Don’t delay – Start your business today
Do you dream of starting your own business but suffer from nocapitalitis? Don’t despair. We set you up with these ten steps, complete with tips, advice from the trenches, and free tools for starting your business with nothing.
What you’ll need:
- A computer
- Internet, lots of it
- Coffee, in abundance
The big idea
Here are eight ways to come up with one that sticks.
- Ask yourself, “What’s next?”. The most successful businesses are the ones ahead of the curve. Look at trends and technologies on the horizon and how you might move in those areas.
- Do something about that pet peeve . Some of the world’s most successful businesses started as a one-man operation created out of frustration. You just have to look to yourself and your life to find what frustrates you. There might just be a market in it.
- Don’t [re]invent the wheel. Sometimes there are ideas that create entirely new industries. But most of the time you don’t need to invent or reinvent one. Analyse big industry players to find their gaps then figure out if you can fill them. Sometimes the big guys create tremendous opportunity in their wake.
- Big fish, new pond. Think about your skills and whether they may be useful in a new area. Do you have technical skills or expert knowledge in one industry that can meet a need in a different one?
- Get your innovation on. When coming up with ideas, try to identify markets that haven’t had many recent innovations. Be careful though, there may be no innovation because it’s had its heyday or because it’s a non-starter.
- Be like fast food: Fast, cheap, and easy. Many companies have got their big start by offering customers an existing product at a lower price. Be smart though. Consumers are discerning and want quality.
- If in doubt, talk. You don’t have a business if you don’t have a market, and successful businesses have ideas that meet people’s needs. And the best way to find out what people’s needs are, is to hang out with them or just ask them what frustrates and interests them.
- Don’t be afraid to mix things up. If you’re the evil genius sort, take a cruise down a shopping aisle and see what happens when you combine two products across the aisle from each other. While it will probably spark a whole lot of bad ideas, you may find a brilliant gem in there.
Are you looking for some ideas? Why not have a look through 10 business ideas that are ready to launch.
With no market, there’s no business
As the saying goes, if there’s no market, there’s no business. But having a wishy-washy idea of who your market is – like a blanket description of ’women‘ – isn’t going to cut it either.
You need to know everything about your would-be customer, from where they live, the routes they drive, their income, what their interests and needs are, right down to the number of sugars they like in their coffee.
One of the best (and free) ways to get this information is through surveys. Facebook and Twitter are your friend – provided your target market actually uses these social media platforms.
If you have a database of email addresses, online surveys can be useful too, but be sure not to spam, or make them too lengthy and vague.
If social media isn’t your forté, you can try keyword searches on Google, visit competitor links to see their pricelists and offerings, read expert blogs, or go the old-fashioned route and get talking to people on the phone or face-to-face.
Get yours here:
Lets you create surveys free of charge for your own audience. For a little extra, you can also get feedback from your target audience.
- Visit: www.surveymonkey.com
- Cost: Free
Lets you create group pages that you can attract potential customers too. Take the time to generate relevant content, create polls and ask questions to spark interaction.
Penning the grand plan
Free help with business plans
To start and run a business you’re going to need a business plan. It gives a clear overview of what you’re going to do and how you’re going to make it happen.
If you’re planning on starting a business for free, it’s more important than ever to figure out where you’re going to incur costs and how long it will take you to start generating cash flow and profit. That way you can implement a cunning plan to get what you need for free.
Some work required
Google ‘free business plan template’ and in 0,18 seconds you get 37,2 million results. Some plans are better than others (and length isn’t the deciding factor either), so make sure you have the following elements thought through:
- An overview
- Executive summary
- General company description
- The opportunity
- The industry and market
- The competition
- Your strategy
- Your team and roles (even if it’s just you)
- A marketing plan
- An operational plan
- A financial plan
- And an appendix.
Get yours here:
By Entrepreneur US expert Tim Berry gets you started on your business plan.
- Visit: www.bplans.com
- Cost: Free
Download our free business plan template here to help get you going.
Free start-up capital
(Or how to get other people’s money)
Now that you’ve got your business idea, you’ve identified your market, and you’ve fleshed out a business plan that documents how much money you’re going to need, you can go about getting that money – preferably for free. Here’s how.
If you’ve had designs on running a business for some time, chances are you’ve been saving for it. While timing can be key in starting a business, keep saving until you have enough capital to keep you going for at least three months to give your business time to start generating cash-flow.
