Are you looking for the fast track to starting your business? You want to make sure you hit all the high points but don’t get bogged down in too many fine points that lead you nowhere, right? Then read this guide, and get your business running in no time…
1Start With A Viable Idea
Start thinking about whether your core idea makes a viable business.
How do you know? Well, honestly, you don’t always. It helps to take a step back, try to be honest and objective with yourself, and ask these questions:
- Does anybody need (or want) what we’re going to be selling? How bad is the need, or how much do they want it? Think about it in common sense terms. Vigorous market research will come later.
- Will they pay for it? While they say people will beat a path to your door for a better mousetrap, that’s not always true. Think about it in your case.
- Are they paying for something else, now, already? Can we go from that to honestly believing they’ll pay for what you’re going to offer?
- How will you focus? Do you have a strategy, or are you planning to do everything for everybody?
The answers to these questions may seem obvious, but the point of this exercise is to give yourself a reality check. Essentially, you’re asking whether there’s a market for your product or service. If you’re laying out a lot of money, and especially if that’s somebody else’s money (like investors), it’s worth it to do the background research.
|More help with developing viable business ideas here:|
There are no formulas for ownership, and it may seem awkward at first, but if you’re partnering with someone, it’s a thousand times easier to do it now than to wait until after the money starts flowing.
Determine the percentage of ownership, who does what, whose idea it was and how much that matters. There are no formulas for ownership. The closest thing to it is money spent, especially if you add in time spent (so-called sweat equity) and work that into a money value.
It’s extremely hard to value the original idea – I say the idea has very little real value, because it’s the work that matters. You have to talk through this. For now, talk about it first, and leave it to settle for tomorrow.
|More help with establishing partnerships here:|
3Get The Agreement In Writing
Now that you have mulled over the potential legal issues surrounding ownership, it’s time to get concrete. Today, get a draft of the agreement in writing.
We don’t mean go to the attorney, but we do mean write down the main points of your agreement with the other people involved. You don’t need formal legal language. That will come later (actually, Step 17). What you want is a simple, plain agreement: Percentage of ownership, money invested, time invested and who owns what.
4Name The Business
That might be just using your own name, but usually it’s more than that, including not only coming up with the ideas, but also checking them for availability, and registering the name to make it legally yours.
You don’t have to make it final, at least not yet (you will later, Step 17 again). Start with the ideas, though, and start thinking about it.
Many people misunderstand what you can and can’t do with names. You can waste a lot of time with those misunderstandings.
|More advice on how to name your business here:|
5Think About The Initial Sales Forecast
Some people dread the forecasting, but your business won’t succeed without it. How can you estimate expenses without knowing sales? How can you estimate your initial cash needs, as part of your starting costs, without knowing sales?
A lot of people think sales forecasting is some highly sophisticated scientific thing they don’t know how to do.
Don’t worry; back here in the real world, a sales forecast is an educated guess. How can you forecast something brand new?
Break it down into pieces. Lay it out onto a spreadsheet over 12 months and make your estimates for each month.
Think about how many tables, how many stalls, how many hours? How much per each? Multiply those units by the rands per unit, and you have a sales forecast.
|Learn more about sales forecasting here:|
6Create An Initial Expense Budget
Like your sales forecast, lay out a spreadsheet with rows on the left, months along the columns and a sum at the bottom to come up with an initial expense budget. Think about rent, utilities, marketing costs and payroll. Note: remember to include what you’re going to pay yourself.
|Learn more about budgeting here:|
7Estimate Starting Costs
Start this with two simple lists: Expenses you’ll incur before you start, and the things (assets) you’ll need to have. Expenses are things like legal costs, fixing up the location, setting up your website and so on. Assets are the things (inventory) you’re going to sell.
The harder part is estimating how much money you need to have in the bank, to support the company through the normal drain period during the early cash-negative days. You have to lay this out month by month, comparing your sales to your expenses, watching the way the money goes in and out. Remember, in most business-to-business settings, you have to wait to get paid.
|More information on how to estimate your start-up costs here:|
8Plan Your Marketing Strategy
Think about your target market. Imagine a hypothetical, ideal customer. Determine his or her age, gender, job, favourite media and family situation. It’s important to know your customer well.
