Connect with us

Launch

How to Quit Your Day Job Gracefully

You’ve decided to leave your job and hang your own shingle. But first, there’s much to consider.

Michelle Goodman

Published

on

Quitting your job

You’d probably like to stay on good terms with your former employer. You may have signed a non-compete agreement. And it wouldn’t hurt to take some customers with you. Here’s what you need to know to navigate the transition from working for someone else to being your own boss.

After working at the same salon for eight years, Seattle aestheticians Stephanie Carroll and Heather Allison decided to open a skincare studio of their own. It’s not uncommon for beauty professionals to retain their clientele when they jump ship, but Carroll and Allison were intent on doing so without burning bridges.

Six months before their departure from the salon, the pair began quietly collecting contact information from nearly 300 clients. After securing a lease on a storefront in which to operate their own business, they gave notice, offering to stay three weeks but settling with their boss on two.

Only then did Carroll and Allison share the news of their new business, Deity Skin Care, with clients who came in for appointments.

“We weren’t really loud about it,” Carroll says. “We just let them know this was the last time we’d be seeing them at [the salon] and that we’d be opening our own space.” At the end of their tenure, the duo sent “Opening soon!” notices to the client list they’d assembled.

When they were ready to open their doors in June 2012, they followed up with a coupon offering clients 30% off their first Deity appointment.

Not only did Carroll and Allison retain about 65% of their customers, they also managed to stay on good terms with their ex-boss. “It took a couple of months for the transition, and then everyone was friendly,” Carroll says, adding that she has seen her former boss socially and that Allison still patronises the old salon.

But making the leap from trusted employee to friendly competitor isn’t always as harmonious. You may have a non-compete clause, a boss who doesn’t take the news of your resignation well or former clients wondering where the heck you went. Here’s how to keep your professional relationships intact when navigating the rocky path from direct report to top dog.

Embrace transparency

When it comes to leaving a company that will soon be a competitor, a little honesty goes a long way. “There’s a mistaken feeling that somehow this needs to be done covertly,” says Andrew Flake, a partner at Atlanta law firm Arnall Golden Gregory.

Related: Which Business Should I Start?

Play It Safe

You’re more likely to get an employer’s blessing if you play by the rules. Legal experts recommend these guidelines.

  • Don’t compete with an employer while still on the payroll. Wait until you’re a former employee, even if you didn’t sign a non-compete agreement.
  • Don’t use company resources to develop your new business. This includes office space, computers, phones, tablets, e-mail accounts or anything else the company owns or rents. Plan your business on your own time and equipment.
  • Don’t phone it in during your last couple of weeks. Give your final projects the same level of dedication you did during your first week on the job.
  • Don’t walk away with anything. Leave behind company hard drives, mobile devices, e-mail lists, trade secrets and anything else that isn’t yours.

Of course, Flake adds, you don’t want the news that you’re leaving to get out prematurely, but you also don’t want to drop an 11th-hour resignation bomb in your boss’s lap and sneer, “By the way, I’m taking these clients with me.” Instead, give as much notice as possible and remain cooperative during the transition. Most important, if you signed a non-compete agreement, tell your employer you intend to honour it, says Lynne Curry, CEO of management consulting firm The Growth Company in Anchorage, Alaska. “Let that person know that you want to maintain good relationships and good standing,” she says.

That’s what co-workers Peter Selber and Nick Altman did when they left their jobs in 2011 to open Infinity Power Partners, a Houston-based energy-management and consulting firm.

“We didn’t want to trick anyone,” Selber says. The duo thanked their managers, told them they’d enjoyed working at the company and said that although they planned to open a similar business in the same market, they would honour their three-month non-compete. “They understood the opportunity we had, and they didn’t stand in the way,” Selber says. “They were very supportive – as much as a competitor can be.”

Read the fine print

Many professional service companies – creative agencies, technology providers and financial planning firms – require staff to sign contracts that restrict them from becoming a competitor for a period of time after leaving.

“Always look at what the non-compete agreement says,” advises A. Kevin Troutman, a Houston-based partner at law firm Fisher & Phillips. “If it defines what you can and can’t do, that’s going to be your guiding point.”

