Situations can arise where you are broke and you don’t know what to do or how to improve on your finances.
The best thing to do at this period is to find things you can cut out from your expenses. Being broke is the worst thing that could ever happen to anyone.
You might never be debt free if you are always broke.
Some sacrifices need to be made to improve your financial situation if you are always broke.
Some re-adjustment to your finances would need to be made when you are broke.
What do you need to cut out on your expenses when you are broke?
1. Bank charges
Paying bank charges on transactions, money transfer and withdrawals from ATM might not seem like a big deal but these bank charges add up after a long while.
To avoid always paying bank charges, you need to transact more with liquid cash or transacting more in a banking premises. If you need to pay for goods or services, pay in cash.
2. Eating Out
Eating out all the time will definitely eat dip in your finance. If you are broke you need to stop eating out.
Having meals at restaurants and fast food joints can be quite expensive. Instead of always eating out all the time, you should do more of cooking your meals at home.
Eating at home will help you through your broke state
Subscriptions come in different forms and al subscriptions are most likely affecting your income negatively, which might be leaving you broke all the time.
Pay TV subscription, mobile and internet subscription, gym subscription are all subscriptions you should find ways of cutting off.
This would help you save more for other important things when you are broke.
4. Fun activities
Fun activities like hanging out with friends, going to the movies should be cut out when you are broke.
There is always money involved in most fun activities.
Think of fun ideas that won’t affect your finance and try them
If you have a habit of always shopping, then you should reconsider your shopping habit. That might be the reason you always find yourself in a financially broke condition.
You might need to cut shopping expenses to help you save more. When you are broke, the only shopping you should do must be for your essential needs and when you need something urgently.
2 weeks after Kylie Jenner disses Snapchat, Snap lays off 120 engineers
In fact, it’s the second time in 2018 alone that Snap is laying off employees. In an email to employees reviewed by Recode, Vice President of Engineering Jerry Hunter told team members that 120 engineers, or about 4 percent of the company’s total workforce, will soon be out of a job. “We want to unleash speed and productivity in our organization, while keeping a high technical bar,” Hunter wrote. “That required us to think carefully about the shape of the organization, and where each member of our team fits.”
This layoff is said to be the largest in the company’s history — previously, Snap has only laid off a few dozen employees at a time. Last year, a few employees from the company’s hardware unit were let go (unsurprising, given that Snapchat Spectacles were not the resounding success the company hoped they would be), and earlier this year, around 24 individuals were released from the company. There has been trouble brewing at Snap for at least the last several months, as Bloomberg previously reported that the social media giant did not award end-of-year bonuses in 2017 because employees “didn’t beat internal goals.”
We should note that the layoffs come after a period of extremely aggressive hiring. Over the course of the last two years, Snap has hired a total of around 2,400 people, or about 100 per month. But now, it seems as though some of that growth may have been excessive. As Hunter wrote in his email, the goal of the “restructuring” is to “unify the entire engineering organization as a single, powerful and diverse team that is highly productive, extremely innovative, and technically excellent.” Moreover, the executive wrote that the organization would rally “around our key priorities, specifically, addressing the technical debt that we have accrued over the years so that we can develop a product that engages customers and drives Snap forward.” And finally, moving forward, Snap will “deploy an organizational structure that aligns top talent with the most critical priorities, creates clarity around our mission, drives accountability, and rewards technical excellence in product development.”
How Do I Start A Transport Or Logistics Business?
Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.
Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.
The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.
Road transportation includes commuter transport from taxis to bus transportation.
It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.
Director Mike Johnston of Transport Concepts, a transport and distribution consultancy, says that starting a transport business can be tough. It is a hard industry for start-ups not just because it is capital intensive, but because you need to be reliable.
Credibility is critical for a start-up transport company as any businesses requiring transport services has to know you are not going to let them down
Threats facing the transport business are not just crumbing and congested roads and highways, traffic fatalities and injuries, but financial issues as well. “Don’t over indebt yourself. Take it slowly and make sure that you have the necessary skills. By this I mean, you might have the driving skills and licences, but you also need financial and business skills.”