What’s your message? Can you say it in a single sentence? What if you have just one sentence that your customers will listen to? Where would you send that message? How would you reach them? Think about your marketing strategy and implementation details. Take the time to go through a short but focused marketing plan to make sure you understand what it will take to market your business.
|More advice on developing a marketing strategy here:|
9Develop Your Look And Feel
Start developing a sense of the look and feel of your company as your buyers will see it. What will your logo look like? What sense will it have to convey? Old-fashioned? Trustworthy? Leading edge? Everybody has a brand. What will yours be? How will you get that idea across to customers and potential customers?
Develop your look and feel with logos, signs, letterhead and graphic standards. These are your branding essentials, and you need to have them in place before you get much further.
10Start Building Your Website
Have you started your website already? Have you been thinking about it? Today’s the day to get going with that. If you’re building a Web 2.0 application or any website that’s core to your business, then you might have to settle for simply having begun by the end of the three weeks.
For most businesses, you can have a website built very quickly. Think about the basic elements of your website, and at least get a site up with basic information about you, your business, your products and your services.
These days there are some good shortcuts available: take a look at TypePad, WordPress and blogger platforms, for example. These were built for blogging but can apply to many small sites, with little to no formatting work.
|Learn more about building a website here:|
11Think About How You’re Going To Get Paid
Think about how your customers will pay you. If you’re going to be selling to consumers, then you probably want to establish a merchant account so you can accept credit cards.
These days, because of the online suppliers, there are a lot more options. In the old days you had to go straight to your favourite bank, which had a detailed and time-consuming process. These days, you have the option of setting yourself up with some web stores (like Amazon, Yahoo! and others) that can handle that part of it for you. If you’re selling to businesses, then think about invoices and credit policies for business customers. There’s no underestimating how important getting paid is.
|Learn more about how to set up credit policies here:|
12Try Making A Sale
Have you been able to make a sale yet? Maybe you should take today to peddle your goods. Even though you’re not fully established yet, lots of businesses (maybe most of them) start selling before they’re fully launched.
This is where you get to make sure that people want to buy what you’re selling. Even if you can’t make a sale, because things aren’t ready, talk somebody through it. The selling will continue for as long as your business is open, but we wanted to include it here as well because so many businesses are born at the moment the first customer says “yes”.
|More advice on sales tips and skills here:|
13Get An Insurance Policy
Take time to talk to an insurance broker and get your business insurance started. These days, you can do a lot of research or even do the whole thing online. And if not, remember the old-fashioned telephone style of finding the right people. Talk to any insurance broker you can think of, ask some questions, and if he or she isn’t the right one, ask who else you should talk to. Find the right person by asking the wrong person who else you should talk to.
In the doing, you’ll find out what kinds of insurance are appropriate for the type of business you’re starting.
14Build Your Dream Team
Have you been thinking about how to build your team? Do you know the people you want to bring on? It’s time to start ironing down the team and the employees, and start the recruiting process. Depending on your specifics, you’ll probably need job descriptions, and you’ll need to place ads on the right websites.
Start thinking about your employee list. Who will you need to help you out when you actually open for business? Will it be just you and your business partner? Do you need to hire service people? Drivers? Designers?
To get started, take another look at the financial planning you did in steps 1-7, see who you can afford to hire and start looking.
|Get help with assembling your team here:|
15Think About Your Business’s Location
Most people know they’re either going to work out of their home or they know where their office will be. They’re considering the right location, how it should look, where it should be, what else is nearby, and so on.
Even if it’s a home office, you’ve probably been thinking about it. Now’s the time to make sure you’re set up. Desk, computer, telephone, Internet, quiet if you need it, view or not, the whole nine yards.
For a retail shop, workshop or office space, if you haven’t done so already, start looking. It’s almost time to make a decision.
There are brokers to help, and they won’t charge you because they get their commission from the landlords (which you should keep in mind as you deal with them because it’s always good to remember who’s paying). Find a broker who’ll work with you; one who listens to you about what you want and don’t want.
Today take steps to establish the location, whether it’s simply adding desks and phones in your home office or making calls to revamp a restaurant or manufacturing plant. For some people and businesses, this takes more than three weeks. Sometimes you can’t even lock in the location you want in that time. But start planning the office space in which you want to work, as this can create the most lag time.
