Being a first class professional with an itch for independence might be enough to get you started in your own business, but not to keep you going. You need a plan, Sam! Here’s what you need to know about business planning, office space and the legal requirements for regulated professions.

Starting and growing a small business is not easy but it can be tremendously exciting and rewarding. This article deals with some of the strategic, physical and regulatory basics that you need to have in place when setting out to conquer your corner of the professional services market.

A business plan is the starting point for any new business. Too often, though, small business owners think that their businesses are too small to need a business plan and that the money spent on developing one, will be a waste. Or, even worse, they develop a business plan only to never look at it again.

Professional services providers are particularly prone to business plan inertia. After all, how difficult can it be to set up your laptop at the dining room table and start dispensing the benefit of your knowledge and experience?

It is true that in some regards rendering professional services is simpler than manufacturing or selling tangible products or running a guesthouse. You don’t need inventory, you don’t need a shop front and in the beginning at least, you don’t even need employees.

This simplicity, however, can be deceptive and a business plan can go a long way towards highlighting potential pitfalls, not to mention excellent opportunities.

The benefits of a good business plan
You are forced to take an objective, critical look at the business in its entirety. Business plan templates ask difficult questions, requiring you to research all aspects of the business environment.

It helps you to determine the feasibility of the business. For example, you might have thought that there was a market for assisting individuals with their income tax returns, only to find that SARS’ simplified systems are eroding that market.

You can anticipate problems before they occur. What if you lose a big contract? What if your clients don’t pay within 30 days? The business plan won’t prevent disasters, but it will help you to deal with them better.

It helps you to develop an operating tool with which to manage the business. An effective admin system is the backbone of even the smallest business. Discuss this with your accountant to determine how you will go about day-to-day matters.

A business plan prevents ad hoc decision making. Without having thought it through, you might be tempted to jump from one idea to the next if they don’t yield results fast enough.

It helps you understand your competitors. You know you are not the only auditor/engineer/management consultant out there, but do you know who you are up against and why they are getting the business?

Have desk, will consult
Although you don’t need a warehouse and a display area, setting up shop as a professional services provider should be done with equal care.

Common wisdom has it that working from home is one of the easiest ways for a new or small business to reduce operating costs, and that it is also one of the great advantages of having your own business. But, as with everything else, there are advantages and disadvantages to consider.

Ask yourself these questions before deciding to work from home:

  1. Is your house conveniently located if clients need to see you?
  2. Does your house contribute to a professional image or will unruly children and pets disrupt business meetings?
  3. Do you have safe, sufficient parking for clients?
  4. Do you need authorisation from your local municipality to operate a business from home?
  5. Will your clients be comfortable to meet with you at your home?
  6. Will you be able to focus on your work, instead of getting distracted by domestic chores?
  7. Do you have the necessary self-discipline to step away from the desk and spend time with your loved ones at the end of the working day?

If you don’t have all the answers to the questions above, and if you decide to rent or buy office space instead, here is another set of questions to ask yourself before signing on the dotted line:

  1. Is the building in an area zoned for professional services?
  2. Does it have all the office, storage or workroom space you need?
  3. Can potential customers access the area easily?
  4. Is the building consistent with the image you’d like to maintain?
  5. Is it in a low-crime area, or will crime insurance be prohibitively expensive?
  6. If your business expands in the future, will the facility be able to accommodate this growth?
  7. Is the location zoned for the kind of Internet connectivity you need? Remember that ISDN and ADSL lines require additional infrastructure from Telkom, which might not be in place. Installing this could add to your costs and delay operations by several weeks.

Can’t rent just yet? Try these three tips:
If you do decide to work from home but don’t feel that it’s an appropriate place to meet clients, try the following:

  • Arrange all meetings at your clients’ offices so that they don’t have to come to you.
  • Informal discussions can take place in informal settings. Almost any coffee shop on almost any day of the week is the scene of numerous business discussions.
  • Make sure your office is mobile. Armed with your laptop and cell phone you can set up office virtually anywhere if you need a break.

Toeing the legal line
The basic legal requirements for establishing a business remain the same regardless of the industry. This includes deciding on the most appropriate structure (eg, close corporation or company), registering a name, employing staff in line with the relevant pieces of legislation and making sure that you see eye-to-eye with the tax man.

In the case of non-regulated professional services providers, this is pretty much the full story. For those in the regulated professions, however, there are very specific requirements to fulfil.

Legal services: Legal services in South Africa are regulated by the Law Society of South Africa (LSSA) in terms of The Attorneys Act 53 of 1979. The LSSA is the umbrella body of the local attorneys’ profession, with four regional societies serving the interests of their specific members.

To open a practice, you have to be an admitted attorney, a member in good standing of the law society and in possession of a Fidelity Fund certificate.