Friends, family and fools
The three f’s for funding, and two out of three love you, which means they’re willing to invest in you and less likely to scrutinise your plan or demand high returns for their investment. The bad news is that if things go pear-shaped it could make things more than a bit awkward. So when seeking money from friends and family, here are some basic rules:
- Treat them as if they were strangers. Keep business and personal separate by insisting on legal documents or promissory notes, and don’t offer less than commercial interest rates.
- Debt can be better than equity. When someone lends you money, you pay them back with interest and they can’t tell you how to run your company. But when someone buys a share, they are your legal business partner. When in doubt, rather ask for a loan.
- Tie repayments to cash flow. Try to avoid obligatory and fixed repayment schedules, instead work on a percentage of operating cash flow.
- Consider non-voting share. If family or friends insist on buying, try make it non-voting so they don’t have the right to second-guess your every decision.
Angel investors and venture capital. An angel investor is someone with loads of money and eyes for mentorship interested in helping out the next generation of entrepreneurs in return for a piece of the action (and anywhere from 10% to 50% equity in the company).
Venture capitalists are in it to make a lot of money quickly and firms have different specialties and requirements. They play hardball and want in on high growth companies, which means your idea needs to have momentum – revenue, channel partners, business development deals – and you need in place a management team, market size, and a number: How much money, and what for, right down to stationery.
Both angel investors and venture capitalists like to see an endgame that will allow them to pocket their winnings by having their shares bought out or selling off the company.
Get yours here:
Get in touch with South African angel investors through various angel investor networks.
- Angel Investor Network: www.investmentnetwork.co.za
- Angel Hub: www.angelhub.co.za
- Investors Network: www.investorsnetwork.co.za
For venture capital, check out these firms:
- South African Venture Capital Association: www.savca.co.za
- Grovest: www.grovest.co.za
- Industrial Development Corporation: www.idc.co.za
- 4Di Capital: www.4dicapital.com
Crowdfunding is a relatively new way to generate capital for launching your business idea. Instead of approaching an investor for a lump sum, crowdfunding is about persuading individuals to each give you a small donation. With enough donors, you have some serious start-up capital. Special rewards are offered in return for donations, ranging from names appearing in menu items, behind-the-scene tours, early releases, small return on investment or royalty.
The best part is that by pitching your business idea to the masses, you also create a base of customers who feel as though they have a stake in the business’s success. The downside is that without an engaging story to tell, your attempt might flop.
Get yours here:
Crowdfunding platforms have sprung up both locally and internationally, here are the most popular sites:
- Kickstarter: www.kickstarter.com
- Indiegogo: www.indiegogo.com
- Start Me: www.startme.co.za
- Start-up SA: www.start-upsa.com
- Silicon Cape Initiative: www.siliconcape.com
These are a godsend if you qualify, meaning your business needs to have a positive impact on the local economy, create jobs and meet the requirements of B-BBEEE. You also need to be prepared to jump through a lot of paperwork hoops and wait a very, very long time.
Get yours here:
The Department of Trade and Industry has dozens of grants, funding and incentive programmes available across a range of sectors.
- Visit: www.dti.gov.za
What you need to get started:
- A small network of enthusiastic believers to get the ball rolling (See family, friends and fools).
- Think up other perks in return for money (remember, donors often want bragging rights to share at the pub).
- Offer a serious business plan that explains what the money will achieve.
- Show you’ve got some of your own skin in the game.
- Include media like videos and pictures, links to active social media sites and regular updates until the project is complete.
Getting free office space
Office costs can be a major hurdle for entrepreneurs with tiny budgets, but the first question you need to ask yourself is: Do you really, really need an office, or is it for show?
There are a number of spaces that can serve as offices, and the first can be your home, lounge, bedroom, garage, local library, café, someone else’s office or even collaborative office space.
If working from personal spaces, offer to visit clients instead of them coming to you (they’ll consider it value add) or spend a little bit of money getting your working space looking professional.
If a home-based business won’t work for you, try co-working spaces by looking for solopreneurs to sub-let excess office space to. If you’re able to offer another business a barter, you could well get your office space super-cheap in exchange for services offered.
Collaborative spaces are also on the rise as more and more solopreneurs need ad hoc office space for conferences, presentations and resources. In these spaces resources and furniture are provided on a pay-per-use rental or membership basis.
Get yours here:
Is a collaborative work space in Joburg’s Maboneng Precinct that you can rent on a membership basis.
- Visit: www.theopen.co.za
- Cost: From R500 per month
Offers both virtual and literal office space on a pay-as-you-use basis.
