Start a New Business

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Thinking of starting a business? bear in mind that there are many ups and downs to starting a business. On the plus side, you’ll be your own boss. This will give you the ability to take advantage of opportunities you may never have as an employee. Your time will be your own to manage, and you will have greater opportunity than many others to build real wealth. In South Africa, entrepreneurship is becoming increasingly highly regarded as a way to enable job creation.

But there are many downsides too. The stats vary, but overall it’s estimated that about 70% of businesses fail over a period of ten years. When you consider the time and effort that people put into their ventures, it’s a sobering thought.

The reality is that businesses in South Africa have limited access to funding. As a result, many are under capitalised and experience severe cash flow pressures from the outset. Add to that the lack of management, sales, marketing and financial expertise of the average entrepreneur. Industry experience is another aspect that is often overlooked by eager entrepreneurs, leaving them unprepared for the challenges they may have to face. Inexperience can result in an inability to accurately estimate revenue and costs.

Neglecting to do thorough target market research, including market size and demands, is a grave error. Never assume that “everyone will want one”.

Before you take that big step and sink all your resources into a business, make sure that you have the requisite commitment and that you are willing to make sacrifices.

Use A Mission Statement to Uncover Your True Goals and Objectives

A mission statement is a key tool that can be as important as your business plan. It captures, in a few succinct sentences, the essence of your business’s goals and the philosophies underlying them. Equally important, the mission statement signals what your business is all about to your customers, employees, suppliers and the community.

The mission statement reflects every facet of your business: the range and nature of the products you offer, pricing, quality, service, marketplace position, growth potential, use of technology, and your relationships with your customers, employees, suppliers, competitors and the community.

“Mission statement help clarify what business you are in, your goals and your objectives,” says Rhonda Abrams, author of The Successful Business Plan: Secrets and Strategies. Answering the following questions will help you to create a verbal picture of your business’s mission:

1. Why are you in business? What do you want for yourself, your family and your customers? Think about the spark that ignited your decision to start a business. What will keep it burning?
2. Who are your customers? What can you do for them that will enrich their lives and contribute to their success–now and in the future?
3. What image of your business do you want to convey? Customers, suppliers, employees and the public will all have perceptions of your company. How will you create the desired picture?
4. What is the nature of your products and services? What factors determine pricing and quality? Consider how these relate to the reasons for your business’s existence. How will all this change over time?
5. What level of service do you provide? Most companies believe they offer “the best service available,” but do your customers agree? Don’t be vague; define what makes your service so extraordinary.
6. What roles do you and your employees play? Wise captains develop a leadership style that organizes, challenges and recognizes employees.
7. What kind of relationships will you maintain with suppliers? Every business is in partnership with its suppliers. When you succeed, so do they.
8. How do you differ from your competitors? Many entrepreneurs forget they are pursuing the same dollars as their competitors. What do you do better, cheaper or faster than other competitors? How can you use competitors’ weaknesses to your advantage?
9. How will you use technology, capital, processes, products and services to reach your goals? A description of your strategy will keep your energies focused on your goals.
10. What underlying philosophies or values guided your responses to the previous questions? Some businesses choose to list these separately. Writing them down clarifies the “why” behind your mission.

About the Author

Entrepreneur Magazine, South Africa.