“It’s best to have mentorship before you embark into this industry. Some of the areas you need to understand include the Traffic Act, operating cost estimates, licence fees, toll fees, maintenance and the escalation of fuel and other costs as well as vehicle performance formulae and terminology”.
Remember there are vehicle schedules, staff duty rosters, maintenance programmes to worry about. Avoid running a business that is demand-responsive (ad-hoc jobs) because this results in operations being random rather than planned. Think about each job offered and ask yourself if it’s what you are looking for, will it be profitable? If not, rather walk away,
The transport and logistics industry is an easy business to enter, but the trick comes in sustaining the business. The transport business has a ‘low barrier to entry’ at the bottom of the market, meaning that anyone with a ‘bakkie’ or a minibus can start offering transport services. This results in a flood of competition at the bottom end of the market.
In many instances the entrepreneur starts these businesses with little to no capital, relying instead on revenue derived from the business to cover all overheads from day one. This lack of capital curtails marketing activities that may result in increased income.
With fierce competition, operators cut prices to survive barely making enough to cover their expenses. This naturally leads to a distressed business that is unable to survive.
Before starting a transport and logistics company, do your homework. Work out how you will build a sustainable business. Seek out customers and contracts BEFORE you start the business because transport contracts don’t magically appear later on.
How To Get Funding
The transport business has a ‘low barrier to entry’ at the bottom of the market, meaning that anyone with a ‘bakkie’ or a minibus can start offering transport services. This results in a flood of competition at the bottom end of the market.
In many instances, the entrepreneur starts a business with little to no capital, relying instead on revenue derived from the business to cover all overheads from day one. This lack of capital curtails marketing activities that may result in increased income.
Where to go for finance when starting a transport and logistics business
Commercial Banks. Commercial banks will finance vehicles used in the transport industry. Before you approach the bank for funding you must be able to show the bank that you have the necessary expertise to run a business by producing a well constructed business plan. You will need security (personal surety and or assets) to cover the loan amount that you need.
Khula Start-up Fund. Khula Start-up Fund has been created to empower South Africa’s historically disadvantaged entrepreneurs to establish new enterprises. Individual solutions are structured after having assessed the potential return of the venture and level of risk. Loans are repaid over a 5-8 year period SME’s can apply for finance between R150 000 to R3 million.
IDC Metal, Transport and Machinery Fund. The Industrial Development Corporation assists entrepreneurs to finance vehicles, components and accessories as well as diverse transport products such as boats, planes and trains. Repayment is usually made over 5-10 years depending on the risk profile.
Protect your credit record
If you do not have a good credit record, no one will want to loan money to start a business, especially commercial banks. It is very important to communicate regularly with your bank, and service your accounts responsibly. By having a good credit profile, you are over the first hurdle.
Find out what documents the bank needs
Contact the bank and find out what information the bank will require before applying for a loan. It always makes a good impression when you are organised.
Show the bank you have the expertise
Before approaching a bank, you must be able to show them that you have the necessary expertise to run a business by producing a well-constructed business plan.
Security is required
You will need security (personal surety and or assets) to cover the loan amount that you need. It is important to show the bank realistic cash flow projections and balance sheets for two to three years.
Understand how banks operate
Create a careful breakdown of what finance you need, vehicles, start-up capital etc. Banks are usually departmentalised. For example, Standard Bank Vehicle and Asset finance division has a team of transport specialists who can advise you on the most suitable finance options with regard to buying vehicles, but they won’t be able to help you with regard to start-up capital.
You should have collateral
In order to borrow, privately or through commercial banks you must have collateral. South Africa’s big four banks offer the standard range of credit – overdrafts, revolving credit, term loans, business mortgages, vehicle and asset finance, property finance, and debtor finance. So if you want a loan of R100 000, you have a R10 000 deposit the bank many grant you a R100 000 loan if it considers you a good risk. Collateral can be in the form of a property, an insurance policy, someone standing surety, or a combination of these.