Contrary to popular belief, many businesses take legal action when an employee violates a non-compete agreement, and the courts do enforce them, Troutman adds.

Flake suggests revisiting your employee handbook, too. Pay particular attention to policies that prohibit you from sharing company secrets and prevent you from conducting personal business on company equipment and time. Also check the relevant state employment laws.

You may need to hire an attorney to help you navigate what’s kosher, particularly if you have questions about the meaning or validity of your contract.

That’s what Mario Ochoa did when he and a co-worker quit their public relations jobs in 2010 to open Sammis & Ochoa, a PR firm in San Antonio.

“I think we dropped $800 to consult with the lawyer and have a couple of letters drafted,” says Ochoa, who received a cease-and-desist letter from his former employer after several clients said they wanted to move with him to the new shop. “That $800 probably saved us a lot of court costs.”

Related: 6 Things You Should Know About Mentorship 

Renegotiate if you can

If your non-compete agreement overreaches, try negotiating a shorter time frame or smaller geographic region. Although exceptions may apply, in most jurisdictions the courts may consider a contract overly broad and not enforceable as written if it restricts you from competing with a past employer on a national level or for more than two years, Troutman says.

With any luck, your employer will see the wisdom in striking a compromise. After all, Troutman points out, “litigation is expensive.”

You also may have some leverage if you’re starting a business that’s related but doesn’t directly compete with the services your employer offers.

“There may be some cooperative work and referrals that can happen,” says James Grove, who chairs the employment-law practice of Cleveland law firm Nicola, Gudbranson & Cooper. “So it may be in the employer’s best interest to trim down that non-compete.”

Noah Rosenfarb can attest to that. He left his position as partner at a CPA firm in 2007 to open Freedom Advisors, a wealth-management company in Boca Raton, Florida. Because Rosenfarb’s former employer didn’t offer the same type of service, he convinced the company to prune his non-compete agreement considerably.

“What I negotiated was, ‘Let me go to my existing client base and say that this is what I’m doing,'” he says.

In exchange, he agreed to refer clients needing CPA services to his former firm and avoid marketing himself to any of the firm’s clients with whom he didn’t already have a relationship.

Wait to compete

Sometimes the only option is to wait out your non-compete. But that doesn’t mean you have to sit idle. “You can prepare to compete,” Troutman says, noting that your employment contract and state laws will usually dictate how and when you can do so.

In many states, for example, you can form a corporation during the non-compete period so long as active competition is not commenced during employment, according to Grove of Nicola, Gudbranson & Cooper. You also can work on your business plan, as long as you don’t tell customers what you’re up to.

Infinity Power Partners’ Selber and Altman played this waiting game for 90 days until the non-compete they had with their former employer expired.

“There was no website, because you’re competing if you’ve got a website up,” Selber says. “There were no marketing materials. There were no business cards.” Former clients and suppliers had no idea where they’d gone; they just knew that the two had resigned.

Only when their non-compete ended did the pair reach out to their more than 150 former clients, painstakingly reassembling their contact lists from memory, their smartphones, the internet and business cards. “We didn’t walk away with anything when we resigned,” Selber says. “All we took were personal belongings.”

The risk paid off: When three months later Selber and Altman flipped the switch on their new business, former customers were thrilled to hear from them. “We estimate that we were successful in retaining about 90% of our old clients,” Selber says. The company quickly hit its year-one revenue goals, contracting more than seven figures worth of business in its first year.

As for how he handled the transition, including those three months in solitary, Selber has no regrets. “We negotiated that, and we were going to honour our word,” he says. “Making money’s great, but there’s a right way and a wrong way to do business. Being honest was key. I think it helped us in the long run.”

What scares you most about quitting your day job?

Michelle Goodman is a Seattle-based freelance journalist and author of The Anti 9-to-5 Guide.

Continue Reading
Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Launch

(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.

Published

on

common-reasons-start-ups-fail

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:

Business plan

  • 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.

Related: 4 Tips To Secure Funding For Your Start-up

Research

  • 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.

the-top-20-reasons-why-start-ups-fail

Funding

  • 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.

