LU 5

1. HOW TO ASSESS A BUSINESS
OPPORTUNITY
LEARNING UNIT 5

2. • Identify the main legal factors when
assessing an opportunity
• Discuss the importance of location, work
style, standard of living, personal
development and capital requirements of a
new business
• Evaluate if your idea is feasible
• Identify ways in which advantages can be
gained when starting an own business
LEARNING UNIT OBJECTIVES

3. LEGAL FACTORS
• Structure
• Intellectual Property
• Tax
• Employment
• VAT
• Other (associations, insurance, licenses and
certificates

4. STRUCTURE
• Sole proprietorship
• Partnership
• Close corporation
• Company

5. INTELLECTUAL PROPERTY
• Trade Marks Act, 1993
• Patents Act, 1978
• Copyright Act, 1978
• Design Act, 1993

6. TAX
• If you chose to form a company or close corporation
you MUST register with SARS
• Submit a tax return annually together with
provisional tax returns twice a year
• If you conduct business in your personal capacity or
in a partnership you have to register as a taxpayer
(if you are not already one) and submit details of all
income and expenditure to SARS annually in your
personal tax return

7. EMPLOYMENT
• BASIC CONDITIONS OF EMPLOYMENT ACT- BCEA
• REGISTER WITH SARS AS AN EMPLOYER – PAYE
• DEDUCT PAYE FROM YOUR STAFF AND SUBMIT TO SARS
MONTHLY
• REGISTER AS AN EMPLOYER WITH DEPARTMENT OF
MANPOWER
• SUBMIT A MONTHLY RETURN AND PAYMENT – UIF
• REGISTER WITH WORKMAN’S COMPENSATION
COMMISSIONER AND PAY A PREMIUM (AGAINST CLAIM
FROM EMPLOYEE ARISING FROM ACCIDENT AT WORK)

8. GROUP EXERCISE
• GET INTO GROUPS OF 4
• COMPILE A LIST OF THE ITEMS THAT YOU BELIEVE ARE
COVERED IN THE BCEA
• BE SPECIFIC I.E. I WANT YOU TO WRITE DOWN THINGS
LIKE HOW MANY HOURS A PERSON IS ALLOWED TO
WORK A WEEK, WHAT AGE CAN SOMEONE BE EMPLOYED
FROM ETC.
• THERE ARE 8 PAGES IN THE SUMMARY OF THE ACT SO
YOU NEED TO THINK FAIRLY WIDELY ABOUT THE TYPES
OF THINGS YOU THINK ARE INCLUDED!!!!

9. VAT
• Only need to register for VAT if your annual turnover
exceeds a specific amount
• If you are registered for VAT you will need to invoice
with a VAT invoice and charge VAT on everything.
• You will need to do a 2 monthly (or monthly) return to
SARS paying over the VAT due
• You will be able to deduct VAT you have paid on
purchases for the business

10. Group exercise - VAT
Get back into your groups of 4
Use your laptops or smartphones and
find out what the annual turnover is over
which you HAVE to register for VAT

11. Other Legal Factors
• Associations – not a legal requirement but can be very
useful
• Insurance – cover issues such as public and employee
liability, loss of revenue following fire etc.
• Licenses and certificates – things such as business TV
licenses, music rights, food preparation, liquor license,
smoking legislation etc.

12. LOGISTICAL FACTORS
• Location can be one of the most important factors to a
business success
• Measured on following four factors
1. Type of business
2. Budget for renting or purchasing
3. Business philosophy
4. Marketing niche you are seeking

13. OTHER LOCATION FACTORS
• Ease of communication
• Availability of labour
• Closeness to the population
• Cost of renting or purchasing property
• Assistance from Government or municipalities in that area
• Location of the owners and managers of the business

14. IS BUSINESS FEASIBLE?
• Pilot test
A preliminary run of a business
sales effort, program or website
with the goal of assessing how well
the overall approach works and
what problems it may have

15. GAINING ADVANTAGE AT START UP
Competitive Advantage
The particular way a firm implements
customer benefits that keeps the firm
ahead of other firms in the industry or
market

16. GROUP EXERCISE
Back into your groups of 4
1. Revision questions page 88 – Module Manual
2. Draw up a contract of employment for a
prospective new employee. Make sure it includes
all of the legal requirements!
3. Use your laptop or smartphone and find out who
the BCEA applies to and who is excluded. Are
certain people excluded from certain elements of
the Act? If yes, identify who and why.

17. Who does BCEA apply to?
BCEA applies to everyone except
National Defence Force,
National Intelligence Agency, or
South African Secret Service; or
unpaid volunteers working for charity.
The section of the Act that regulate working hours does not apply to:
workers in senior management
sales staff who travel and regulate their own working hours
workers who work less than 24 hours in a month
workers who earn more than R115 572 per year
workers engaged in emergency work are excluded from certain provisions.

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