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.
Small Business Savvy: Why You Need Negotiation Skills
Work on your negotiation skills and you will see your business grow from strength to strength.
Starting and running a successful small business requires skills and knowledge that many business owners may not possess. For example, the owner of a food truck may be an amazing chef but they may not have ample knowledge of accounting, employee management or inventory control. They may also not have the ability to successfully negotiate with landlords, partners or suppliers.
The ability to reach an agreement on an issue without having to compromise too much comes with practice, and can be learnt by taking negotiation skills courses and interacting with more established members of your industry. The reasons why these skills are vital to small business owners are outlined below.
These skills are beneficial for everyone involved
While negotiating in a boardroom is a useful skill to have, small business owners need skills that translate to their situation. Negotiation skills are needed when meeting with suppliers, in order to receive a better price for bulk goods, and can be useful when hiring a new employee and discussing what their responsibilities will be.
Being able to negotiate professionally is also beneficial when dealing with customers. You will be able to reach an agreement that suits you both, without fumbling and settling for less. Your customers will respect you as a vendor, especially if you are able to stay calm and collected throughout the transaction.
You can create win-win situations
Negotiating is not simply creating a positive outcome for one party but reaching an agreement that both parties benefit from.
The best small business owners are those who are able to negotiate an outcome that has a win-win result, in which every party involved believes the deal is a good one.
Being able to reach agreements that are positive for both you and the other party is a highly valuable skill. Not only will everyone involved have positive results but you will become a more respected businessperson. Your suppliers will enjoy dealing with you, your clients will respect you and partners will be more likely to use your viewpoints in their decisions.
Good negotiation will improve your bottom line
The ultimate goal of a negotiation is to reach an agreement that is favourable to you and your business. By being able to negotiate a good deal, you are automatically improving your bottom line. But, this takes a keen mind and a knack for negotiation, which some business owners do not have. By taking courses, you’ll be able to improve your ability and thus improve your end results.
If you are able to reduce your overhead by 10% due to an effective negotiation, that money can go directly to your profit margin. Negotiation skills are imperative for a thriving small business, because as the business owner, you are in charge of dealing with suppliers, partners and clients and will need the ability to create outcomes that favour your bottom line and end goals.
Related: How to Win a Business Negotiation
Your business confidence will be boosted
Walking into a negotiation feeling unsure of yourself and your ability to negotiate can lead to an agreement which favours the other party, not yourself. However, by improving your skills and being able to argue and negotiate professionally will boost your business confidence tenfold.
Having confidence when walking into a negotiation means that you will be able to concentrate on the issue at hand, not worrying about whether the other party is out-manoeuvring you. The ability to confidently make a presentation and provide offers and counter-offers has been shown to garner better results. Confidence in business helps to win many boardroom battles.
You will build respect
Having effective negotiation skills will build respect in the eyes of your competitors, suppliers and staff. Having the respect of your employees is vital for a successful small business, as your team is most likely small and close-knit. If they respect their employer, they will most likely work harder and be more productive.
Being respected in your industry is another benefit of having sound negotiation skills.
The impression you leave after a negotiation can have a lasting effect on how you are viewed in your industry, so it is best to be able to have a positive impact. Being able to negotiate professionally and without incident will more likely result in respect from vendors, partners and clients.
The simple fact of the matter is that it is better to be seen as intimidating rather than a pushover at the negotiation table. Your ability to confidently present your case will have a positive effect on your reputation in your industry, and will ultimately work toward achieving your bottom line and end goal. Work on your negotiation skills and you will see your business grow from strength to strength.
Win A Business Makeover With Retail Capital To The Value Of R250 000
Retail Capital is giving SMEs an opportunity to win a makeover to build their brand with an investment of R250,000.
Retail Capital is giving SMEs an opportunity to win a makeover to build their brand with an investment of R250,000. During the summer campaign, SMEs are encouraged to share the vision of how they would like to see their business grow, and led by a team of experts, Retail Capital will work with the winning SME to help make their vision come true.