Investor deck

  • 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.

Related: 9 Quotes Every Entrepreneur Should Live By

Tech

  • 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.

Team

  • 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.

Ego

  • 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.

Related: 7 Strategies For Development As An Entrepreneur

Old-Fashioned values

  • 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.

Continue Reading

Launch

The Complete How-To Guide for Starting a Car Wash

What you need to know about opening your own car wash in South Africa.

Katie Cubitt

Published

on

74-the-complete-how-to-guide-for-starting-a-car-wash

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

  1. How to Choose What Type of Car Wash to Open
  2. Steps for Registering a Car Wash Business
  3. Car Wash Funding Options
  4. Choosing a Location for Your Car Wash
  5. Car Wash Insurance and Liability Cover
  6. Car Wash Equipment and Supplies
  7. Car Wash Marketing and Branding Basics
  8. Hiring and Managing Your Car Wash Staff
  9. How to Set Your Prices?

How to Choose What Type of Car Wash to Open

man-washing-car

There are many different kinds of car washes to choose from

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.

Pros and cons of a car wash

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.

Pros and cons of going mobile

Steps for Registering a Car Wash Business

car-wash-south-africa

Register your business using this easy guide

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.

Read: Start A Business They Said… It’ll Be Easy, They Said…

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.

Related: The Basics Of Registering A New Company

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

car-washing-business-advice

Fund your business using this guide

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.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

Choosing a Location for Your Car Wash

man-washing-car

Location, location, location

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).

Resource: How do I go about analysing and choosing a possible location for my business?

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

car-wash-sponge

Ensure your business is fully insured

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.

Related: Insurance For Small Businesses: What Should Be Covered?

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

automatic-car-washing

Obviously the equipment you need will depend on the type of car wash you open.

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:

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

car-wash-sign

Simply put, branding is your promise to your customers; marketing is communicating that promise to them.

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.

Related: Smart Marketing Ideas For Small Businesses

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.

Related: The Complete Guide To Writing A Marketing Plan

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
  • Flyers
  • Customer databases so that you can text or email them your specials (these must be opt in)
  • Signage
  • Posters
  • Advertisements in local papers and on local sites
  • Promotions
  • Coupons
  • Specials
  • Discounts
  • 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

car-wash-man

Hiring staff should be your next priority

“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

  • Polite
  • Friendly
  • Punctual
  • Efficient
  • 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.

Read: As An Entrepreneur, Be A Motivational Leader To Your Staff

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?

drying-car

People will pay a little more if the service that they receive is outstanding – but the quality of your work must justify the price.

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.


Next guide: How Do I Start a Transport or Logistics Business?

truck-driver

Continue Reading

Launch

The Only How-To You’ll Need To Start A Restaurant

A step-by-step guide to opening your own restaurant in South Africa.

Katie Cubitt

Published

on

105-the-only-how-to-youll-need-to-start-a-restaurant

Decisions to Make Before Starting Your Restaurant

Before you even think about opening a restaurant, there are a few hard decisions you’ll need to make. These choices create the foundations of the business that you are going to be building.

What type of Restaurant is Best for You?

type-of-restaurant

Firstly, you need to choose between opening an independent restaurant, or a franchise. If you’re leaning towards an independent business then you need to make the further choice between whether it will be a completely new concept or a pre-owned business.

An overriding factor in this is decision is who you are and what your goals and ambitions are. To this end, you need to weigh up your options and match your choice to your individual preferences.

Buying into a franchise allows a franchisee to purchase the rights to sell a company’s products or services and use its logo for advertising and branding. The restaurant industry is one of the most popular industries for franchising opportunities. Franchises are a softer, more supportive gateway into the food industry.

Related: 5 Lessons From tashas Founder Natasha Sideris

There are support structures in terms of management training and avenues to find help. Coupled with this are the branding and marketing strategies that are proven and ready to roll out. Being a franchisee means being part of a larger team and oftentimes that is easier than trying to start from scratch.

Opening a franchise also means that there is name recognition and discounted rates on stock due to the larger buying power of the big chains buying in bulk for all their stores.