16Set Up Your Accounts
With some good accounting software, you can keep track of every transaction – every cheque, each invoice you receive and those you send out. Keep careful track of spending and invoice categories, and before you know it, you’re doing the bookkeeping. The best way to choose your new accounting software is to check with your bank so your systems will be compatible. That will save you endless frustration with inputting records.
|More help with accounting systems here:|
17Create The Legal Documents
Way back in Stage 1, you got together with the others involved and wrote down your agreements on who is supposed to own how much of the business, who does what and who is putting in how much money. And you started looking at possible names for the business. Today, get it locked in by creating the legal entity online talking to an attorney or both.
Do yourself a favour, though, before you start the attorney’s meter running: Make sure you understand the basic trade-offs, so you can spend the billable attorney time making the right choices, rather than just understanding the options. We don’t recommend setting up your business without an attorney (online or not), but if you get informed first, you’ll reduce the expense.
|More advice and resources for legal assistance here:|
You’re nearing the end of your three-week start-up. Just three steps left, so if you’re going to have employees, it’s time to hire them or at least begin hiring. You started the recruiting process last week, so you should have some people in mind. Don’t do job interviews without first going over a simple review of what you can and can’t say.
A lot of what would at first glance seem like common sense is technically illegal. For example, you’re not supposed to ask someone his or her age or marital status because that information can lead to the appearance or suspicion of discrimination.
|Learn more about hiring and staff management here:|
This is another one that depends on the details. It can be as easy as deciding to spend a few thousand rands you already have or as hard as raising millions of rands from professional investors.
Your simple start-up, involving a home office and a computer, might need nothing more than what you can get at a retailer like Dion or Makro in an afternoon.
If you have to raise more money than you have, you need to write a detailed business plan, find potential investors and do a lot more work. If you’re looking for professional investment, you almost certainly won’t get that in three weeks (although there are some rare exceptions). You can still get your business going with the money you can get quickly so that you look that much more attractive to investors.
|Tons of advice on funding a business here:|
20Think About Opening Day
This should be fun: Imagine the big party, the searchlights beaming into the sky, a brass band. Well maybe not all that, but opening day is a good event to start your business marketing right.
Plan your opening day and make sure everyone knows about it. Write a press release, talk to local or trade reporters and generally let people know about your business. You want to build buzz so that when you open, people are aware of you.
|Advice on how to create buzz here:|
21Start Your Business
You’re up and running, and in 21 steps, just as we had hoped. That makes today the first day of the rest of your business. Today you’ll want to take another day to make the sale.
Focus today and see how many customers you can get in the door, figuratively or literally, depending on your business. On your first day, remember to observe what’s going right, what’s going wrong and to note what could be better.
Your business will quickly become different from what you expected, and that’s OK. The key is to record what’s different and why, and make course corrections. In the real world, your planning should become management. So review your plan vs. actual frequently, and run your business better.
|Advice on getting your business going here:|
3 Actionable Insights To Make Your Investment Pitch Perfect
The best pitches aren’t just short and to the point, they deliver on investor expectations and needs.
The best pitches aren’t just short and to the point, they deliver on investor expectations and needs.
1. Confront your product and market flaws from the start
Investors come from business and investment backgrounds. They will recognise the potential dangers in your business model. If you ignore these elements, you’re not addressing key concerns they may have, and how you will protect the business against them.
DO THIS: Look at your business from every angle. Where are your potential weaknesses, and what is your plan to overcome them?
2. Pitch to the right investors
The sectors and mandates that different investors and funds follow dictates the businesses that will interest them. Pitching your business to the wrong investors wastes their time, your time, and potentially damages your brand in the market place — waste the time of too many investors, and the word will spread.
DO THIS: Research the investors and funds you are pitching to thoroughly. This will narrow your focus, and help you develop your pitch deck. It will also help you unpack the areas of the business that you’ve discovered are important to the particular investors you’re pitching to.
3. Don’t follow fads
Investors aren’t interested in ‘flash in the pan’ business ideas. They care about products that stand a chance of long-term success. You might start off selling to a niche audience, but the goal must be to reach a wider audience as the product develops and matures.
