The South african climate has long been fertile ground for start-ups and entrepreneurs. With incubators and accelerators for almost every industry, funders constantly in search of viable businesses to invest in, and government doing their bit, South Africans are no strangers to start-ups.
Here are Six Steps to Ensure our Start-ups Successfully Transition into Sustainable SMEs:
1. The Lone Ranger is a Fossil
Transitioning successfully from start-up to a small business or enterprise is a tricky balancing act; you need the income to drive you forward but not too quickly that you can’t expand staff at the same time.
Related: 21 Steps To Start-Up
Outsourcing – thankfully something South Africans are no strangers to – is still the best interim solution. Outsource your accountant, marketing and even you PA so that you can bridge the gap as your business transitions from one phase to another.
Also consider a business coach to guide you through this transition phase. The value of a coach’s guidance as you let go of the old and embrace the new, will ensure you don’t leave what’s important behind.
Bring people around you. That ensures you are free to focus on the core functions of your business, while they carry on with the peripheral functions.
2. Focus on What Matters
Throughout the start-up phase, and beyond, it’s important to set achievable goals and regularly review your progress against them.
However, instead of focusing on growth, stay focused on your key objectives and what makes you different from your competition.
Focus on your team and creating a great customer experience, rather than growth: Growth is a by-product of a successful business.
Progressing from micro to SME shouldn’t change your company attitudes and culture: these make you unique.
Hold onto these and incorporate them into your bigger profile as you develop your business.
3. Bloom and Grow
Your next big step is to hire a full-time key member of staff – a production manager, operations manager, perhaps a senior accounts manager. I know this is a large financial commitment, but you will see a return on your investment.
Firstly, the boost in moral will lift the spirits of the existing team, as this senior position will alleviate some of their workload. Secondly, the added seniority on the team will help support your leadership.
According to Paul Lees, chief executive and founder of Powwownow, which has gone from a start-up to a well-established SME in the last decade, believes that often the hardworking individuals who have built a business from the ground up, are not equipped with the skills to take it to the next level.
Invest in knowledgeable individuals, hold on the knowledge of the original team, and your business will transition start to grow.
4. Know What You’re Worth
In the beginning, most startups exchange low prices for their school fees. I.e. you and your team are still learning how this thing called ‘start-up’ works, so you charge lower fees as your service or product might take a little longer to be delivered, and might have a glitch or two. You probably also take jobs that might not be your core business, but you need the work, so you do it.
No problem. Learn, dig deep, eat humble pie, say yes and grow. However, you are not meant to stay in this phase forever.
With time, you gain experience, confidence and expertise. When you are ready to transition, you no longer need to stay in the cheap and cheerful seats. It is likely that your value and team have scaled and you now qualify to play in a different price league.
When you initiate the transformation to expand your business, be sure to evaluate clients and their worth.
- If necessary, walk away from a client or two who might not be willing to evolve with you.
- Be consistent and never compromise on your quality of service.
- Weigh up your strengths and weaknesses, what you enjoy doing and ultimately what gives you the best return.
- Prioritise these core areas of strength to drive your business forward.
- Identify what your ideal customer looks like, so that you can cater to their needs, and make your offering more attractive to them. A good marketing company or brand coach can help you with this.
5. Think Big, Act Small
If you’re an entrepreneur and you’re still in business, congratulations – you are doing something right. With only 10% of start-ups surviving, it is important that you don’t walk away from everything that got you here in the first place in exchange for ‘growth’.
- Startup Culture: Your culture is a foundational pillar when you’re a small company – it’s what carves out your reputation and generates those highly-coveted streams of repeat business. Have big goals, but protect the energy and agility of your startup.
- Start Somewhere: ‘Think big, act small’ also implies that each big dream has to start with that first small step.
In a post from Google’s Think Insights, Google’s former Senior Vice President of Adwords and AdSense, now Senior Vice President at YouTube, Susan Wojcicki explains, “No matter how ambitious the plan, you have to roll up your sleeves and start somewhere. Google Books, which has brought the content of millions of books online, was an idea that our Founder, Larry Page, had for a long time. People thought it was too crazy even to try, but he went ahead and bought a scanner and hooked it up in his office. He began scanning pages, timed how long it took with a metronome, ran the numbers and realised it would be possible to bring the world’s books online. Today, our Book Search index contains over 10 million books.”
- Update How You Do Things: ‘Think big’ also means it’s time you stop running your business with free-trial software and patchwork systems. If you want to compete with the big dogs, adrenaline and will-power are not enough to go the distance.
I know this is not glamorous or very ra-ra, but if you want to emerge as an SME to contend with, it’s time to improve your internal systems, software and policies. The systems you use now will buckle and fail under the strain of rapid growth.
Does someone in production consistently produce great work in record time? Map out what he does and how he does it, step by step, then make that a new production policy, so that your product delivery becomes reliable and consistent. A business coach could help you here.
Still using excel to handle your orders, invoicing and reports? It’s time to look at a more holistic, smarter approach that will scale with you. Business Operating Systems (BOS) – the next generation of ERPs – automate the admin of your business so that you are free to grow. A good BOS should cover quotes, production management, stock control, time keeping, reports, invoices and accounting. If you have a big budget, look at SAP. If you want software that will grow with you, and has friendly support, we like QuickEasy BOS.
6. Jack Be Nimble
Finally, never cease to innovate. Stay nimble. You’re the boss, right? That’s one thing that large corporates envy about SME’s: If you have an idea, you are able to immediately put it into action. Test it. If it works, great. If not, try something new.
Many SMEs Start With Great Plans But Fail To Take The Big Leap
Most small-to-medium sized enterprises (SMEs) are aware of the benefits of good governance practice but, faced with limited time and resources, which could be costly in supporting growth ambitions.
- 27% of SMEs don’t have a vision that covers more than the next 12 months
- 45% of SMEs either don’t have a strategy, or one which covers only the next 12 months or less.
The latest global research, inclusive of Africa in supporting small business growth from ACCA, outlines the governance needs of SMEs. It highlights simple but effective practice over vision, strategy and human capital can provide them with greater flexibility, adaptability and resilience as they grow. This a huge factor in the long-term sustainability of the business, if put in practise.
“If you incorporate good practice for running your business from an early stage, your company is more likely to be resilient and is more likely to appeal to external investment,” explains Jo Iwasaki, head of corporate governance at ACCA. It is about leadership directing the company and being aware of factors both within and beyond their enterprise and build resilient organisations in the face pf the changing world.
The research also found that half (49%) of SMEs do not involve anyone external in their strategy discussions, despite the benefits experienced by those that do, which include additional experience and knowledge of the industry/sector (according to 46%), an independent perspective / constructive criticism (44%) and advice on their growth strategy (39%).
“There are a lot of daily concerns for the leaders of a small business, and often the biggest challenge is meeting day-to-day operations and cash management needs while thinking about the long-term future of the company. And while many leaders are keenly aware of the importance of resilience in the rapidly changing business environment and of buy-in from stakeholders, for example funders and employees, there often may not be the time to think or do much about it,” added Iwasaki.
“I hope that this research helps SMEs in focusing on some of the most crucial issues, and can be a resource not just to SMEs themselves but also to policymakers,” concluded Iwasaki.
How vision and strategy helps small business succeed is available at ACCA Global.
Small Business Owner? All The Documents You Need To Get A Car
Read on below for some tips on all the documents you need to get a car as a small business owner.
As a small business owner, transport is an important aspect of your financial success. You need to be able to drive to and from meetings so that you arrive on time, as well as have the ability to transport your products to customers and to your store.
You will need to purchase a car for your small business to make life easier and more efficient. Once you have used a car repayments calculator in South Africa, you will need to gather all the necessary documents together in order to make a purchase. Not sure what those documents are? Read on below for some tips on all the documents you need to get a car as a small business owner.
A business plan
A business plan is necessary for the financial institution as it will show them how your business is doing financially and whether or not you will be able to repay them on time and in full. Your business plan should be detailed and provide a financial breakdown of your business at its current point in time.
Having a business plan will also show the financial institution that you are serious about your commitment to repaying your car loan. Being transparent with them will work in your favour and allow them to see the progression of your business with the use of your new vehicle. You will need to carefully outline how you will repay the car and what you will do if you are unable to make the repayments.
One of the most important documents you will need to provide the lender with is proof that you are the owner or part-owner of the business. You will need to turn in the correct documents that correlate to your business, such as a partnership agreement, limited liability company documents or a business licence.
In some cases, you can simply provide your lender with your personal information and the information of your business. You will need to provide the tax identification number of your business too. The ownership documents are important, as they differentiate the purchase from being a personal one to being one for a business.
Be sure to have these documents ready, and make copies in case you should misplace anything.
You will need to provide the lender will all the necessary personal information. This includes a copy of your identity document, the most recent three month’s worth of bank statements for your business as proof of your ability to repay the debt, as well as proof of business and residential address.
If you are the sole proprietor, the financial institution or lender will need these documents because you and your business are seen as one in the same. This means that they need to look at the income from your business and both your business and personal expenses when calculating your affordability. You can use a car repayments calculator in South Africa to do the legwork and figure out your affordability before the financial institution does but their results might differ.
Driver’s licence of the regular driver
If you are going to be driving the car regularly, then you will need to provide the financial institution or lender with a copy of your driver’s licence. However, if you will be allowing your staff to use the company car, then you will need to provide both a copy of your licence and theirs, in order to add them to the insurance as a regular driver.
Providing a copy of the driver’s licence of everyone who will be driving the company car will allow your insurance company to add them as regular drivers. It is also important for your financial institution to know how and how often the car will be used, as this will influence their approval decision. Be sure that whoever you list as a regular driver is trustworthy and will drive responsibly in order to limit the amount of wear and tear on your business vehicle.
Proof of insurance
Once you have settled on the perfect car for your needs, before the car can be delivered you will need to provide the lender with proof of insurance. This is necessary as the financial institution or lender needs to be assured that the car will be insured against anything that might happen to it while en route to your business.
You should look for car insurance that offers affordable premiums and that is tailored to company cars rather than cars for personal use. The proof of insurance should have the details of all regular drivers listed, so that your lender has a comprehensive list of everyone who will be using the car, and should clearly state what is and is not covered. Be sure to make a few copies of this document for the drivers to keep for themselves in case they have any queries or need to make a claim at some point.
How To Choose An Outsourcing Partner For Your Small Business
Before you jump the gun and choose the first outsourcing company that piques your interest, you need to consider the following factors.
Business process outsourcing (BPO) has proven to be a practical decision for many business owners when it comes servicing your customers’ needs. Gone are the days where you’re needed to juggle customer communication while trying to solve several pressing issues at the same time. Now, you can simply put those concerns in the hands of professionals who can help you achieve greater success.
Many small business owners are forced to wear several hats at the same time. And focusing on your business’ direct needs, such as growing your bottom line, as well as having to manoeuvre your way through the online space to keep your customers happy, is not always possible. Not to mention, there isn’t always enough time in the day to focus on, and excel in, all of these important elements.
Based on the above, it’s clear that outsourcing your needs is a feasible solution for long-term success, however, the question is not always “why” but rather “who” to outsource to. With so many incredible outsourcing partners out there, it’s important that you find a company which can service the needs of your customers and add value to your unique business offerings.
Before you jump the gun and choose the first outsourcing company that piques your interest, you need to consider the following factors.
Analyse the resource quality
When you choose to outsource your services to a company, you need to look at their skills to determine whether or not they will be able to help you achieve the success you want and need. Make sure that you do your research to see the type of clients they work with or the projects they’ve worked on to ensure they’re able to handle the volume of questions, queries and customer needs your business has.
Choose according to the infrastructure you need
As a small business, most of the frustration of not being able to meet your customers’ needs is due to the lack of necessary infrastructure needed to perform particular tasks. For instance, artificial intelligence (AI), chatbot technology and more. Your chosen provider will also need to have the correct equipment and software to safeguard your information if the server is down or one of their machines become faulty. Customer service in today’s day and age is a constant service.
Your provider needs to be able to set up solutions to ensure that your customers will be assisted 24-hours a day.
Communication needs to meet your business needs
The company you choose to work with should have a clear understanding of your business needs, and they will need to be available for communication when you need it. Small businesses are testing the waters, and therefore should be able to change their approach in real-time if something isn’t working. If your partner is on-par with what you need for your business, together you will be able to succeed.
Flexibility in service offerings
As mentioned, your chosen partner needs to be flexible in their services in order to keep up with your customers’ ever-changing needs. Should your approach need to change, your outsourcing company should be able to guide you and provide insight that can help you achieve your goals. Reliability also goes hand-in-hand with flexibility, as your partner needs to work effectively to help your business thrive online.
Outsourcing cost versus delivery
Small business owners need to be careful not to over capitalise on their expenses, therefore it is advised that you shop around to find the most affordable, competitive price for your needs. Do your research on the market to see what other companies are offering in terms of costing and services. During this process, you need to ensure that you are not choosing the cheapest place and compromising on quality.
Weigh up your options and remember that this is a service that you are unable to provide due to time and skills.
With the right partner, the benefits of outsourcing are endless. They will have a positive impact on your reputation and your bottom line, which is why you cannot take this decision lightly. You will also need to choose according to the size of your business and your needs. For example, if your needs are to communicate with your customers across various online channels in a personalised manner, you will need to look for a company that is small enough to attend to the detail you expect. If you simply want to automate your customer needs, you will be able to consult with large companies with years of experience and the latest technology. The smaller your company choice, however, the smaller your financial risk.
In the beginning stages, it’s best to start with something small and work your way up according to your business growth and needs. The above-mentioned factors are crucial when wanting to boost profits and return on investment (ROI). Choose wisely and, together, you will take your business to new heights.
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