Rather seek finance in isolation
Once you have the vehicle finance, approved approach the banks Small Business Division for Start-Up capital. By seeking finance in isolation (department by department), it’s much easier to get approval. If you have, though the help of your mentor, secured a contract to transport goods, this too, will make it much easier to get finance, especially if vehicle finance has already been approved.
Consider government funding
There are a variety of Government Funds that have been created to empower South Africa’s historically disadvantaged entrepreneurs to establish new enterprises. Individual solutions are structured after having assessed the potential return of the venture and level of risk.
A partner could be the solution
If you do not have a deposit and cannot get approval for financing, consider taking a partner who may be able provide the necessary deposit.
If you are unable to get funding, consider renting instead of purchasing a vehicle and begin your business on a modest scale.
What Are The Costs Involved
One of the most important things to do in order to run a successful transport company is to understand your costs. Don’t take short cuts and remember quality controls and stringent maintenance to vehicles is crucial,” says Mike Johnston, director of Transport Concepts, a transport and distribution consultancy.
Besides capital outlay for equipment and vehicles, other expenses have to be considered:
Garage or other facilities for vehicles stored at business premises
Additional security features – e.g. immobilisers and tracking equipment
Routine servicing and maintenance of vehicles
Repairs for scratches, wear and tear (tyres) or accident damage
Parking costs incurred for business use
Toll charges incurred for business use
Marketing and advertising programmes
Salaries and benefits for staff.
By law, any vehicle using South African public roads has to be “roadworthy”. The responsibility of scheduling and taking a vehicle in for roadworthy testing rests solely on each individual vehicle owner.
Regardless of how vehicles are paid for, the cost of financing a transport business is the biggest expense which has to be dealt with. Make sure you do your homework and have an understanding of the different options available when it comes to paying for vehicles. You can consider the following options:
1. Financial Lease
No upfront cash is needed
A lease is flexible and can be “tailored” to suit specific cash flow
Use of vehicles is funded from revenue
Ownership remains with the lessor
Rentals must be paid when due, regardless of cash flow start-up
2. Extended Rental Agreement
Fixed rentals are a hedge against inflation
Instalments can be paid from the revenue generated by use of the vehicle
Be clear about exclusions
Understand what portion of the rental is allocated to the maintenance component of the lease if there is one, and how this is set to escalate over the period of the agreement.
3. Installment Sale (often includes a Maintenance Lease)
A small amount relative to the total purchase price is paid as a deposit
Instalments can be paid from the revenue generated by use of the vehicle
Fixed instalments assist budgeting.
4. Outright Purchase – pay cash for the vehicles
You can negotiate discounts
Can be financed by employing overdraft fund
Shows on the balance sheet as an employed asset
Disadvantage include depreciation and maintenance
Whichever finance option you choose, it will have an affect on the cost of operating your transport company, the taxes you pay and the profits you can make.
What type of insurance is needed for a transport and logistics company?
Drivers’ liability: You must have insurance for drivers’ liability for injury to others, including passengers, and for damage to other people’s property resulting from the use of a vehicle on a road or other public place.
Comprehensive insurance: Which covers damage to vehicles as well as third-party liability, fire and theft, as well as sufficient cover for the goods transported in terms of damage and theft.
Where to find a contract or customers for my transport business?
There are almost 4 000 road freight businesses registered with the TETA; many of these are small businesses, and they will be your most direct competition. To determine your target market the first step is to do in-depth research that will help you define who your customers are.
This is known as market research and it is this collection and analysis of information about consumers and your competitors that we help you plan your marketing strategy.
Manufacturers: They need their raw materials delivered to their workshops or factories
Agriculture: Farmers use road freight haulers to move their animal feed, chemicals such as fertiliser and pesticide, livestock and agricultural products are transported by road
Wholesalers: They need to have their stock delivered to their warehouses or wholesale outlets.
Smaller services: Refuse removal, garden clean-ups, furniture and office movers.
Advertising your services
Get your name out there. Try advertising in the local newspaper, or listing in the classified section of community newspapers in your area. Another successful avenue is the buying an ad in the Yellow Pages.
