Good business necessitates good administration

By David Malherbe   –   Published in Drakenstein Gazette – Friday 12 July 2013

Anyone of us knows the importance of making good decisions.  For a business owner it is even more important because bad decisions can cost him his business; his source of income.

But there is a way to minimize this risk; it is called “good administration.”  Yes, many people do not like administrative work, but this is a business’ source of information.  Every transaction is a piece of data that builds the picture of what is happening in the business.

But the recording of transactions is just the first step in a whole process that forms part of the bigger administrative and information system of the business.  And what we want is information of what happened in the past to make predictions for the future, e.g. a budget.  Without accurate and well recorded information you make bad decisions due to wrong information.

Unfortunately business owners often neglect this aspect and are not willing to pay good money for good administration.  Administration is a lot more than just knowing how much money you have in your bank account.

Businesses are subject to a multitude of laws and bylaws that they need to comply with.  One of the easiest ways to determine whether a business has a good administrative system is to look at their compliance to government systems, ordinances and laws.

You need to have somebody to keep your administration up to date.  If not, it may cost you dearly sometime in the future.  Either you’ll have to pay someone to sort out all the neglected paperwork, or pay penalties and interest to SARS for undeclared income, or go bankrupt due to a lack of knowledge about the true state of your business.

Administrative personnel need to be people who have a savvy for detail and paperwork.  Good administrators are usually people with good qualifications.  Unfortunately business owners seldom regard administration as important enough to allocate good remuneration to administrative personnel.

A good record keeping and administrative system is a necessity for any business.  Without it you head for disaster without even being aware of it.

David Malherbe and Dewald Scholtz will discuss this topic in more detail Monday evening from 19:00 till 20:00 on Radio KC 107.7 FM in the program “You the Entrepreneur”

(David Malherbe is a business- and career consultant and lives in Wellington.  He can be contacted via his web page or at T/F 021-873 0262.)

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