For many, loss of job satisfaction can lead to a fork in the road: Look for another job, or becoming self-employed. This article covers important things to know in preparation for becoming your own boss.
Reasons for becoming self-employed
Your reasons for becoming self-employed can follow any number and combination of themes:
- You want independence with your finances or to better them; want more control of your time
- Take on a new challenge, learn new skills or deploy the ones you have better
- You may want more money and better work conditions
- You may have been retrenched, feel unfulfilled by your current job, or can’t find a job in you area
- You may have spotted an opportunity in the market or want to have a greater impact on your community
- You may want greater flexibility in your day to see to family responsibilities
- More control who you provide business to
- You may want to pursue your passion and create greater meaning in your life
- You may not be ready, able, or interested in retiring.
Whatever your reasons for wanting to be self-employed, it’s important to know what they are, as these reasons will influence the kind of business model you create, and serve as motivation as you start and grow your business.
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Are you suited to be self-employed?
The next thing to assess is whether you’re cut out to be self-employed. While not everyone can be entrepreneurial greats like Richard Branson or Mark Shuttleworth, there are endless opportunities for individuals to kick-start small businesses and life fulfilling, financially secure lives.
Here are some characteristics that will help you figure out whether you’re suited to being self-employed:
Preparing to be self-employed
Before you print your resignation letter and put it on your boss’s desk, there are a few things to get in order on your quest for self-employment. You need to have a plan, so have these ducks in a row before taking any big leaps:
- Increase your savings. A business is going to require capital, often much more than you anticipate. So make sure you start saving. There will be unexpected expenses, months of little or no income, personal bills that need to be paid etc.
- Scaling back on expenses. If you’re leaving a salaried job to pursue self-employment, you’re going to need to reduce your expenses as much as possible. Not only with this help you with saving for your business, but once it’s go-time, there will be less pressure on the business to float your lifestyle. You may need to trade in the fancy car, scale back on luxury spending, skip a holiday or two. Make sure your family is on board with these sacrifices to avoid conflict.
- Can you start part-time? It’s not always necessary to quit your current job in order to become self-employed. Let your employer know of your intentions and nine times out of ten they will support you provided you’re not compromising your productivity, abusing company resources or poaching clients.
- Learn, learn and learn some more. Take the time prior to starting your business to analyse your target market, the demographics of your surrounding community, take courses or self-study to up-skill yourself, write a business plan, and get a mentor if you can.
- Crunch numbers. If you already have a business idea, take the time to carefully figure out your finances. How much capital will you require? What are your (conservative) projections? How long is your sales cycle? What kind of profit margin can you achieve? Will you require a loan?
Finding a business product or service to provide when you’re self-employed
Thanks to globalisation and the Internet, you needn’t always rely on your local community to support your business idea. If you’re passionate about a particular interest, search the Internet for forums or groups with similar shared interests. See if you can set up an e-tail business to tap this interest.
If you have spotted a need in your area that you have the skills and interest to tap, take the time to understand your market, their needs, income, expectations etc. As an example, if you spot a need in your community for a trustworthy and reputable handyman service, you can meet that need by setting up a handyman business that trains and deploys handymen around the community.
At the core of every single business on earth that has ever achieved sustainable success is this philosophy:
Every successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they’re willing to pay, in a way that (4) satisfies the purchaser’s needs and expectations and (5) provides the business with sufficient revenue to make it worthwhile for the owner to continue operating. – Josh Kaufman
Implications of being self-employed
Also known as ‘the dark side of being self-employed,’ there are a number of implications that can be pushed aside during the excitement of having a business idea and getting it off the ground. Here are the top considerations to put some thought to before starting your own business:
Family considerations for the self-employed
The start-up and growth phases of a business are incredibly demanding. This means much of your time and energy will be devoted to the cause, while family can take a back seat.
You may find that being your own boss actually means more work time than if you were an employee, suddenly evenings, weekends and holidays are work-time too, primarily because of the knowledge that your business success is down to you and you alone.
Because of time and financial restraints, you may have to make unpopular sacrifices like annual holidays to the coast, reducing your children’s allowances, relying on your spouse to carry the bulk of living expenses.
Even if you’re in a position to still enjoy these things, you may have a hard time switching off and enjoying family time, knowing that there’s always something in the business that needs to be done.
Financial considerations for the self-employed
While a successful business can lead to greater wealth in the future, there will be times where the business presents huge financial uncertainty – you may not be able to draw a salary, it hasn’t reached break-even, a return on investment is years off, and your life will continue to throw financial curve-balls like an unexpected medical expense.
You will need to look carefully at if and how you plan to continue medical aid and pension payments, how you will pay loans like your bond, car etc.
Work-life balance for the self-employed
For many new and experienced entrepreneurs, finding a work-life balance can seem like an insurmountable challenge.
The line between work and personal time becomes blurred, your sense of success and fulfilment becomes attached to your business success, and you may find it hard to switch off at the end of the day.
Here are some tips to help:
- Set a place and schedule. Choose a place to work that allows you to zone in and concentrate. It’s good for this place to have a door. Get up at the same time every morning and have a routine similar to what you’d have at a place of employment. When the work day is done, turn off the computer, close the door, and ‘go home’. Don’t fall into the trap of working in your favourite TV chair, of working all hours of the day, and trying to multi-task business and family.
- Build social contact into your day. Hanging about the house all day will lead to cabin fever and a sense of isolation. Allocate time in the day to leave the ‘office’ to have lunch, pick up the kids, run errands, visit clients, socialise etc.
- Keep some days ‘no work’ days. While it’s a tough decision when you’re business needs you as much as it does in the start-up phase, make sure you have dedicated ‘no-work’ days. Even if it’s just one day a week, you need this time to recharge your batteries and enjoy important personal time.
Isolation of the self-employed
One factor of being self-employed often takes entrepreneurs by surprise – and that’s a sense of isolation. When you’re your own boss, you are at the steering wheel and the weight of the responsibility can make you feel isolated.
If your family members are employed, they might not understand what it feels like to experience the challenges, responsibility and demands you do as a business owner.
At first, the idea of working by yourself can seem appealing, moving from a business with numerous employees to being a small business owner can also feel isolating because of lack of social engagement.
This is particularly common for entrepreneurs starting a one-man-business from home. While you no longer have to commute to your place of work, you also lose the daily interaction you previously enjoyed with colleagues.
For a boost to your confidence, some much needed entrepreneurial and industry advice, being exposed to potential business, spreading word-of-mouth referrals, and developing yourself as an entrepreneur, network, network, network. Join entrepreneurial organisations, attend industry events, and maintain good relationships in your network.
To get started with your small business, click here.
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.
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