While South Africa’s economy is not faring well, Retail Capital CEO Karl Westvig remains optimistic about the country’s retail and hospitality sectors. “We are seeing some green shoots, with an increase in turnover in these sectors – starting from the end of September. Economic conditions remain very tough, but businesses seem to be trading well into October and we’re hoping this continues into the festive season trading.”
According to recent statistics from Statistics South Africa (Stats SA), South Africa’s retail sales rose by 5.5% year-on-year in August 2017, following a downwardly revised 1.6% gain in the previous month and above market expectations of 2.3%. It is the biggest gain in retail trade since August of 2012.
Related: How To Raise Working Capital Finance
“I do believe that these sectors will see an improvement during the summer season. But, key to this will be for small business owners to ensure that they have the right amount of stock, adequate cash flow, as well as other systems in place to meet the ever-changing needs of customers,” says Westvig.
For many small businesses, however, continually adapting to market changes requires cash injections that they don’t often have.
The prize includes the following:
- Business plan/consulting
- Marketing strategy
- Design and branding
- Website and social Media and,
- R50k capital to gear your business.
Westvig explains that the summer campaign tagline ‘Your Vision. Our Belief’ really speaks to why Retail Capital first opened its doors. “Our goal is to see the potential of small businesses and to work with them in making these become a reality.”
He adds that the idea is not to simply help one business during the campaign either. Westvig points out that one of the biggest challenges that small businesses face in the sluggish economy is enough foot traffic through their doors. “Generally, the main hurdle in creating brand awareness and projecting credibility of their establishments boils down to establishing a strong online presence.”
“One of the first ways that South Africans identify a business or service provider that they want to work with is over social media – even in a country where the digital divide has traditionally separated the technological haves from the have-nots,” he says.
He explains that companies that don’t have a social media presence are running the risk of being overlooked entirely. “They may attract customers in their own community with signage or word of mouth, but to grow a business, they need to expand their reach – and that’s where social media comes in.”
But, the reality is that resource and time constraints mean that for many SMEs, social media is not prioritised. “Unfortunately for the average small business owner, they don’t have the time or expertise to get connected.”
Understanding the importance of having an online presence, Retail Capital has also committed to developing the digital presence of all campaign entrants. This would include setting up each entrant’s digital presence on platforms such as Google, Facebook, Twitter, Tripadvisor, Zomato and any others that may be relevant to their specific market or industry.
“As a partner to many SMEs in South Africa, we are continually looking at new and innovative ways to help provide them with the much-needed support in order for them to realise their visions. SMEs need to be supported with initiatives like targeted education and training, supportive legislation, and funding opportunities that collectively help them grow our national economy,” says Westvig.
Who we are and what we do:
“More than R1.25 billion has been extended to a range of businesses including food trucks, hair salons, restaurants, spas and franchised retail stores. Many of these businesses have not been able to raise funding in any other way, other than to go to unscrupulous lenders,”says Karl Westvig, the CEO Retail Capital, a company that provides working capital with the help of innovative lending technology.
“We have also estimated that for every R160 000 we lend, we create a new job. This means that 625 jobs have been created purely by enabling small businesses to get the funding they need for working capital requirements or expansion opportunities.”
Retail Capital’s system, which enables it to advance funding to small businesses, based on real time information on credit card transactions, is providing a new funding alternative to entrepreneurs who have previously been turned away by banks. Because it is able to get actual sales information, it can approve funding immediately, and allow for flexible repayment options based on sales cycles of the particular businesses it is funding.
“This creates significant opportunity for small business owners to focus on their business and grow volumes or look for expansion opportunities rather than spend their time frantically trying to repay debt or keep the business alive after debt repayments have eaten away at any cash reserves they might have had.”
Retail Capital funding is repaid by it taking a percentage of a business’s recorded credit or debit card sales, with repayments fluctuating in line with their business cycle. This has the effect of ensuring that it isn’t overburdened with debt.
“In the past six years since starting the business, small businesses have had the benefit of R1 billion in funding they would have been unable to get through traditional channels,”says Westvig.