Franchises do however have downsides. The biggest is that you would need starting capital to buy into the ready-made brand. The amount of capital needed depends on the size and popularity of the restaurant and there is usually a down payment that needs to come from personal, non-borrowed funds.

Another downside is that the franchisee must pay royalty fees to the franchisor and sometimes, even additional advertising fees on top of that.

Related: What To Look For In Restaurant Management Software For Small Business

There is also always the possibility of expensive upgrades that can be determined by the franchisor. Finally, if you choose to buy into a franchise, you must be aware of the strict rules and guidelines that you will have to follow.

If you find yourself better suited to the independent restaurant path then there are once again a number of advantages and disadvantages.

On the positive side, there are no royalty fees to pay. With the exception of partners, the profit belongs to the owner. Owning an independent restaurant also allows for unique concepts and ideas to organically grow and then be implemented as you see fit. This allows for exclusivity and freedom of choice.

Furthermore, the restaurant is then able to adapt to the changing needs of the market, or according to the trial and error process, which is inevitable in any start-up business.

On the down side, there are high failure rates. Rob Davies, the minister for trade and industry said in May last year that five out of every seven small businesses started in South Africa would fold in its first year. That is a huge percentage. On top of that are the difficulties in growing your brand so that it becomes recognisable to a market swamped with choices.

Obviously, a pre-owned restaurant has a slightly different set of pros and cons in terms of starting out. On the positive side the restaurant may already have some familiarity to its target market.

Conversely, a pre-owned restaurant might need to have the brand, marketing strategy or even the physical premise overhauled. There might also be need for you to repair or further amp up any reputation that the restaurant previously had in its target market.

Use this restaurant business plan to help get you started.

What to look for in a restaurant location

The next thing to consider is where you will be opening your business or restaurant. For a franchise that choice will be made in conjunction with the franchisor. A pre-owned restaurant will usually have a location. If that premise is rented – the lease will need to be put into your name; similarly it will need to be transferred if you are buying it outright.

As we know, location is very important and in the restaurant industry it can make or break your business. Your restaurant will not be a successful venture if the location is not suited to your intended customers or to the type of restaurant you are looking to establish.

Related: How tashas Built A Recession Proof Business

Do not get too attached to the idea of a perfect spot – that will more than likely not happen, rather, focus on these five factors:

  1. Population base of the area – is it large enough to support your plan?
  2. Size of your restaurant – too big or too small?
  3. Available parking – enough for a full night at the restaurant?
  4. Accessibility to customers – if it’s a pain to get to, people won’t come as often.
  5. Visibility to motorists and walk ins – same as above, if they don’t see you – they won’t come.

By considering these factors you will ensure that you end up with a location that is customer friendly, visible and it is easy to visit because parking is not a problem. Also – you will have a place that is the right size for your business plan. There is nothing worse than a cavernous space that customers rattle around in. The same goes for a space where you can easily cut the steak for the man sitting at the table next to you.

If you are leasing the property, your local municipality requires a letter of consent from the owner stating that you may trade from the property.

But before you sign the dotted line of your lease agreement when renting, here are a few tips.

Steps to Get Your Restaurant Started

restaurant-funding

Restaurant Funding Options

At this stage of the process, you will need to consider your options in terms of finding the funding to buy out an existing business, start your own, or buy the rights to a franchise.

As an entrepreneur in South Africa you have a number of options available to you.

  • The first option is to use only your own capital, but that is not possible for most.
  • Second is to obtain a small business loan from your current bank. If your current bank is not open to giving you the loan, then you may also investigate into other financial institutions including credit unions. Loans in the banking sector can range from small micro-loans to enough start-up capital to launch from scratch. The amount you borrow is largely determined by the institution’s willingness to accept the risk.

But the banking sector is not the only place to obtain funding – especially in a country that is aiming to increase the number of small business owners and entrepreneurs. This means that there are a number of government organisations and agencies that aid in SME funding.

The first of these is SEFA – the Small Enterprise Finance Agency. SEFA recommends that the entrepreneur has 10% of their own investment to start off with, but can do funding options ranging from R60 000 to R5 million.