- Visit: www.regus.co.za
- Cost: Pay-as-you-use
Is a Joburg-based shared office space for start-ups complete with desks, office resources, kitchen facilities and IT support.
- Visit: www.impacthub.net
- Cost: Monthly rental
Well, sort of
Remember, you are your best employee. To keep things small and cost-free in the beginning, see how long you can get by with just yourself.
Then it’s time to ask the same people you asked for money to get involved: Family, friends and fools. If they don’t have the specialist knowledge and skills you’re looking for, lure in talent by offering equity or profit share.
If you’re not looking for a full-time employee (expensive), consider using freelancers for ad hoc projects.
Get yours here:
Freelancers can be found all over the place. But good places to start are:
Running your office
It’s pretty much free (if you don’t count your bandwidth)
There are dozens of open source and freeware applications out there to help you run your business, some are even designed for operating from a tablet. Whether its project management, communication, creating documents, or specialist programmes, Google is your friend.
Get yours here:
Allows you to create everything you could possibly need from anywhere that has an Internet connection. From spread sheets to word documents to presentations, Google Docs has it covered for a couple of dollars a month. If you’re into completely free software, try Open Office.
Perfect for video conferencing and is free.
- Visit: See www.google.com/+/learnmore/
Can be your perfect free solution if you need to video or phone call one location at a time. If you need some extra bells and whistles though, like video conferencing, you can pick up the tab of a few dollars a month.
- Visit: www.skype.com
Here are 5 time management tools for your business.
Financial and HR
Paying people and other people stuff
Unless you have a financial or HR background this can be particularly daunting. But having a clear picture of the financial status of your business at all times is essential.
Fortunately there are various products available to help you out. Be careful though: Some can start free and then quickly become expensive.
Get yours here:
Is offered to FNB clients free of charge. It collates electronic bank statements to generate financial statements. It also allows you to prepare income statements, balance sheets, cash flow statements, and provides debtors, creditors, budgeting and Vat functionality.
- Visit: www.fnb.co.za
- Cost: Free
Online billing can be done through the likes of Snapbill that allows you to send invoices and can be set for recurring billing. It can be operated from any web-enabled device.
- Visit: www.snapbill.com
- Cost: Free (for three invoices per month)
Sage Pastel Payroll:
If you’re not able to keep things to a one-man-band, online payroll can be your answer. Sage Pastel Payroll software offers start-ups more cost-effective solutions depending on the number of employees you have on your books.
- Visit: www.pastelpayroll.co.za
- Cost: R17 per employee for My Pastel Online (aimed at start-ups)
People management for SMEs is available from PeoplePlus. It is available 24/7 and offers data back-ups, legislative updates, HR resource information, leave management, disciplinary and training management modules, a recruitment portal, a document manager and payroll module.
- Visit: www.peopleplus.co.za
- Cost: Pay-as-you-us
Build a website for free
Probably the most important thing you’ll need after a business plan
Today’s consumer is a few steps ahead of you in the sales process and it’s all thanks to the Internet. So if you don’t have a good website, you’re seriously hamstringing your business’s chance of survival.
At the end of the day, if you’re not online, you don’t exist. But here’s the great news: You don’t need to be a tech boff, spend loads of money or do anything complicated to have a hot website.
Here’s what a good website needs:
- A domain name that’s easy to spell and correlates to your business’s name.
- A host.
- A front end that’s HTML or Flash (that’s amateurish basic text or more sophisticated functionality).
- Highlight your brand. Make sure you convey what your brand stands for. Be sure to have relevant and useful content, information about the company, news, pricing, promotions, review and testimonials, everything a potential customer would want to know before they decide to purchase.
- Spell out what your product or service does and why it’s relevant to the consumer.
- Showcase your brand leaders – it helps personalise the brand.
- A space to let happy customers grow.
- Keep it clean! Go easy on flashing, spinning, garish colours, poor quality pictures, and anything that could be annoying.
- Make sure it’s easy to navigate.
- Choose smart keywords and get working on SEO so you pop up first in Google searches.
- Start a newsletter that visitors to your site can subscribe to.
- Get a blog going that’s linked to your website. People want information. Give it to them.
- Linking your site to social networks is great for Google ranking, so at the very least, get a Facebook page.
- Generate interest with news about upcoming promotions or new products and services.
- If you’re an e-tailer, streamline your payment service to be as quick and painless as possible.
- Contact information. Make it easy for potential customers to get hold of you for more information and quotes.
