highlight and discuss your competitive advantage

Sales and Marketing Strategy

• Elaborate on current and planned sales and marketing strategies and promotional activities (advertising, exhibitions, promotions, public relations, etc.)
• Describe your distribution strategy and channels
• Formulate sales staffing, recruitment, remuneration and commission structures
• Include a detailed motivation and substantiation of sales projections (in monetary and physical terms) with a comprehensive analysis of the lead time expected to reach sales targets and milestones (e.g. break-even point)
• Elaborate on your pricing strategy and how it compares with your competition
  where the business is a franchise, include the full marketing strategy of the franchisor

Financial Statements and Projections

• Include only a summary of the financial statements and projections in the body of the business plan — attach a detailed analysis as an appendix
• Include operating budgets, cash flow projections, income statements and pro forma balance sheets for at least three years (recommended five years). Provide monthly projected figures for the first and second year, quarterly figures for years three and four and annual projections thereafter.

Where applicable, provide:

• Historical financial performance as shown by at least the last three sets of audited annual financial statements and up to date management accounts comprising income statements (monthly and year-to-date), balance sheets, and debtors and creditors age analysis.
• Costing methodology employed, or to be employed, and detailed costings giving a full analysis of cost of sales.
• Pricing policies giving a full analysis of theoretical and actual mark up and gross profit percentages.
• Rebates, discount structures and terms offered to and received from customers and suppliers respectively.
• Break-even and sensitivity analysis.
• Details of overdraft and factoring facilities (bank, limit, security and interest rate) and medium and long-term loans.
• Ensure that your financial projections agree with any other statements in the business plan (for example, costs involved in your proposed marketing strategy)
• Formulate and motivate your capital requirements

Legal and Regulatory Environment

Include:

• Details of any licenses, copyrights, trademarks and patents registered (or in the process of being registered)
• Details of any legislation and regulations governing the industry, product and production processes
  proof of compliance with tax and labour legislation (VAT, PAYE, RSC, UIF, COIDA, Employment Equity Act, Skills Development Act, etc) where applicable
• Details of duties and tariffs to which inputs or products are subject if the business is a regular importer or exporter
• SWOT Analysis and Risk/Reward Assessment
• Discuss definite and possible strengths, weaknesses, opportunities and threats
• Give an honest assessment of the risks faced by the business, entrepreneurs and investors in relation to the potential for growth, profitability, and capital appreciation
• Discuss strategies that can be implemented to address the risk factors highlighted

Appendices and Supporting Documentation

The following supporting documentation should be included where applicable:

1. Newspaper clippings, promotional literature, product brochures, market research, trade and industry publications
2. Partnership, association or shareholders’ agreements
3. Offers to purchase, purchase and sale agreements
4. Contracts, orders, letters of intent
5. Memoranda of understanding, lease, franchise, agency or distribution agreements
6. Documentation relating to licences, copyrights, trademarks and patents
7. Quotations or pro-forma invoices for capital items to be purchased
8. Detailed personal balance sheets of the entrepreneurs
9. Copies of identity documents and marriage certificates of the entrepreneurs
10. Schedules of life assurance and endowment policies of the entrepreneurs
11. Copies of company or close corporation certificates and registration documents
12. Drawings, work flow charts, plans, factory layouts, maps, etc
13. A list of persons to whom reference can be made regarding creditworthiness, product and service quality, and the skills, abilities and integrity of the entrepreneurs.

‘There are no secrets to success. It is the result of preparation, hard work, and learning from failure.’ – Colin Powell

Sole Proprietor/Trader

The Sole Proprietor/Trader is the most basic form of business and consists of one owner. The only requirement is meeting basic tax and legal paperwork. Because the owner is the sole member of the company, all liability and possible legal action falls to him/her and personal assets, should the business accumulate unpaid debts.

Once the owner passes away, the business ceases to exist. This type of business does not need to be registered as a legal entity itself. All legal matters are referred personally to the owner.

Partnership

The Partnership paradigm closely resembles the Sole Proprietor, but can include as many as 20 partners. Each must have a clearly stipulated role, share, profit cut and liabilities. Every aspect of a business partnership must be agreed upon and every liability is shared.

Losses, legal action and security are all placed on the group as a whole. A business partnership does not need to be registered, but all legal documents must be correctly drawn up between the partners.

Private (Pty) and Limited (Ltd) Companies

These types of business offer directors protection from individual liability. A company can make shares available to staff as a Private company (Pty) or to the public as a Limited company (Ltd), and these are easily transferred from one owner to another.

(Pty) Ltd companies are subject to an annual audit. This is the best legal structure for people who ultimately want to sell their business to a large competitor, or to be listed on the stock exchange.

Specific information regarding SA company structures can be found at the Companies and Intellectual Property Commission (CIPC) website www.cipc.co.za

It is also a good idea to contact the local Chamber of Commerce in your area for advice and networking opportunities.

_{‘Life is like a cash register, in that every account, every thought, every deed, like every sale, is registered and recorded.’ –  Fulton J. Sheen}