DO THIS: Critically evaluate the staying power of your business idea. Is it a product that’s trendy but could lose traction as market fads change, or does it solve a real and enduring need?
5 Tips To Get You Ready To Launch That Business Now
Are you dreaming about becoming an entrepreneur, but not sure whether you’re ready to take the plunge? Some of the world’s top entrepreneurs weigh in on what it takes to be a success.
1. Think out the box
A general rule of thumb is that you should do what you know. Spend time in an industry before launching your business, build up a network and understand your target market and their needs. This is all sound advice, and has been the foundation of many successful start-ups.
However, there is an inherent danger that entrepreneurs should avoid at all costs: Many industries are bound by legacy ideas and systems that are the enemy of disruption and innovation. Entrepreneurs who didn’t know something couldn’t be done are often the ones who find a way to make it happen.
Approach an industry or idea with fresh eyes. Take lessons from other industries. Don’t be limited by your lack of knowledge — go out and learn, even if you’re learning on the fly.
Airbnb, Uber and Netflix are three of the most disruptive businesses in the world today, and they’ve achieved phenomenal success because they didn’t buy into the simple and engrained idea that an accommodation business should own property, a taxi service should own vehicles, or a movie rentals business needed to own DVDs.
If you really want to differentiate, you need to lead, not follow.
“Don’t be intimidated by what you don’t know. That can be your greatest strength and ensure that you do things differently from everyone else.” — Sara Blakely, Spanx founder and self-made billionaire
2. Be an open-source person
Have you been delaying launching your own business because you’re not sure if you’re ready? Some of the most successful entrepreneurs have taken the plunge and learnt along the way. Gil Oved and Ran Neu-Ner, founders of The Creative Counsel — South Africa’s biggest advertising agency with an annual turnover of R750 million — followed this simple rule in their start-up days: They always bit off more than they could chew, and then chewed like hell.
Their philosophy was that ‘no’ was never the end of a negotiation, but the beginning of one. This tenacity kept them going, even though they spent their first year barely making ends meet.
Gil and Ran are not alone in their thinking. Robin Olivier, founder of Digicape, a R240 million Apple products and services business, prepared himself for entrepreneurship by putting his hand up for anything and everything that came his way. “I’ve always been like that. I jump in with two feet and figure things out along the way.” For Robin, that’s the only way you learn.
Joshin Raghubar, founder of iKineo and the chairman of Bandwidth Barn and the Cape Innovation and Technology Initiative, began his career working for Ravi Naidoo at African Interactive. At 23, he found himself project managing the African Connection Rally, a massive partnership with the Department of Transport. Why? Because he was always ready to step in, learn something new, offer his opinion and take on any challenge.
Joshin believes that successful entrepreneurs are open-source people who are willing and able to consistently and continuously learn new things. If you’re moving forward every day, you’re already on the path to success.
3. Be significant
Start-ups are tough. They are lonely, and they take a lot from you physically, mentally and emotionally. Passion and significance are two key components that will keep you going through your darkest hours. If you can answer why you are doing something, you’ll be able to forge on, even when the challenges ahead seem almost insurmountable.
“If something is important enough, even if the odds are against you, you should still do it,” says Elon Musk, who isn’t letting go of his dream to colonise Mars during his lifetime, despite many challenging tasks ahead of him. The lesson is simple: Whatever you endeavour to accomplish, out of this world or not, do not allow yourself to be deterred by the odds. Bravely forge ahead.
Steve Jobs shared a similar outlook. Before entering into business with Steve Wozniak, he dropped out of college and took time off figuring out what he wanted to do with his life.
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work,” he said. “And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”
If you know you want to be an entrepreneur, but you aren’t sure what you should be doing or haven’t found the right business idea, think about the things that truly matter to you. What problem would you ultimately like to solve? Sometimes you need to build up to it, and start with one thing that will lead you to the next (consider how Musk built the Tesla to fund other parts of his business), but once you’re on the path to significance, nothing will hold you back.
“The key to realising a dream is to focus not on success but on significance — and then even the small steps and little victories along your path will take on greater meaning.” — Oprah Winfrey, self-made billionaire media mogul
4. Look for opportunities in every challenge
Some people see challenges, others see opportunities. The latter are known as entrepreneurs. Some of the most successful businesses have been launched in the midst of recessions. How? Because entrepreneurs aren’t daunted by a challenge. In fact, challenges are great, because they keep the competitive pool smaller.