Get yours here:
To see if your domain name is available, spend time looking up names and variations.
To register and start building your website for free, a number of sites are at your disposal. Check the conditions though, some downsides might be paying for extra bells and whistles or subdomains.
Building a website
If you don’t have the time or skills to start your own site, spend a little cash having a professional set up and host your site for you.
- Visit: LIT Creations, www.litcreations.com
- Cost: Starter pack R2 300.
To check your website is ticking all the boxes, get it graded with a website grader.
- Visit: Free Grader, www.freegrader.com
Get the look
How to brand your business
The impression your business makes on potential customers is critical. It has to speak to your target market, convey the right kind of message and convey legitimacy and credibility. But it needn’t cost you a fortune. Here’s how to get branded:
Lets you design your logo for free with a user-friendly interface. You can choose from thousands of icons too if you don’t fancy yourself a designer.
- Visit: www.logomaker.com
Can also save you a lot of money by designing your own logo for free. It also throws in matching business cards, envelopes and flyers.
- Visit: www.logosnap.com
How to create a kick-ass logo
Since your logo is a visual representation of what your business does and stands for, don’t cut corners with this important process.
- First articulate the message you want to convey. Write a one-sentence mission statement to help you focus and stay true to while designing.
- Get inspiration by looking at logos of other businesses in your industry (including your competition).
- Focus on the message and personality you’re trying to project.
- Make it clean and functional so it works well on business cards, websites and a branded truck, for example. Remember: Scalability, ease of reproduction, memorability, and distinctiveness.
- Your business name will affect the logo design.
- Use the logo to illustrate the business’s key benefits.
- Don’t use clipart. It’s not just a matter of looking cheap, it’s too easy to copy.
- Avoid trends. Remember the dot com bubble where a random object was mixed with a colour? It dates.
- Watch your colours. Try keep to three or less, and remember colour expresses mood.
- Once you’re done, protect your logo by having it registered as a trademark.
How To Make Course Corrections And Finding Your Differentiator
A lot of launching a business is starting small, and pivoting as needed.
An advisor whom we trust, and who has been involved in our business since launch would like to buy into the business. We could make use of the cash injection, and we believe his experience would be beneficial to the business. His condition is that he occupies a board seat, and that we create an advisory board that he can also sit on. Should we do it? — Mvepho
If you trust the guy and need the money, do the deal. A board seat is fine. Voting should be based on shareholding, not hands raised. Don’t allow for any special minority rights like veto over budget or right to appoint CFO.
An advisory board for a start-up seems a tad overkill, but if he wants one, give it. He’s either going be an ass, or he won’t. Only one way to find out: Get into bed.
The key provisions of the shareholder agreement relate to divorce. How do you get out of relationship? There are three key parts to consider: Forced sale provisions (death, disability, prison, leave country, etc); Valuation formula for exit (5 x NPAT); Agree to arbitration being binding.
The simpler you keep things, the easier it will be to part ways if things don’t work out.
I need to attract customers away from their existing suppliers who offer a similar product to mine. My value proposition is convenience and quality. What other value should I consider? My main customers are restauranteurs and households (flats), and I provide the convenience by instant deliveries of food (chicken and eggs) to their doorstep. — Mam
Pick one differentiator. If one isn’t enough, your product isn’t good enough.
In this case maybe it’s convenience. Or maybe it’s speed of delivery (30 minutes from order). Or maybe it’s the best eggs in SA.
Whatever. Ask customers what the most important thing is, then focus on pushing that as your unique selling proposition.
That doesn’t mean you ignore the other inputs. It just means your pitch is predicated on one key selling point.
My partners and I have managed to get an investment opportunity for our app but now we have an issue about how we should spend that money.
I think we should first get some traction with users with a MVP even though we’re not delivering on our value proposition in the beginning i.e selling before we commit to building and iterating based on user feedback before adding new features.
My partners think that now that we have an investment opportunity, we should build the app with all the features because that’s what differentiates us in the market.
How would you handle a situation like this? — Tula
Start with MVP. Get feedback. Iterate.
Do not start with an app including all the bells and whistles. Firstly, it will take too long to make and get bogged in scope creep. Secondly, if you’re on the wrong track and you’ve already spent all your money, its game over. Insert coin.
Rather start small. It lets you course correct faster and keeps you in the game longer.
