After surviving the first few years as a start-up, things may be running smoothly. But, warns SANDRA SWANEPOEL, Vice President for Midmarket Africa at Sage, if you want to grow you will have to start implementing strict business processes.
You conduct your performance reviews over a casual lunch or coffee meeting with employees, get expense reports and payroll done on Saturday mornings and record customer information on spreadsheets. You have survived your first few years as a start-up, and business is on the up and up.
The last thing you feel like doing is complicating things by adopting formal business processes – after all, that’s what you and your employees hate about big corporations – restricted agility and unnecessary complexity.
The reality, unfortunately, is that unless you can support growth from a processes point of view, your business will stagnate. There comes a point when your customers will start having higher expectations from you. Your employees will, too.
To survive, you’ll need to have suitable software systems in place, start documenting policies and formalising other aspects of the business to ensure compliance and productivity and reduce the risk of reputational damage.
What you will gain
Done well, formalising the company’s structure and processes gives management better visibility and control of the organisation’s finances, speeds up paperwork, and helps align everyone in the company behind its values and strategy. It can be good for employee morale because people will feel confident about their purpose and responsibilities.
What you stand to lose
Resisting the need to formalise processes could harm customer service, make it hard to comply with various laws and regulations, and restrain the company from reaching its true potential in terms of profitability and revenue. It could also make it difficult to monitor your team’s performance or leave gaps for reputational risk, human error, insider fraud and other risks to creep into your day-to-day operations.
How to tell when the time has come
Here are three signs that it’s time to formalise your business processes:
1. Your headcount is growing rapidly
As your turnover and headcount grow, so do your responsibilities in terms of legal and regulatory compliance. The tipping point usually comes at a turnover of around R5 million and a headcount of more than 50. For example, the Companies Act exempts smaller, owner-managed companies in South Africa from needing an external audit. The act provides a Public Interest scoring system, taking into account how many employees you have, your revenues, your liabilities and your external shareholders.
As your business grows, you may need to meet the tougher demands of an external auditor, which will be far easier if you have a proper business system and formal processes in place. Likewise, it will become subject to requirements such as the Employment Equity Act and Broad-Based Black Economic Empowerment Codes and regulations. Compliance with these will be much easier with formal processes in place.
Quite apart from the compliance angle, a larger headcount and turnover means that managing your business by filing papers in a shoebox or chatting to employees over the tea break will become increasingly impractical. To remain in control, you’ll need to do things in a standardised and consistent manner and ensure that you can monitor financial and operational performance. Formal processes and systems are also essential to HR functions such as performance appraisals, succession planning and career paths.
2. Your business is multifaceted
If you run an intricate, geographically dispersed or heavily regulated business – for example, certain forms of complex manufacturing or financial services – you may need to fast-track formalising your business processes. Your customers and funders will demand it and you’ll need to have the process discipline to deliver accurate reporting, ensure consistent product and service quality, and monitor performance.
3. Your growth is accelerating
Companies cannot afford for their businesses processes, employees and management to fall behind the growth of the company. If growth is accelerating, your company is probably starting to compete with bigger companies that have economies of scale, established systems and robust business processes. That means you may also need to retool your company with formal processes and systems to boost productivity, ensure staff retention and deliver your product or service with a predictable quality level.
It’s about the right solution. If your business has survived to a point where you need more formal systems, you should congratulate yourself. Not all companies manage to survive their first few years; you can consider yourself a business hero because you are helping to grow South Africa’s prosperity. Apart from documenting standards and procedures, one of the keys to ensuring your future sustainability is usually to put systems in place to automate processes.
It is also worth remembering that just as not having the right systems in place can slow you down, so will having a system that is too sophisticated. Often these systems are also expensive and resource intensive, choose your software well, making sure that it fits the maturity of your business
The best system is one that saves time and makes you more agile, with a direct ROI that can be seen as soon as you are live on the product. This is one of the topics that we will be discussing at the Sage Summit as we seek to advise business builders how to reach the next level. The Sage Summit takes place at the Sandton Convention Centre in Johannesburg from 7-9 March 2017.
Samsung unleashes the beast
Most new smartphone releases of the past few years have been like cat-and-mouse games with consumers and each other. It has been as if morsels of cheese are thrown into the box to make it more interesting: a little extra camera here, a little more battery there, and incremental changes to size, speed (more) and weight (less). Each change moves the needle of innovation ever-so-slightly. Until we find ourselves, a few years later, with a handset that is revolutionary compared to six years ago, but an anti-climax relative to six months before.
And then came Samsung. Probably stung by the “incremental improvement” phrase that has become almost a cliché about new Galaxy devices, the Korean giant chose to unleash a beast last week.
