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Are You Suited to Entrepreneurship

How Crisis Leads to Opportunity

The direst economic disaster since the Great Depression has led to the emergence of new consumer behaviours. Here’s how to cash in on what people want.

Monique Verduyn

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The long-term impact of the downturn is slowly coming into view: austerity, mistrust of big corporates and a new resourcefulness characterise the emerging breed of consumer. “The devastation we have seen in the US, the UK and Europe, and places like Dubai has changed people’s value systems,” says Dion Chang, trend analyst and editor of The State We’re In: The 2010 Flux Trend Review. “2010 will signal the beginning of a new world order and although South Africa takes a little while to get up to speed with international developments, there is no doubt that we are going to be impacted by the same trends.

Consumer Activism

The most significant and dominant trend to emerge, according to Chang, is the rise of civil society and the growth of the civil voice. It’s a movement that is giving rise to new opportunities for entrepreneurs.

 “Consumers have found freedom online,” says Chang. “They are able to communicate, to shop comparatively, and to customise just about everything they buy, from bed linen to muesli.

Food For Thought

One sector that is feeling the effects of the new consumer activism more and more is the food industry. With “green” being the watchword in the developed world, moneyed consumers in South Africa are becoming increasingly concerned with the provenance of what they put on their plates.

New Zealand company Icebreaker introduced Baacode in 2008, a system that invites customers to trace their wool garments from the farm through each stage of the supply chain process. In South Africa this year, Checkers introduced lamb products which are traceable back to the farm of origin (known as the “farm to fork” approach) and include an ecological audit to ensure the maintenance of pasture health. These products now account for 50% of all lamb sold at Checkers and Checkers Hyper stores.

“Companies are quickly learning that consumers are becoming stronger and more vocal,” Chang adds. “They will soon not part with their money unless they can be assured that the organisations they interact with practice good corporate governance and eco-friendly practices. Customer loyalty is not about the product anymore; it’s about what the company is doing to reduce its carbon footprint.”

As a result, localisation and regionalisation is set to take off as people focus on local produce, with those who previously dismissed green initiatives finding that consumers are subconsciously pledging allegiance to companies that care about the environment.

“We’re wary of dodgy milk products and bad pet food,” says Chang. “We simply want to know more about stuff. That’s what’s drawing us to old-fashioned food markets.”

Changing Direction

With many of the retrenched either being too old to start their careers again or too young to retire, entrepreneurship is set to take off. “Again, it’s about the reassessment of value systems,” Chang says.

The shift, he notes, also results from the fact that people are fed up with banks and big business, which have been blamed for precipitating the global financial crisis.

“With so many people having lost their jobs and now working for themselves, there are major opportunities out there for financial service providers who make it easier for freelancers and the self-employed to have access to facilities like credit and medical aid,” adds Chang. “Entrepreneurs need to spot the gaps and supply the services these people need. The big corporates are simply moving too slowly.”

The good news is that technology now enables people to start up entrepreneurial endeavours much quicker and more cheaply than ever before.

Beyond 2010

While all the big stuff has been taken care of for 2010, Chang believes there will be a shortage of suppliers for food, transport, flowers, tables and chairs, stationery and other daily requirements. “There’s going to be a last-minute rush. We can expect lots of opportunities for people who are ready and waiting in the wings.”

And after? “We are the first host country to have so many stadia at the seaside,” he says. “All of them offer great views of our beautiful coastline, which is among our greatest commodities. I don’t think any of us realise yet the value that the images of those beaches, broadcast all over the world, will have for South Africa into the future. It’s a good time to own a B&B.”

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

Are You Suited to Entrepreneurship

Build Solid Back-Room Basics For Business Success

What do South African entrepreneurs really know about what goes on behind the scenes building of businesses?

Marc Wachsberger

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South Africa has a vibrant start-up culture with great ideas starting out with a bang, but closing down with a whimper because entrepreneurs picture the glory at the destination, but not the nitty gritty of the journey to get there.

Be smart about scale

When I started out, I literally did everything myself. I negotiated and signed leases, I arranged the furnishing for our apartments and managed the interior décor process. When guests started using our apartments, I signed them in at reception, and then carried their bags.

At that stage, there was no money in my business to pay for attorneys, interior designers and decorators and there certainly wasn’t enough money for porters.

However, when we got to 70 apartments, it didn’t make sense for me to be a porter any longer, so I hired someone to do that job, explaining clearly what I expected of him. Before I did that, though, I spent time designing incentives for him so that he would be more affordable for me, and so that he could earn as much money as possible.

Related: Training Is A Two-Way Trick

Know your talents – and your limitations

There are certain things I’m really good at, but I know without a doubt that sales isn’t one of them – and without sales, you don’t have a business. I couldn’t afford a top-flight salesperson, but I knew that I could attract the right talent with the right business model. I set some high targets for Pamela Niemand, but offered her one third of the business if she met them. We both won: she earned a share in a successful, trend-setting business, and my trend-setting business became successful!

Use your skills – but know when to hand over

My background in corporate finance meant that I had all the accounting skills I needed when we first started out, but I knew that the time would come when I would need someone focused on that side of the business full time. Doing it all myself first meant that I could brief my first full-time accountant clearly and with a deep understanding of what would be required – and that I could help that person find and fix any challenges based on my experience.