My waiter has contracted a chronic infectious disease (not HIV). He’s worked for me for seven years, but I can’t risk my staff/customers getting sick. What should I do? — Bob
The business comes before individuals. It can be painful losing a loyal long-time staff member, but you have to do it if he jeopardises your business survival. Exhaust all options, but if there is no medical solution then you have no choice. But you can’t just cut him loose. If you do that, all your other long-standing staff will look at you and think, “He doesn’t care for me.” Morale will go down, and your business may fail anyway.
If you are forced to lose a loyal staff member, you must go out of your way to ensure he/she is financially taken care of, either through a pension or a lump-sum payment.
It’s the right thing to do, and it will show your other staff that you have their backs through thick and thin.
Alan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.
What it’s about
It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur.
For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy.
This book is a collection of tips and wisdom that will help you make money without forgoing happiness.
Get it now
Do you have a burning start-up question?
(Infographic) The 20 Most Common Reasons Start-ups Fail And How To Avoid Them
These do’s and don’ts can make or break your start-up.
So, you have a great new idea or invention, and you are ready to open your start-up business. But, you’ve been scared by the well-publicised statistic about start-up failure – more than 50 percent of small businesses fail in the first four years.
Opening and operating a successful start-up requires some luck hard-work and thoughtful planning – as well as the ability to adapt that plan. Having been involved as a consultant to numerous start-ups over the past decade, I have seen some fail, some achieve a modicum of success, and some make it big.
Here are a few do’s and don’ts that will help guide your start-up to the promised land:
- Don’t think that a great idea or a great product is enough. The start-up graveyard is littered with amazing ideas and products that have failed.
- Do have a business plan that includes every aspect of how you will run your operation and how it will be successful. It should include all anticipated costs, marketing, manufacturing, the technology required and staffing. A business plan should also include how you will market and sell your product.
- Don’t think your idea or product is original and because you and your friends think it’s amazing, means that it is and there’s a market for it.
- Do lots of research before you spend your money. As a consultant, I have on three separate occasions been asked to help with a business plan for a start-up, where I discovered almost exactly what they are doing has been tried before and failed. In two of those instances, the previous failures indicated that the idea wasn’t good. In the third instance, we were able to learn from the previous mistakes and actually make a successful run at it. The number one reason start-ups fail is that there is no market for their offering.
- Don’t assume you will get financing other than the money you start with from yourself, family and friends. Only a very small percentage of start-ups get Venture Capital (VC) funding and in fact, the funding bubble has burst. And that means early-stage start-ups are getting little or no love from outside equity firms.
- Do assume the initial funding you have will be all you get, so the goal is to have the lowest burn rate possible. Therefore, your initial business plan should have a route to profitability and sustainability before the money runs out. The number two reason start-ups fail is that they run out of money.
- Don’t think that your expert knowledge of your business, a well-developed business plan and proficiency in PowerPoint are enough to craft an investor deck that will get a private equity firm’s attention.
- Do hire an expert consultant who has done this before. VCs can smell an embellished or amateurish deck 100 miles away. You typically only get one look by a potential investor, so make sure your investor deck is the absolute best it can be.
- Don’t assume that technology will be easy or come as scheduled. In almost every start-up I have been involved with, where the need for technology advancement was crucial to success, there were unanticipated issues and delays.
- Do assume that there will be delays in technological deliveries and therefore you need to leave a buffer for that in your business plan. Do have a competent development team and if they are not performing, replace them as soon as possible.
- Don’t think that you can go at this alone or that it will be easy to assemble a winning team.
- Do select your team members carefully, trying to add as much diversity as possible. The most successful start-ups that I have seen have mixed experience and newbies as well as the more traditional kind of diversity. The number three reason startups fail is that they have the wrong team.
- Don’t think customers are just waiting for your offering and investors will be lining up to give you money simply because your idea is amazing – even if you have been a successful serial entrepreneur in the past.
- Do be humble and realistic about everyone you meet. Relationships are a key to success, and like with personal relationships, if you want to be successful, be sure you see yourself as others see you. I have witnessed a lack of self-awareness and a big ego from owner’s doom potentially successful start-ups.
- Don’t think you are leaving a nine-to-five job for the easy and flexible life of being your own boss. A start-up is a seven-day-a-week occupation and now it’s your money and reputation that are solely on the line.
- Do plan to work harder than you ever have with little return on your efforts for an extended period. Do be honest with everyone you interact with, as your reputation will ultimately be a key to your success.
To have big success as a startup, you’ll have to master all the do’s and don’ts above, and that’s a daunting task. So, before you begin, the question you must ask yourself is: “How badly do you want it?!”