The new Galaxy Note 9 is not only the biggest smartphone Samsung has ever released, but one of the biggest flagship handsets that can still be called a phone. With a 6.4” display, it suddenly competes with mini-tablets and gaming consoles, among other devices that had previously faced little contest from handsets.
It offers almost ever cutting edge introduced to the Galaxy S9 and S9+ smartphones earlier this year, including the market-leading f1.5 aperture lens, and an f2.4. telephoto lens, each weighing in at 12 Megapixels. The front lens is equally impressive, with an f1.7 aperture – first introduced on the Note 8 as the widest yet on a selfie camera.
So far, so S9. However, the Note range has always been set apart by its S Pen stylus, and each edition has added new features. Born as a mere pen that writes on screens, it evolved through the likes of pressure sensitivity, allowing for artistic expression, and cut-and-paste text with translation-on-the-fly.
(Click here or below to read more about the Samsung Galaxy S Pen stylus) Samsung Galaxy S9 Features)
SA ride permit system ‘broken’
Despite the amendments to the National Land Transport Act, ALON LITS, General Manager, Uber in Sub Saharan Africa, believes that many premature given that the necessary, well-functioning systems and processes are not yet in place to make these regulatory changes viable.
The spirit and intention of the amendments to the National Land Transport Act No 5 (NLTA), 2009 put forward by the Ministry of Transport are to be commended. It is especially pleasing that these amendments include ridesharing and e-hailing operators and drivers as legitimate participants in the country’s public transport system, which point to government’s willingness to embrace the changes and innovation taking place in the country’s transport industry.
However, there are aspects of the proposed amendments that are, at best, premature given that the necessary, well-functioning systems and processes are not yet in place to make these regulatory changes viable.
Of particular concern are the significant financial penalties that will need to be paid by ridesharing and e-hailing companies whose independent operators are found to be transporting passengers without a legal permit issued by the relevant local authority. These fines can be as high as R100 000 per driver operating without a permit. Apart from being an excessive penalty it is grossly unfair given that a large number of local authorities don’t yet have functioning permit issuing systems and processes in place.
The truth is that the operating permit issuance system in South Africa is effectively broken. The application and issuance processes for operating licenses are fundamentally flawed and subject to extensive delays, sometimes over a year in length. This situation is exacerbated by the fact that it is very difficult for applicants whose permit applications haven’t yet been approved to get reasons for the extensive delays on the issuing of those permits.
Uber has had extensive first-hand experience with the frustratingly slow process of applying for these permits, with drivers often having to wait months and, in some cases more than a year, for their permits.
Sadly, there appears to be no sense of urgency amongst local authorities to prioritise fixing the flawed permit issuing systems and processes or address the large, and growing, backlogs of permit applications. As such, in order for the proposed stringent permit enforcement rules to be effective and fair to all role players, the long-standing issues around permit issuance first need to be addressed. At the very least, before the proposed legislation amendments are implemented, the National Transport Ministry needs to address the following issues:
- Efficient processes and systems must be put in place in all local authorities to allow drivers to easily apply for the operating permits they require
- Service level agreements need to be put in place with local authorities whereby they are required to assess applications and issue permits within the prescribed 60-day period.
- Local authorities need to be given deadlines by which their current permit application backlogs must be addressed to allow for faster processing of new applications once the amendments are promulgated.
If the Transport Ministry implements the proposed legislation amendments before ensuring that these permit issuance challenges are addressed, many drivers will be faced with the difficult choice of either having to operate illegally whilst awaiting their approved permits and risking significant fines and/or arrest, or stopping operations until they receive their permits, thereby losing what is, for many of them, their only source of income.
As such, if the Ministry of Transport is not able to address these particular challenges, it is only reasonable to ask it to reconsider this amendment and delay its implementation until the necessary infrastructure is in place to ensure it does not impact negatively on the country’s transport industry. The legislators must have been aware of the challenges of passing such a significant law, as the Amendment Bill allows for the Minister to use his discretion to delay implementation of provisions for up to 5 years.
Fair trade and healthy competition are the cornerstones of any effective and growing economy. However, these clauses (Section 66 (7) and Section 66A) of the NLTA amendment, as well as the proposal that regulators be given authority to define the geographic locations or zones in which vehicles may operate, are contrary to the spirit of both. As a good corporate citizen, Uber is committed to supplementing and enhancing South Africa’s national transport system and contributing positively to the industry. If passed into law without the revisions suggested above, these new amendments will limit our business and many others from playing the supportive roles we all can, and should, in growing the SA transport and tourism industries as well as many other key economic sectors.
What’s more, if passed as they currently stand, the amendments will effectively limit South African consumers from having full access to the range of convenient transport options they deserve; which has the potential to harm the reputation and credibility of the entire transport industry.