Alongside SEFA is the Small Enterprise Development Agency. SEDA aims to grow and support small enterprises through government funded agencies. They offer help in terms of training, support networks and programmes to aid small businesses in finding their feet and their goals.

Another channel for financing a SME is government grants. The basic difference between a grant and a loan is that a grant does not have to be repaid, but it does come with strict guidelines for applying and using the funds granted to you.

The final option to find the funding to start your own restaurant is to seek out investors. These can be friends or family members who are willing to help you get started, or larger firms and companies looking to aid an entrepreneur in starting a new business in South Africa.

Related: SEFA Funding

It is worthwhile to do the research and see who would be willing to contribute. Note that it is standard practice for investors to want shares in your business in return for their capital.

Here’s a quick guide of how to impress potential partners/investors:

  • Always be professional
  • Build trust in yourself and your brand
  • Be creative in your approach
  • Have the right information easily at hand
  • Know your figures offhand for easy reference
  • Always be on time.

How to Register a Restaurant

Once you have decided to go ahead and make a go of this venture, there are multiple steps that need to be followed in order to legally register your business.

Restaurant Name

Before you get started with registering your business, it is worthwhile to first check that your chosen name doesn’t already exist in South Africa. For more information on how to go about doing that, follow this link .

CIPC

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. These services do of course have their own fees attached.

Business Bank Account

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.

Related: Starbucks Coffee Is All About Culture… For A Reason

SARS TAX

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.

Restaurant Permits and Licenses

restaurant-permit

Because you will be selling food and alcohol (usually) there are some permits that you will have to apply for before you open to customers.

Firstly, to sell perishable food, a trading license must be purchased from the Business Licensing Department of your local municipality.

Next, in order to sell liquor under a license, an application must be made with the Liquor Board.

How to Equip Your Restaurant

At this point, you have a registered business with funding, a name and a location. Now you need to outfit your space with the necessary equipment, staff, technological necessities as well as look into health and safety regulations and training.

Restaurant Equipment

Obviously, the equipment needed for your restaurant will vary according to the style of food you are looking to produce, as well as the space available in your kitchen.

Finding the right equipment at the right price can be a nightmare – but there are easier ways, such as making use of South Africa Restaurant and Hotel Suppliers Guide which stream lines the process of searching individually.

You can also find a list of approved suppliers here.

The cost of starting a restaurant depends on the size, location and style of eatery you will be kitting out. Also, prices vary according to the finishes you choose and the brand of equipment you purchase.

Below is a list of the basics that your restaurant will more than likely need.

  • Shop fitting
  • Kitchen equipment
  • Refrigeration
  • Storage
  • Dining area (tables, chairs, high chairs etc)
  • Crockery, cutlery, linens, and all the kitchen tools
  • Signage
  • Sound and Lighting
  • A till system
  • TVs (if you go that direction)
  • And possibly a POS or Point of Sale system that allows for the wait staff to be connected with the kitchen staff.

James Brewer is the owner of six successful restaurants in the greater Gauteng are. After 28 years in the industry he knows a thing or two about opening a new business.

Related: Doppio Zero: Paul Christie & Miki Milovanovic

Brewer points out here that “all essential equipment should be bought new because reliable equipment is a must.” Brewer adds that you must always make sure you have tested all your working parts before you open for business.

Branding and Marketing Your Restaurant

restaurant-marketing

An important aspect to your new business is to ensure that you are working with the correct branding and marketing strategy.

When first outlining your brand, remember that you need to develop an identity for your brand – know who you are and stay true to that image. The most successful brands are those that know who they are and where they are going.

Have a marketing plan – use those in the know to help you formulate a plan of attack for what would work best for your target market, your style of restaurant and the food you serve, and for the scale of your business.

Remember with your marketing plan to ensure that you follow the ethos of having an ongoing conversation with your customers. Marketing is there to reach out to the customer and have them respond.

Make use of the platforms and agencies that are there to aid start-up businesses and entrepreneurs. Use them to their full potential.

Embrace social media – it can work wonders at getting your name out in the market.