This article was originally posted here on Entrepreneur.com.
The Complete How-To Guide for Starting a Car Wash
What you need to know about opening your own car wash in South Africa.
We all love to have a clean car – start your own business today
Shiny wheels, the perfectly clear windows and not a streak in sight. In today’s fast paced world we often don’t have the time to do it ourselves – and when we do, there are other things that quickly fill that time.
And so we pop off to the local car wash to have it done and ticked off the list so that we can move on to other things.
How often have you sat considering owning a car wash of your own while you’re waiting for your car to be done? If it’s more than once, then maybe you should consider taking the leap and starting a car wash business.
Contents in this guide
- How to Choose What Type of Car Wash to Open
- Steps for Registering a Car Wash Business
- Car Wash Funding Options
- Choosing a Location for Your Car Wash
- Car Wash Insurance and Liability Cover
- Car Wash Equipment and Supplies
- Car Wash Marketing and Branding Basics
- Hiring and Managing Your Car Wash Staff
- How to Set Your Prices?
How to Choose What Type of Car Wash to Open
The first decision that needs to be made involves deciding between a franchise and an independent business model. Both of these come with their own set of risks and rewards – all of which have been set out in the table below.
The decision between an independent venture and a franchise opportunity must be a personal choice based on your personality.
In general – if you are someone who likes to blaze your own trail and like to have complete and utter control over every aspect of your business, then starting a car wash, or any business, as an independent is the way to go for you.
If however, you are better at working within the guidelines and like the freedom of someone else, in this case the parent company, making the decisions for you – then starting a franchise is the way forward.
Make sure when investigating the car wash franchise you are interested in, that you choose a recognisable brand with a good reputation in order to get the full benefit of buying into a franchise.
With both franchising and independent ventures, you now also have the choice of starting a mobile car wash, instead of a fixed full time entity.
Need to know: Should You Purchase An Existing Franchise?
This also comes with pros and cons and these are listed below.
Steps for Registering a Car Wash Business
Here are the main steps for registering your new small to medium enterprise:
Register your business with the Companies and Intellectual Property Commission (CIPC). This involves lodging a Notice of Incorporation (CoR 14.1) and a Memorandum of Incorporation (CoR 15.1 A-E). These forms are available at www.cipc.co.za. They take roughly five to seven days.
Alternatively, it is possible to use a service that registers your company for you with the CIPC such as this one. These services do of course have their own fees attached.
Thereafter, you must open a bank account for your business. Depending on the correctness of the application forms, this only takes a day or two and is free of charge.
For an SME, earning less than a million rand a year – the only form that SARS requires is the IT77C that must be accompanied by a certified copy of your ID and a copy of the company’s registration documentation. The IT77C form is available from www.sars.gov.za. If your employees aged 24 – 65 will be earning more than R5 000 per month, then you will need to register for UIF and PAYE.
To register for unemployment insurance – visit www.labour.gov.za for more information on the process and for the forms.
The final step that takes place in conjunction with the step above is to cover your employees in terms of occupational injuries, diseases or death in terms of the Compensation Fund. This is optional. These forms are available from www.labour.gov.za
In terms of the permits and licenses you will need to start a car wash you need to first assess whether or not the premise you want to work from is purely residential or if it has been zoned to allow it to be a business property.
Furthermore, to operate a car wash you might need to apply for a permit under the water restriction bylaws depending on your municipality and the province you are in. For more information on the permits possibly required visit the Department of Water Affairs website.
Car Wash Funding Options
Before you even begin to look for funding, you will at this point need to create a detailed business plan. No institution will give you funding without one. For instructions on how to put a business plan together watch this video on business plans for dummies.
Sourcing funding for a start-up can be a bit of a challenge if you do not know where to go or what they are expecting of you. Here is a quick rundown of what you would need to prepare in order to encourage others, such as financial institutions, to give you the funding you need to start your venture.
Related: New Ways SMEs Can Find Funding
Broadly speaking there are four main options available to entrepreneurs starting their own businesses. These are: Loans from financial institutions, own capital, investors and grants. Grants usually come from the government and are loans that you won’t have to repay, but grants come with strict guidelines on how the funds may be used.
It is always preferable to start with the bank that you already do business with – that way they have all your information and know your financial habits and behaviours as well as your credit record. Another option is to look at credit unions.
When applying for funding here are a few tricks to help you get the cash:
- Make sure that you have a detailed business plan that shows how the funds will be used and spent. It is highly necessary for you to have a detailed knowledge of the costs involved in your business – from supplies to staff to overheads and equipment.