Apply your business name, logo and contact details on to vehicles, to raise awareness when vehicles are out on the road.
Join associations such as the Road Freight Association or the local chambers of commerce so that you can network with companies operating in your area.
In order to be successful in obtaining business contracts you have to demonstrate that you have experience in the industry and that you can sell your business based on a high standard of business principals and ethics. Ensure that you can offer a better service that no one else can.
If you have a history in the industry, it makes it much easier to win contracts.
Speak to owners of similar businesses and make yourself known. The best source of information you can find about an area of business, is other business owners. One way for smaller operators to secure contracts is through sub-contracting. Subcontracting occurs when a transporter contracts to a third party and not to the principal. The subcontractor subcontracts to an established transport company which has the contract with the principal but perhaps does not have the capacity to carry out the contract.
Make contact with businesses such as manufacturers, wholesalers and retailers to see if you can tender for work to deliver their goods.
As a small transport business, you can approach transport brokers and secure contracts through them.
Before accepting a contract though a broker, discuss the terms of the contract with your mentor, so that you have the proper checks and balances in place.
As a small transport business you can approach transport brokers and secure contracts through them.
A broker can take up to 20% of the contract value. “Be wary of who you choose to work with in the brokering industry as it is not well regulated and its wise to ensure that they are reliable and upstanding brokers”, recommends Johnston.
There are almost 4 000-road freight businesses registered with Transport Education & Training Authority (TETA) of which many are small businesses, and they will be your most direct competition.
Winning contracts takes hard work and it takes of lot of networking to develop strong relationships in the industry that you are approaching. Trustworthiness is another very important aspect.
1. Offer a unique service
Remember, there are so many companies offering a similar service you have to find a way to provide an incentive for a company to make use of your services.
The way around this is to take a long hard look at your competition and offer something they don’t, such as faster turn around times, brilliant service or very competitive rates.
Often an established transport company may not be able to meet their contractual commitments because of unforeseen circumstances. Offer to pick-up any overflow and sub-contract the delivery. It’s often last minute business but creates a good opportunity to prove yourself as a reliable supplier.
3. Getting contracts from mining groups
If you fit into the historically disadvantaged South African profile, large mining houses support smaller vendors in outsourcing various contracts. For example, Anglo Platinum is committed to support and develop black economic empowerment (BEE) suppliers in South Africa.
It does so by supporting HDSA vendors in line with mining charter requirements. In other words, if you run a transport company and meet their qualifying criteria; Anglo Platinum may award a contract to your transport business.
Most large mining houses are committed to awarding tenders to vendors that are ethically, socially, and environmentally responsible as long as the vendors comply with their business principles and code of ethics.
To find out more contact the procurement departments who implement vendor social procurement programmes:
Anglo Gold Ashanti
Sasol Small-Business Development Division
These just a few of the many corporates that you can contact.
4. Sub contracting
One way for smaller operators to secure contracts is through sub-contracting. Sub-contracting occurs when a transporter contracts to a third party because they do not have the capacity to carry out the contract. The contractor subcontracts to a transport company who does not have the capacity to carry out the contract.
5. Bidding for tenders
A tender is an offer to do a particular job or supply particular goods or services at a particular price. To bid for the tender a business has an opportunity to put forward their services at their price to the organisation that has put out the tender. Many companies secure a good deal of work this way.
To be eligible to tender for a contract
The business must have a good banking and credit record
Be a registered business
A record of delivering on time
Be registered with the South African Revenue Services
Make sure your tax is up to date
You can subscribe to Tenders South Africa who, on a daily basis, our extensive research network across South Africa tracks tenders and business leads from newspapers, gazettes, websites, tender bulletins, private companies, and public sector organisations.
The Bulletin is available online edition on the Dti’s site, or the SA Government Online site.
You can also subscribe by post to the Government Tender Bulletin for R34.20 per year, by contacting the Government Printer.
Seda have a dedicated page that features tenders that are available countrywide.