Vinny Lingham, Shark Tank South Africa investor and serial entrepreneur, says that he would rather have been homeless than not start a company because he didn’t have any finances. He sold his house, rented back a room in his (now former) home, and launched Clicks2Customers, a business that hit the R100 million turnover mark three years later. He didn’t see the challenge; he focused on the opportunity.
You’ll have to keep a close eye on cash flow and find some really smart solutions to real-life problems, but that’s the foundation of a great start-up. It’s all about the lens you see the world through. Are you open to opportunities, or limited by challenges?
“Dear optimist, pessimist, and realist — while you guys were busy arguing about the glass of wine, I drank it! Sincerely, the opportunist!”— Lori Greiner, Shark Tank US investor
5. Failure is a critical element of success
Don’t let failure hold you back, or worse yet, keep you from trying. You already know that failure is a part of the business of entrepreneurship, but it’s easier said than done when you’re picking yourself back up after a bad break. Remember that with a shift in your perspective you can transform the stumbles and falls into opportunities to improve yourself and your business offerings. What didn’t work? What did? Keep at it — you only have to get it right once.
Oprah agrees. “At some point, you are bound to stumble, because if you’re constantly doing what we do, raising the bar; if you’re constantly pushing yourself higher, higher, the law of averages — not to mention the Myth of Icarus — predicts that you will at some point fall. And when you do I want you to know this, remember this: There is no such thing as failure. Failure is just life trying to move us in another direction.”
And what about Richard Branson? The billionaire mogul has launched more than 200 successful ventures, but he’s also had some dismal failures, including Virgin Cola and Virgin Brides. If he didn’t ‘screw it, just do it’ in the face of failure, where might he be today?
Instead, he believes in getting back up and pushing on. “The main thing is, if you have an idea for business, as I say, screw it, just do it. Give it a go. You may fall flat on your face, but you pick yourself up and keep trying until you succeed,” he says.
There’s no such thing as a successful entrepreneur who didn’t fail while they found their success. But, there are many, many entrepreneurs who haven’t found success because they’ve been too afraid to fail. Which will you be?
“Don’t worry about failure. You only have to be right once.” — Drew Houston, CEO of Dropbox
The 3 Blueprints For Starting A Business
There are three templates to starting a business. Get this first step right, and success will fall into place.
“One reason that America continues to do so well as a market,” an economist explained to the audience at a recent conference, “is that they are still leading the charge to do new things. In addition to pioneering new products, they are still pushing the boundaries of frontiers like space-travel and technology. They don’t merely copy the products made in other countries. They make and do entirely new things, and that matters.
“By contrast,” he explained, “many of the older economies, like Europe, are just ‘kicking the can down the road’. They don’t really have a vision for the future. They’re just trying to maintain what is, to survive a little longer.”
Grow or shrink
Companies, countries and entire economies are all broadly following one of these two approaches. One is the bold, growth option, while the other is only about maintaining what already exists. The trouble with maintaining, however, is that, in a dynamic system, you tend to be either growing or shrinking. A dynamic system rarely tolerates anything simply standing still. To stand still is, often, to shrink.
Once in a lifetime chance
Your company, team or organisation’s founding moment is a once-in-a-lifetime opportunity to get this one right. Are you simply going to kick the can down the road? Or do you want to build spaceships? Are you going to be a soulless ‘also played’? Or would you prefer to do something new and meaningful? Mission matters greatly.
In Exponential Organizations: Why New Organizations are Ten Times Better, Faster, and Cheaper than Yours (and what to do about it), Salim Ismail calls it a ‘Massive Transformative Purpose’. The stronger your purpose, the more you attract tribes of people, both as aspiring employees and as a supporting community of customers.
This is not to say that you are obliged to invent something brand new and original. A good deal of research is showing that pioneers in a new industry do not tend to do as well, or last as long, as the ‘settlers’ who come after them. One reason is that the pioneers have to make all the initial mistakes. The settlers get to enjoy greater leverage, by observing what has already worked or failed, then capitalising on that learning.