- Know about the industry and the market you are entering. It can be beneficial for you to do a market analysis.
- You will more than likely have to use your personal assets and wealth as collateral for your new business.
- It will show your dedication and commitment if you use your own capital to place an initial investment. In some cases, it is required for you to do so – such as with SEFA – the Small Enterprise Finance Agency who require a 10% personal initial investment.
Choosing a Location for Your Car Wash
With a fixed location – most of your business will come from ‘walk ins’. It is essential to your business that your car wash, or any service based business, is in a location that is convenient.
More often than not people do not specifically set out to go have their cars washed but rather end up having it done because it was easily available and they had the time.
Here are a few tips of choosing a successful location:
- Being near a shopping area is always preferable
- Heavily populated residential areas with high traffic volumes are better for business
- The site must be easily accessible from the road
- It must be easy for customers to get back onto the road once their car is clean
- Highly visible
- A decent size car wash has more than one washing and drying bay, there needs to be enough space for these as well as a waiting area
- Enough space for cars to queue
- It is also in your interest to pick a location that will allow for expansions as your business grows.
In South African law, verbal leases can be upheld in court, but it is always best to get the agreement in writing.
In clear and concise language that both parties can understand, make sure that your lease covers any changes you may or may not make both structurally and superficially.
Make sure you know how your rental will be calculated – it is usually quoted in Rands per square metre per month, excluding VAT for commercial and industrial properties in South Africa. Make sure you both agree on what costs will be covered by your rental and what costs you will incur (i.e. electricity).
Know under what circumstances the lease may be voided by either party. And finally, know who is liable for damages to the property or for instances of burglary.
Car Wash Insurance and Liability Cover
First off, for new owners the importance of a disclaimer needs to be highlighted. A disclaimer can exempt car wash owners from covering the costs of repairing vehicles that are damaged on their premise but they do not cover gross negligence on behalf of the business owner.
It is the responsibility of the owner to ensure that all machinery and equipment is well maintained and is regularly checked for foreign objects that could cause damage. It is also the responsibility of the owner to make absolutely sure that all cleaning products used throughout the process are car-friendly.
Furthermore, public liability cover is not enough. Property in the custody, care or control of the car wash owner is excluded from cover under the public liability section. The correct policy to have in place is the Motor Traders Internal section.
Your level of insurance coverage will have to be higher if you and your employees are the ones driving and moving the cars.
It is important that you as the owner of the car wash to have general liability insurance that covers:
- Medical expenses to yourself and your employees in case of injury
- Custody, care and control coverage
- Equipment break down
- Damage to cars – you will need to set this limit for your policy
- It is also important (especially if you have bought the property) that you have property insurance that will cover your premise in terms of theft, damage, fire, flooding etc.
Leonard Degee, who has been in the independent car wash industry for 12 years, knows that in order for his car wash to continue successfully, it is important that only management handles all the cars.
Not only does it make the insurance coverage easier and cheaper, but customers are usually happier knowing that the person who might be moving their car is more accountable.
Car Wash Equipment and Supplies
In some cases, all you’ll need is a bucket, clean water, soap and some good cloths – and the willingness to approach people to offer your services. But if you would like to open a more professional business and reach a broader market then there is some equipment that you’ll need.
If you are opening a franchise, the parent company or franchisor will be making the decisions for you. If you are opening an independent location or mobile business then you will need to source the necessary equipment.
The basic equipment needed for a manual car wash is:
- High pressure system
- Oil/water separation Unit
- Drainage unit
- Industrial vacuum cleaner with wet upholstery cleaning option
- Possibly an upholstery cleaner
- Depending on the products you choose you might need a foam attachment on your hose.
Alongside your basic equipment you will also need your location to have:
- Concrete wash bay slab
- Pump room
- Drying bay
- Ancillary Walling and Paving
The Basic equipment you will need for a mobile car wash is:
- Pressure washer hose with a compressor
- An industrial hose with nozzle and gun
- A good sized tank in the back of the truck/van or even trailer
- A generator (remember to keep extra fuel handy)
- A powerful vacuum cleaner
For cleaning products and supplies, you have a multitude of varieties to choose from. If you are inclined to go the eco-friend route, there are even ranges of waterless cleaning solutions.
The cleaning product basics you would need are:
- Car soaps
- Metal polish
- Plastic polish
- Car wax
- Glass cleaner
- Fabric shampoo
- Leather cleaners
- Detergent for the pedals
- And then sponges, cloths, brushes – preferably suitable for use on all cars.