Against the backdrop of recessionary conditions in South Africa, Retail Capital’s client information reveals growth in informal sector turnover across a number of industries.
“We believe that growth in the informal sector is outstripping that of the formal sector,”says Westvig.
As a large proportion of the businesses it funds are women- and black-owned, there is evidence that entrepreneurs who have previously been excluded from access to finance are now enjoying success now that their access to finance problem has been solved.
3 Ways To Find Ideas For A New Business
Every business starts with an idea, a vision for a product or service that the business then brings to life.
Every business starts with an idea, a vision for a product or service that the business then brings to life. Sometimes, the greatest ideas and the most successful businesses can spring from some unlikely places. So if you’re hunting for some fresh ideas for starting a new business, try these tricks to get the wheels turning.
1. Ask People What They Need
A good product or service will fill a gap or meet a need that is not being met yet. So if you need a fresh idea, start by asking people what they need. Of course, you don’t just want to stop random people at the shopping mall and ask them what kinds of products they’d like to see. You need something a bit more targeted than that.
Related: 10 Business Ideas Ready To Launch!
So start by picking a niche group of consumers that you would like to reach. For example, you might decide you want to create a product or service to help make teachers’ jobs easier. So reach out to some teachers and ask them what kinds of problems the encounter most, and what kinds of things would help them. Odds are, they’re going to have a lot of answers.
Entrepreneur Sam Ovens started his first business out of his parents’ garage, and he did it by solving a problem for a very specific group — property managers. He reached out to this niche of consumers and learned that they spent a lot of time juggling notes and photos for the various properties they managed. So, Sam created an app that made it easy for property managers to take photos of properties, add notes, and send the documents out to their clients. The app, SnapInspect, was hugely successful and launched Sam into a multi-million dollar business career.
2. Find Something That Bothers You
If you don’t have someone else to ask, ask yourself what some of your pet peeves are. What’s something that you put up with, just because it seems to be the norm, but that you secretly wish you could fix? Find what that one thing is, and fix it. Odds are, there are other people who have the same problem, and they’ll pay you to fix it for them too.
For example, one young college grad was irritated by something very simple; he didn’t feel like there was a quality no-show sock for men. As a young professional himself, he wanted something that he could wear with his slacks and dress shoes, but it seemed that the only option for professional socks were long. So he started a Kickstarter campaign, and he raised $50,000 to start producing quality no-show socks.
This simple desire to fix his own pet peeve led Kory Stevens to found Taft Clothing. The line now produces high-fashion men’s shoes, and the business now boasts millions of dollars in sales. Plus, Kory has those no-show business socks he wanted for himself.
3. Make a Cheaper Product
Certain products and services simply have a high price tag. But if you can find a way to take an existing product or service and provide it for a steep discount, you have a recipe for a successful business. Consumers always want to save money, and if you give them the chance to save money on a product they already use, they’ll take it.
One example of this is an eyeglasses company called Warby Parker, which was launched in 2010 by four friends who attended the same business school. They looked around and noticed that most prescription glasses were selling for $300 or more. So they decided to offer the same kind of product for just $95. Since the company’s launch, Warby Parker has grown to 100 employees and is still expanding.
The opportunities for new business ideas are all around you. If you know where to look, you could end up with the next big thing in the business world.
- Sennergi’s David Hounson 4 Tools To Help Weather The (Entrepreneurial) Storms You Will Face
- The Best Conversion Rate Optimisation Tips To Help You Grow Your Business
- How To Make Speedy Decisions As A Leader
- What Kind Of Leader Are You?
- Surge In South Africans Swopping Their Cars For Bitcoin
- What Can Businesses Expect From The Future Of Work?
- Daniella Shapiro Of Oolala Collection Club’s Smart Strategies For Marketing Your Online Business
Start-up Industry Specific2 months ago
How Do I Start A Transport Or Logistics Business?
Business Plan Advice2 months ago
Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits
Company Posts5 days ago
Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria
Entrepreneur Profiles2 months ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing