My default setting is POSITIVE, and as with most of you I also get my fewer positive moments. In these moments I make sure to keep my circle of influence tight. Saying that, I am also a realist, and for all practical purposes 2023 will be an “interesting” year.
A year (and a bit) after businesses recovered from lockdown (some still attempting to recover. Some businesses died), we are facing a global economic crisis. Its undeniably the case which is shown in the rising interest rates.
To top this off many countries struggle with load shedding. We feel it hard in South Africa.
With this gloomy picture in mind, lets ponder on a few ideas around how to prepare for 2023.
1.Prepare your business with Solar powered equipment, and SARS’s Renewal Energy Allowance
Section 12b of the South African Income Tax Act makes provision for an accelerated depreciation allowance of ONE year, which means a company can deduct 100% of the cost in the year the expenses have occurred.
With the current trend of companies in the need of solar energy additions to maintain the workloads and productivity, this allowance will come in handy.
It is important to note, that it is only applicable to assets brought into use for the first time by the taxpayer.
There are numerous products on the market and solar finance options. Contact our office if you need advice and to assist with this structure.
We can not depend on a government to sort out Eskom. No riot will fix Eskom. Rather spend the time and energy in create a sustainable solution for yourself.
2. Be wary of financing luxury items
I would not currently opt into a new financing agreement for any luxury items. Interest hikes is still very active and will be provide many problems for high geared individuals and businesses.
Upgrade a property through a bond is also extremely dangerous in this economy. The last interest hike of 0.75 points, increased the monthly repayment on a bond of R 3 million with roughly R 3,000.
Taking risks must never involve your safe haven (your private house).
3. Save 3 - 6 months (even a year) in operating expenses
Having savings 3 – 12 months in operating expenses, you make sure you don’t make emotional decisions when the downcycle comes around. Apart from safeguarding the business, you can act on the ample opportunities that a winter cycle brings to the table.
4. Difficulty meets OPPORTUNITY
For every expansion we will have a recession. After every recession we will have a period of massive expansion. It’s written in history.
Any downcycle bring unlimited opportunities. Are you focussed on what propaganda (the news) is spreading, or are your focussed on the opportunities that will surface around you? There are plenty, but we cannot focus on both.
Strong winds create excellent sailors.
5. Create a LEAN company
Never confuse your TOP LINE (Turnover) with the BOTTOM LINE (actual profit). Constantly evaluate the costs of the company, even if it grows into a tremendously successful business. The costs between the TOP LINE and the BOTTOM LINE, makes all the difference.
There would be a lot of small little items in between that someone, somewhere told you the business can not live without.
How lean are your company? How quickly can you pivot in a downward spiral?
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