Related: 7 Creative Strategies For Marketing Your Start-up On A Tight Budget

The POS Sector blog for restaurants and bars has an interesting list of ways to promote your business, keep the customers entertained and keep them coming back. The list includes fun ideas such as hosting a themed dinner party, having wine tasting evenings and even suggests having a happy hour. They also have ideas such as visiting the companies in your area and giving discounts on delivery.

If you would like any road signs near your business, you will need to get approval from the national roads signs committee which falls under the jurisdiction of the Department of Transport.

The trick is to make your restaurant stand out from all of those around you and with the help of an innovative marketing strategy.

Health and Safety

In the food industry there are strict health and safety regulations so as to ensure the well being of your staff and your customers.

One such regulatory body that carries out inspections on behalf of the Department of Health is the NRCS (National Regulator for Compulsory Specifications). They are a internationally recognised and work in close co-operation with other regulators of the Food and Associated Industries (FAI).

It is also good to know that there are a wide variety of courses that aim to train staff in terms of food hygiene and it could be worthwhile to send employees for this kind of training.

Hiring Restaurant Staff

Hiring-Restaurant-Staff

Part of being an entrepreneur is creating jobs. That means hiring staff to fill your books and feed your customers.

With six locations under his direction, James Brewer believes in hiring from existing staff.

“Make sure you survive,” he says, “do not trust anyone and check all CVs.”

When hiring, there are a few more things you need to remember:

  • Conduct proper interviews especially considering you are entering the customer service industry
  • It is worth your while to follow up on recommendations and references of those you interview
  • If you hire foreign nationals – remember to check their work permits.

Under the Basic Conditions of Employment Act, it is a law in South Africa that no matter how small your business is, or whether the employee is part-time, full-time or temporary; you must supply them with a written document stating the details of their employment.

There are bargaining councils for all industries in South Africa. These help solve labour disputes, aid in producing proposals for labour prices and policies and smooth the way for collective agreement. For the restaurant industry it is the Tearoom, Restaurant and Catering Bargaining Council.

Related: 4 Steps to Hiring Killer Sales Staff

Since it was enforced in 2007, there is now a minimum wage that employers must grant their wait staff. For businesses with less than ten employees, the minimum wage is R12.39 per hour and for businesses with more than ten employees it is R13.81 per hour. These figures are applicable from 1 July 2013 until 30 June 2014.

There has been no regulation over whether or not employees may then take a percentage of the staff’s tips – but this is a contested issue.

A Day in the Life of a Restaurant Owner

Until your business is running smoothly, you will need to put a lot of energy and time into it. Starting a successful venture means persevering in the industry.

We asked Brewer to describe his average day from opening to closing in the early years of any of his new restaurants, and he surprised us with a short and concise mantra: “Open at 9 am, do ordering, check stock, sell, sell, sell. Check staff, take stock, close at 3am. Clean all the time.”

A restaurant needs nurturing and attention to detail. And as the entrepreneur you need to be the one who is in control of what is going on inside your business on every level, from stock to staff to products and services and most definitely with your clients as well.

Lessons from Restaurant Failures

red-wine-stain-restaurant-failure

We’re not going to beat around the bush and pretend that starting a restaurant is a new concept. This however, holds a bevy of perks because you are able to learn from those who have succeeded before you, and more importantly, from those who have failed.

In general, there are many stories you can glean lessons from. Here is quick list of some of the things to take to heart to ensure your success:

  • Never compromise on hygiene
  • Never compromise your food or service quality – and don’t let your staff either
  • Create and maintain a loyal customer base
  • Play to your strengths
  • Recognise your deficiencies and rectify them early on
  • In the early years, reinvest in your business – it needs nurturing.

Once again, James Brewer puts his 28 years in the industry to good use and gives you these further tips:

  • Stick to the basics
  • Be in your shop
  • Keep control of costing
  • Enjoy what you’re doing
  • Know that equity keeps your partners happy
  • Be positive to your customers
  • And don’t forget to look after your staff – they are your future.

Restaurant Industry Contacts

Equipment Suppliers

Furniture Suppliers

Point of Sale (POS) System Suppliers

Restaurant Associations

Staff Training


Related: How tashas Built A Recession Proof Business

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending