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Could you Expect to Spend that on a Real-World Venture?

Setting realistic investment expectations for your online foray.

Wesley Lynch

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For various reasons, many people still have totally the wrong idea about what constitutes appropriate costing for an online presence.

One hears stories of websites costing R20 million, and you have to wonder – what on earth were they thinking? On the other end of the scale, there is the perception of websites as cheap commodities.

This is having a skewing effect in the market.

Knowing what you want

How much, then, should a website or mobile app or social page cost? The answer to that is, invariably, the counter-question: How long is a piece of string?

Only by knowing what you want and appreciating the underlying complexity of it can you come to a good idea of what you should spend.

And to truly know what you want begins with a simple question: what would the real-world equivalent be of what you’re trying to achieve?

Horses for courses

You may want something as simple as a brochure site intended to drive traffic to your real-world store. An equivalent investment would be the cost of designing, laying out and printing brochures. Unfortunately, it doesn’t end there. As with print brochures, you have to consider the risk – reputational or operational – of unavailability, and hence the cost of service level agreements. In addition, there are marketing costs (including search engine optimisation) and regular brand revitalisations to consider.

Or it could be something bigger, such as an online store. An online store has global reach, while a store has local or at best regional reach, and hence far great potential return on investment. On the other hand, with an online store you save on people to man the outlet, as well as floor space, while the IT and systems investment might be equal. An industry rule-of-thumb in such a case is to price an online store at twice the cost of a flagship real-world store.

A third possibility is that digital and online is your entire business model. If there is a similar real-world business model to your online one, use that to benchmark the required investment. Think, for instance, publishing. You may already have a very good website but be looking for an iPad app. To cost that, work out, for example, what it would cost you to set up a magazine from scratch, or to re-jig your set-up to go from monthly to weekly (printing, production and possibly staffing costs).

Give to get

While that sinks in, consider this sobering bit of context:

  • You’re investing in complex, automated capacity
  • In return, if you do it right, you can expect increased sales and business growth.

In the publishing example, going online, mobile or social translates to a total or partial repurposing of your content for a whole new publishing platform, in return for extra revenue from a whole new channel.

Commensurate returns

Strangely, there exists the perception that online ventures require less investment for the same return. In the real world, few entrepreneurs would expect more than a doubling of their money within a year, and yet many business folk expect online ventures to deliver returns of many multiples over and above their investment.

This is simply unrealistic. The return you can expect will be commensurate with the investment you make.

Fallacy

It is a fallacy that online is cheap. The complexities and work involved in setting up your unique online presence, as well as its potential return on investment, will determine what a fair investment should be.

Wesley Lynch is the founder and CEO of Realmdigital, a top South African e-business strategy and technology partner, specialising in Web, Social and Mobile platforms. As a technology entrepreneur, Wesley has over a decade of experience in the financial, business and software development industries. He is also the co-founder of MyTrueSpark which sees him regularly consulting with start-ups, Venture Capitalists and Angel Investors. Wesley has recently been recognised in the Old Mutual Entrepreneurship Guide as one of the 38 emerging South African tech entrepreneurs to watch.

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How The Sanlam Enterprise And Supplier Development Programme Is Helping Start-up Businesses

The balance between funding, business development and mentorship can make or break an enterprise development programme

Francois Adriaan

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165 new employment opportunities, 172 SMEs developed and 1046 jobs sustained. These are some of the numbers recorded by Sanlam as the company prepares to wrap up the fourth year of its Sanlam Enterprise and Supplier Development (ESD) programme.

The flagship incubation scheme has turned around loss-making enterprises, helped some participants get critical accreditation and funding, but most importantly, R12.6 million was spent procuring goods and services from the participating businesses by the end of 2016.

Related: Enterprise Development Programmes For Black Entrepreneurs

Receiving funding isn’t the secret to start-up success

Francois Adriaan, head of Sanlam Foundation says the secret to a successful enterprise development programme is not the amount of funding big corporates can give SMEs: “It’s having the right mix of mentorship; business intervention and procurement spend flowing from your corporate to small businesses.

You have to show the entrepreneur you are mentoring that you trust them enough to do business and walk the journey with them instead of giving them a once-off grant and leaving them to their own devices,” says Adriaan.

Financial support that’s timed to business need

Like in many other ESD programmes, participants in the Sanlam ESD programme also have access to funding. But what sets the programme apart from others, says Adriaan is that the amount of funds disbursed to each participating businesses is directly linked to its need, its commitment and progress record.