In summary, my simple advice to anyone starting out would be to bootstrap your business yourself without investors or staff for as long as you can, but don’t over-extend yourself. Know when to delegate tasks away so that you can focus on what you’re really good at – but don’t do it before you have a solid understanding of what’s required. Know what you’ll never be able to do, and bring in that resource from the beginning – but do it based on performance-based incentives, so that your fledgling business doesn’t lose out if your early hires don’t perform.

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Are You Suited to Entrepreneurship

The Myth About The Relationship Between Entrepreneurs And Taking Risks

This is the true relationship between entrepreneurs and the apparent illusion of risk.

Lisa Illingworth

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“I can’t be an entrepreneur or start a business. I don’t have the appetite for risk.” This line is spoken regularly to brave few that leave the perceived safety of a job, take the plunge and venture into the unknown world of being an entrepreneur. However, there is a gross misunderstanding in the appetite for risk that entrepreneurs are believed to have innately inside of them.

The little-known truth is that the majority of entrepreneurs don’t like taking risks and according to Luca Rigotti and Mathew Ryan in their paper that explores a model for quantifying risk and its translation into enterprising action, the results were very interesting.

Risk is explained by these theorists as taking action where the outcomes are unpredictable as well the factors leading to that outcome are unknown. One of the theorists in this area, Saraswati, who coined the term “tolerance for ambiguity” has a more accurate description of what the outside world deems taking a risk.

In simple terms, entrepreneurs don’t go head-first into the shark infested water because they like the idea of danger and potentially being eaten alive; or the thrill of being able to say that they survived whilst others perished in a pool of maimed flesh. They carefully calculate that the sharks have been fed recently, some of the sharks are ragged tooth sharks that whilst looking like they are set to devour a human being, are actually incapable of opening their jaws wide enough to bite. For those sharks that still have space or who smell blood and can’t resist the urge to kill, the entrepreneur has a cage set up that he can retreat into quickly and a knife with which to protect himself.

Related: 5 Infamous Risks Every Entrepreneur Must Face

Tolerance for ambiguity is the careful evaluation of what is known at the moment where a decision must be made and an open-mindedness for what is not known. This, coupled with the agility to change course when new information is presented, has earned the label of high risk appetite. The appetite is not for the risk, but it is the ability to move down a path, when all the information is not known.

I likened it to a person moving around in the dark holding a candle. The candle casts a light that illuminates a limited parameter around the person holding the candle. What is beyond the light that the candle casts, is unknown and potentially a risk. But as the person moves forward, the light reveals what was unknown and in the shadows. As the light reveals new information and new challenges added to what they have already learnt, the person can make better informed decisions. The tolerance is in not knowing what lies in the shadows yet to be illuminated by the candle and then the confidence in his or her own ability to act on what new information is discovered.

None of this behaviour is risky or irresponsible. There is careful consideration for what is known and a tolerance for what is unknown. And once there is more information available, a calculated next step is taken and more information is assimilated into what is now known. This is the true relationship between entrepreneurs and the apparent illusion of risk.

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Are You Suited to Entrepreneurship

7 Skills Every Entrepreneur Needs To Adopt Today

Want to know what skills can help you build confidence and your business? Here are seven…

Nicholas Bell

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For some people, becoming an entrepreneur is as easy as stepping off a bus. They have a big idea, they bring it to life, they hire employees and the next thing they are in a building smothered in branding and living the business dream. For others, the idea and the passion are there but they are unsure as to how they can make these into a sustainable reality. Entrepreneurial spirit isn’t like instant coffee – you don’t add ideas and suddenly get all the skills you need to thrive.

Want to know what skills can help you build confidence and your business? Here are seven…

1. Believable vision

Make sure that your vision is believable and achievable. It has to live in the realms of possibility, not as a blue-sky idea that looks good on paper but wouldn’t work in reality. You need to be able to live this vision so make it realistic and achievable. This will not only keep you on track, but your employees as well.

2. Be inclusive

You need to ensure that every person who works with you feels as if they are part of your vision and understand it. They need to relate to where the business is going and how it plans to get there. Many leaders don’t understand why employees are not engaged with their business and it’s because many of them don’t actually understand what the business does.

Related: 4 Ways To Improve Your Budgeting Skills

3. Communication is critical

If you don’t have fantastic communication skills, then now is the time to hone them. When it comes to building employee morale, commitment and engagement, nothing works as effectively as constant communication. The same applies to client relationships. You need to repeat the vision and ethos of the company at every opportunity and you need to be part of the team that does this communication.

4. Be visible and transparent

You are communicating, now you need to make that communication genuine by being both open and clear. People respond incredibly well to transparency. They feel as if they are part of something that recognises their value and contribution and it fosters a more inclusive company culture. Often toxic cultures come about thanks to a lack of communication and visibility. People know when things are being kept secret and react negatively to it, regardless of whether they’re an employee, a customer or a manager.

5. Be practical

You aren’t going to build an empire in a fortnight so focus on a realistic and practical business strategy that has clear benchmarks and even clearer goals. Communicate these with the company and keep everybody on the same page. Practical and achievable means long-term success.

Related: Crucial Skills You Need To Be An Entrepreneur

6. Build opportunities

As people become immersed in your company and part of its growth they will also need opportunities to grow. You need to tie their careers to the business and create opportunities for them.

7. Be human

It takes people to build a culture, a company and a future. It’s essential that you are human in your interactions and your treatment of others. The impact that a down to earth and authentic attitude can have on a company is extraordinary.

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