How to go about it:

  • Open a trust account, separate from your personal and business banking accounts, and obtain a letter from your bank confirming that you have done so.
  • Appoint an accountant/auditor for your practice.
  • Obtain the following three forms from your regional law society: application to register as an attorney, Fidelity Fund certificate application and application for an identity card. The latter identifies you as an advocate/attorney, allowing you access into restricted areas such as prisons and courtrooms.
  • Submit the completed application forms, along with the trust account confirmation letter and details of your appointed accountant/auditor to your regional law society.
  • Once the law society has registered the new practice and issued a practice number, you are good to go.
  • The law society will require you to submit an accountant’s/auditor’s report on your first three months’ operations, within six months of your commencing practice.

Accounting, auditing and bookkeeping services: The auditing profession is regulated by the Independent Regulatory Board for Auditors (IRBA) in terms of the Auditing Profession Act 26 of 2005, while the South African Institute of Chartered Accountants (SAICA) oversees the accounting profession in terms of the Chartered Accountants Designation Act 67 of 1993.

If you plan to do the attest function (in other words, carry out audits), you have to be an IRBA registered Accountant and Auditor. To be appointed as an accounting officer for companies such as close corporations, you have to be a registered Chartered Accountant or an Associate General Accountant.

How to go about it:

  • Make sure you are registered with SAICA or IRBA, depending on the kind of practice you want to establish.
  • Decide whether to buy an established practice or a block of fees, or to finance yourself while you establish a viable client base.
  • Consider specialising in a certain niche and establish yourself as a specialist in that area.
  • Notify SAICA so that they can change your registration category on their database, ensuring that you receive all mailings relevant to practitioners.
  • Buy SAICA’s Marketing Manual and Practice Management Manual, both of which are available from the SAICA bookshop or can be ordered from the website www.saica.co.za.
  • Contact the SAICA Small Practices Director to discuss your options further: (011) 621 6600.

Built environment services: The Council for the Built Environment (CBE) oversees the full spectrum of professional services related to the building industry. The CBE is an umbrella body that represents the following councils:

  • Engineering Council of South Africa
  • SA Council for the Architectural Profession
  • SA Council for the Quantity Surveying Profession
  • SA Council for the Property Valuers Profession
  • SA Council for the Landscape Architectural Profession
  • SA Council for the Project and Construction Management Professions

Professionals wanting to practice in any of the areas overseen by the different councils, have to be registered. Additionally, registration with one council does not qualify you to work in other built environment fields.

The good news is that most of the councils have Recognition of Prior Learning (RPL) processes in place to facilitate the registration of people who gained their competence through experience, rather than academic qualifications.

Many of the councils, and their related institutes, have support material available to assist professionals wanting to set up their own practices. Architects, for example, would be well advised to lay their hands on the SA Institute of Architects Practice Manual, which consists of more than 80 practice-related documents.

Top tip:
Join the South African Association of Consulting Engineers (www.saace.co.za) to learn from other professionals in this field. This voluntary association of independent consulting engineers in private practice provides, amongst other services, advisory notes, guidelines on professional practice matters and a peer review and quality management programme.

Medical and dental services: The Health Professions Council of SA (HPCSA) is an umbrella body consisting of twelve boards, regulating health care professionals in South Africa. Its function is to provide control over the training, registration and practices of health care practitioners.

In order to set up an independent practice, you have to be registered with the HPCSA, mentally and physically fit to practice and in possession of a practice number. You also need a practice number to claim payment from either a medical scheme member or service provider.

How to go about it:

  • Make sure you are registered for independent practice with the HPCSA. (Remember: the registration guidelines vary from one professional board to the next.)
  • Once in practice, it is a legal requirement to inform the HPCSA of any changes to your personal details.
  • Apply for a practice number from the Board of Healthcare Funders of Southern Africa (BHF).

The application form is available on the BHF website (www.bhfglobal.com) and you have to submit it with the following documents:

  • Certified copy of your ID
  • Certified copy of your marriage certificate (where the name on the HPCSA registration certificate differs from the one on your ID)
  • Certified copy of the Incorporated Certificate from the Registrar of Companies (where applicable)
  • Certified copy of HPCSA Independent Practice Registration Certificate
  • Certified copy of HPCSA Registration Certificate (if applicable)
  • Certified copy of Department of Health Dispensing Licence (if applicable)
  • Certified copy of proof from the HPCSA that your subscription fee has been paid for the current year
  • Certified copy of approval letter from the HPCSA for private practice for dental therapists, medical technologists and diagnostic radiographers
  • Post or deliver the documents to the BHF – they only accept originals.

Top tip:
Speak to as many colleagues and friends as possible who are in public practice – learn from their mistakes and successes.

Sourced: Small Capital

Small Business Forum

The Small Business Forum is an independent network of entrpreneurs and small business owners established to encourage and support the creation, growth and development of small business in South Africa.

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