“Financial support is timed according to the specific needs of each SME. Those who qualify for funding are then provided with a further seven years of SME growth support through the ASISA Enterprise Development Fund.”

The Sanlam ESD programme

The Sanlam ESD programme was launched in July 2013 in collaboration with the Association for Savings and Investment South Africa (ASISA) to empower SMEs, create jobs and contribute to economic growth in South Africa. An independent evaluation shows that participating enterprises have grown their annual revenue by 19% on average.

D&P Auto participants

One of the programme participants is D&P Auto, a panel beating business based in Retreat. For two decades, the owners of the business (husband and wife) poured their life savings, bank loans and even pension policy pay-outs into the business to keep it afloat because it was not making profit. Three years of focused business incubation and mentoring under the Sanlam ESD programme resolved D&P Auto’s 20-year loss-making battle.

“Our business has grown from a non-profitable business to the extent that we now have to pay provisional taxes to SARS for the first time in 24 years,” said Pam Douglas on their business maiden profit.

Successes of the incubation programme

The incubation from the programme has helped other participants brush up their bookkeeping skills, file successfully for tenders and get accreditation that took their businesses to the next level.

G&T Auto, the only fully accredited Major Structural Repairer in the programme, bagged Mazda accreditation last year, a rare accolade that will see the enterprise repair Mazdas that are still under warranty. The owner, Thembi Sithole says the programme has given her confidence to approach bigger clients as she now understands the requirements to get big contracts. She has also become more knowledgeable about financial statements and their impact on obtaining funding.

Related: Why Employee Engagement Programmes Backfire And What You Can Do About It

Adriaan says enterprise development initiatives of this nature give big corporates an opportunity not only achieve their business objectives, but also impact broader South African society.

“This commitment is around impacting issues of inter-generational poverty, unemployment and inequality. It is also about aligning around public-private-civil society partnerships in sustainable ways,” concludes Adriaans.

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Are You Ready For A Side Hustle? Here’s How To Know

We talk to side hustle pro Susie Moore about who should jump into entrepreneurship and when is a good time to take the leap.

Andrea Huspeni

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It seems like everyone has a side hustle. Indeed, 1 in 4 millennials have a side hustle, part of the  54 million Americans making money outside of their pay cheque.

But are you ready to get your hustle on?

According to Susie Moore, a life coach and the founder of Side Hustle Made Simple, you are always ready to begin a side hustle. You just need to know where to begin.

Related: 3 Ways To Set Your Side Hustle Up For Success

Moore has helped thousands of people take the leap from concept to creation in making their entrepreneurial dreams a living, breathing reality by launching a risk-free side hustle. She left her $500,000 job after her own side hustle took off within just 18 months.

She’s also the author of What if it DOES Work Out? How a Side Hustle Can Change Your Life released this fall, speaker and adviser to startups. Her work has been featured on the Today Show, Marie Claire and more.

To help aspiring entrepreneurs understand what it takes to be a side hustler, Moore is joining us for this week’s episode of Tough Love Tuesday, our Facebook Live series that connects experts with side hustlers for real-time advice and support.

Related: 50 Jobs, Gigs And Side Hustles You Can Do From Home

Specifically, she’ll share:

  1. The qualities all side hustlers need
  2. Advice that turns great ideas into action
  3. Strategies for making money right away
  4. Ideas for perfect side hustles
  5. Productivity hacks that prevent burnout.

This article was originally posted here on Entrepreneur.com.

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(Video) Why Your ‘Great Idea’ Actually Sucks

Don’t get caught up in coming up with the next big idea.

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Everyone wants to come up with the next Uber, Facebook or Tesla. But, if Entrepreneur Network partner Patrick Bet-David has to choose between someone with a great idea and someone with great sales skills, he’s taking the salesperson every time. Why?

Related: The 3-Step Approach For Testing Out Your Business Idea

Well, look at the history of great businesses. Ray Kroc didn’t start McDonald’s, but he learned how to sell the fast food restaurant and made far more in his life than the actual McDonalds brothers. Steve Jobs couldn’t code like Steve Wozniack, but he knew how to sell Apple, and his estate is worth far more now than Wozniack’s.

Facebook, Tesla and more. Each time, it seems like the great salesperson ends up earning more than the person who created the great idea to start with.

Watch the video to learn more about the relationship between great ideas and great sales techniques.

This article was originally posted here on Entrepreneur.com.

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