Here are some suppliers of equipment and cleaning products:
- Eco Wash – http://www.ecowash.co.za
- Hurricane Car Wash – http://www.hurricanecarwash.co.za/about.html
- Kwik Car Wash – http://www.kwikcarwash.co.za/page2.htm
- Eco D Wash – http://www.ecodwash.com/
- Durawash – http://www.durawash.co.za/
- Dynachem – http://www.dynachem.co.za/
- Geowash South Africa (for mobile car wash systems) – www.geowash.co.za
Keep all equipment in good working condition with regular check-ups. For an easier resale, make sure you have detailed maintenance records on all equipment.
In Degee’s car wash, they purchase R3000 worth of stock every month – which covers the 360 or so cars that they clean.
Car Wash Marketing and Branding Basics
Branding and marketing are two very different concepts, both of which are highly important to the effectiveness of your business.
In order to bring the customers to you, there are a couple of things you could do. These involve connecting on an emotional level, staying relevant and flexible, committing to the community you work in, staying visible and finally aligning your marketing tactics with your brand strategy.
The biggest secret to marketing is being able to differentiate yourself from your competitors. Brand Strategy Insider is an online resource for branding and marketing and they list 50 ways to differentiate your brand.
For the car wash business here are the applicable ones:
- Expand your appeal
- Rewrite the experience
- Break away from conventional wisdom
- Be the expert
- Share values with your customers
- Engage the senses
- Focus on aesthetics
- Treat people differently than your competitors do (treat them better)
When you are implementing these values in your brand, make sure that they go deeper than just your aims. Make these things that make you different the foundation of your business.
That means engraving these changes in the mission statement and instilling it in your staff. It’s important to note that your staff are your brand ambassadors. A good service experience means that people will come back and more than that, they will tell others about you too. Word of mouth is a powerful tool in launching a new business.
Degee says that the best marketing strategy they have is their car wash’s visibility.
In terms of marketing schemes available to you as a new business owner, you have a couple of easy options:
- Keep the conversation active with your customers
- Customer databases so that you can text or email them your specials (these must be opt in)
- Advertisements in local papers and on local sites
- Always squash any bad word of mouth by proving the opposite
- Consider loyalty reward programmes to encourage repeat customers.
Hiring and Managing Your Car Wash Staff
“Good management and good staff is the most important thing,” says Degee. With your staff often handling the money, it is easy for untrustworthy staff to “slip it into their pocket.”
Make sure your staff is reliable and Degee advises that you need to keep theft as low as you possibly can.
If you open a bigger operation than just yourself, or if you are needed to expand your business as it grows, then you will need to hire staff. Because you are in the service delivery industry, you need to remember that your staff needs to treat your customers well – as do you.
To this effect, hire people that are
- Have a good sense of service delivery.
The number of people you hire depends on your expected workload. The more washing and drying bays you have, the more people you will need. You also need to consider how many days of the week you are open and how many hours a day.
Obviously, if you want to go the more automated route with a machine run conveyor system, then the need for physical staff will be less.
How to Set Your Prices?
If you are going to give a variety of different services then you should have options for all budgets and time frames to suit the biggest market possible.
As with any service industry business – you need to have competitive prices for the services that you offer. It’s important to do some market research in your area as to what your competitors are charging for which services.
Important factors to consider:
- The cost of your cleaning supplies
- Your overhead costs
- The amount of cars you can do in an hour
- The number of staff members you have
- Your working hours for the week
- Competitor prices for similar services
- The type of area you are in (residential, urban, rural, business?)
For a mobile car wash it is important to consider many of the same factors including fuel price and distance travelled. In general, the cost of a mobile car wash service is higher than that of a car wash that a patron will go to because of the added convenience factor for the customer.
When deciding on prices for a mobile business, you will once again need to do current market research into what your competitors are charging.
To end off, it is important that you and your staff do a good job on the cars that you clean. The best way to get repeat customers is to supply the ones you have with an amazing service. For an in-depth tutorial on how to professionally clean a car – watch this video.
Advice from Car Wash Pros
Degee offers a few tips for an entrepreneur starting his own car wash.
- Trustworthy staff is hard to find. Sort that out before anything else.
- Sometimes, the easiest way to bring in new staff is through our existing staff.
- A high turnover rate brings the possibility of more theft – try keeping good staff for as long as possible.
For the International Carwash Association visit www.carwash.org.
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