The idea of founding a company that thrives on meaning has more to do with how meaningful the work is, and how much of a drive to achieve goals is built into your corporation.
Elon Musk’s SpaceX is certainly not the pioneering organisation in space-travel. We have left earth’s atmosphere before, decades ago. In that sense, SpaceX is a settler, and not a pioneer. That said, it is nevertheless a strongly goal-oriented, purpose-driven organisation. You don’t have to invent something entirely new to create a mission-driven company.
The Israeli Defense Forces is highly mission-driven, because it has to be. Pixar is mission driven, because it chooses to be, and because it believes in magic.
Being mission-driven, from the top to the bottom of an organisation, changes the energy. It converts ‘mere work’ into ‘shared purpose’.
Sociologist James Baron and his group of experts led a study in the mid-90s looking at how people founded their companies, across a wide spectrum of industries, including hardware, software, medical devices, research and manufacturing.
The study asked about their original blueprints. What organisational models did they have in mind when they started?
Baron determined that there were three templates for starting a business. You might start your company based on:
- A Professional blueprint, in which you hire people with a preference for specific skills (prior to its fall from grace, Kodak hired people based on specific educational qualifications)
- A Star blueprint, in which you hire ‘superstars’ based on future potential, placing a premium on choosing or poaching the brightest hires. You look for raw potential, not current knowledge
- A Commitment blueprint, in which you believe that skills are nice, but cultural fit and buy-in to shared values is more important. You build strong bonds to the company. Employees tend to be passionate about the mission.
Baron and his experts tracked the firms through the 1990s and into the next decade. Those that used the Commitment blueprint, which prioritises a shared sense of mission and values, greatly outperformed the others. The failure rate for firms with a Commitment blueprint was zero.
Failure rates were substantial for the Star blueprint, and more than three times worse for the Professional blueprint. It seems these approaches don’t keep people going in the same way that buy-in to a mission does.
Nevertheless, the Professional blueprint, which prioritises the specific skills on people’s CVs, tended to be the most common.
There were two other rare blueprints: Autocracies and bureaucracies, focusing on detailed rules and procedures. These blueprints were the most likely to fail, and autocratic was most likely to fail out of the two. This is an important point: Rules-based organisations and dictatorships, according to this finding, are so likely to fail that investing in them is not worthwhile. But where a culture of people is part of a mission, they are most likely to succeed. Translation: Autocracy rarely ever works, and systems of intense rules and guidelines work slightly less badly.
Rules and dictatorships = likely to fail.
Mission-driven culture = 100% success rate.
Most real-world autocrats would probably agree with this finding, if they heard it. Then they would continue to run their business as autocrats, because, they’d say, “My situation is different, I happen to be right, and people should do what I say.”
When you’re an autocrat, it’s hard to know that you’re an autocrat. When you create your business to follow a mission from the word go, and you allow a degree of genuine democracy in which others can outvote you for the good of the mission, you instil the possibility of overcoming this blind spot, sometimes in spite of yourself.
Now, here’s the kicker: The Commitment culture is extremely effective in starting an organisation and ensuring its initial survival. But over time, the same study found, it is not the best performer.
The challenge is that when organisations mature, encouraging layer upon layer of like-minded people tends to discourage innovation and original thinking. Too much shared value = groupthink.
So, what’s our total moral? In a best-case scenario, we need to start with a common mission and committed people, and focus on growing. Once we’ve matured, we need to make a point of bringing in diverse thought, in order to avoid too much homogeneous thinking and yes-mannery.
In Originals: How Non-Conformists Move the World, Adam Grant shows how these findings map perfectly onto the rise and fall of Polaroid. Like-mindedness worked well to get the brand going initially, but then, ultimately, the same like-mindedness prevented them from learning, growing, changing and adapting in a volatile market.
Like the IDF, they had a strong sense of shared purpose. But unlike the IDF, they were incapable of a belief system that said ‘the only tradition is that we have no traditions’. They were not a learning and growing organisation.
The more a company develops a culture, the more it will tend to hire for that culture, and the more resistant its own people will be to new ideas or contrary views.
So what if…?
What if you decided to be an organisation on an important mission, rather than merely a group of people kicking the can down the road?
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