If it’s your dream to start your own business, there are some cardinal rules that, if followed, will help you dodge becoming a start-up failure statistic. Your road to starting your own business begins here.
Starting a small business: Being your own boss
One of the biggest choices a would-be entrepreneur needs to make is whether to walk away from a relatively secure, salaried job in order to pursue their own-business dreams. But the transition from being an employee to being an entrepreneur is a big one and there are things you should be prepared for:
How comfortable are you with risk?
Not only will you need to decide on leaving your job for starting a business, you may also need to fund it with personal savings, taking a loan, or cashing in a retirement policy.
Entrepreneurship by its nature involves a degree of uncertainty, and as your own boss, you’ll need to make some tough and/or unpopular decisions.
The key is to take calculated risk – make sure you’ve done as much research as possible on the industry, your business model, your target market, and financials.
Do you have the right characteristics?
Great entrepreneurs are independent, stubborn, charismatic, resilient, persuasive, able to negotiate, creative, and natural-born leaders. If you don’t possess these traits, it doesn’t knock you out of the game.
Be sure that the kind of business you’re entering suits your personality type. For example, a PR agency will require a business person who is tenacious, out-going, sociable, and loves interacting with people. An accountant, on the other hand, may not require such high social skills.
Are you in it for the love of it?
There will be times when money is tight, when hard decisions need to be made, and when family and personal time gets sacrificed for the business. If the dream you’re chasing is just to get rich, it won’t sustain you very long. You need to eat, live and breathe your passion and dream.
Do you have the right skills?
If you’re leaving corporate, ensure that you have all the necessary skills to run a business, or be prepared to reach out for help. Many corporate individuals have expertise in a particular field but don’t have all the other skills needed to run a business.
Be prepared to learn how to fill the gaps, ask for help, or outsource or hire for the necessary skills.
Have you planned properly for starting a small business?
A start-up may start out of the blue, but no successful business has survived and thrived by winging it all the time. A successful small business starts with a careful plan.
Related: Do You Speak Start-up?
First define why you are starting a business
Is it to be your own boss, to make more money, to gain more independence, to have more time, to sell for millions one day, is it for a steady income, because there’s a gap in the market, or you want to turn your hobby/personal interest/passion into a meaningful business?
Second, come up with a sound business plan
No idea can be realised or made to last without some planning. A business plan is your first port of call to mapping out your business.
Next, who will be part of the business?
Are you a sole proprietor who will run all aspects of the business? Will you have partners in the business and what will they bring to the table? A word of caution: Choose your partnerships wisely – if it’s a family business, be sure there are boundaries in place and that roles are well defined.
Make sure your business partners complement your skills and knowledge with their own. While things may start off well, make sure you have an attorney draw up papers of who’s who and contributed what in the event things go south.
Where will the money come from?
While some businesses can be started with very little, many will need a cash injection to bring them to life. Will you use personal savings, take out a loan, seek investors, court venture capitalists, self-fund and bootstrap the business?
Each option comes with its own pros and cons, so investigate them carefully. Also be mindful and realistic about return on investment – it’s very rare that a business will make back 100% of its start-up capital in the timeframe you initially expect. Be conservative in your estimations.
Pay close attention to running costs
Sometimes it can take up to three years before a business reaches break-even and starts to make a profit. So, while you’re working toward this point, keep your books immaculate, document all outgoing and incoming money. It will help you pin point areas where expenditure can be trimmed and income improved on.
The importance of networking when starting a small business
Networking is one of the most important activities you’ll be involved in when starting your business. Entrepreneurship is a hard game and can be a very lonely and isolating experience for some. By networking with other entrepreneurs, you will learn that your fears and challenges aren’t always unique to you, but just par for the course. Sharing with other entrepreneurs can give you confidence and motivation to keep going.
Networking can also help you land clients by giving you the opportunity to rub shoulders with people who may need your product or service – think conferences, trade shows, industry events – or may put you in contact with people who can provide you with skills, resources and advice.
If you’re not in need of help, networking is a great opportunity to market your company and position yourself as an industry expert. If people get to know you as the industry go-to-guy, you’ll develop a positive reputation, gain trust, and business can follow.
Landing clients: A small business imperative
Without clients, a business is a non-start. So once you’ve got your business plan in order, focus your attention on landing your first client as soon as possible. For some entrepreneurs this may involve taking on clients from their previous job, from networking, or through word of mouth.
For others it may involve finding clients from scratch. If you’re providing a new product or service, make your clients fully aware that it’s a work in progress and that things will improve with customer feedback. You may even want to get your first client by offering a free trial period or at discounted rates.
The object of getting your first client is to get feedback as quickly as possible and develop your offering based on their needs and demands, rather than producing a 100% ready for market offering that doesn’t meet the needs of your target market.
Related: Advice for Starting a Business
Starting a small business: The most common mistakes
Key performance indicators
To help you stay focused during the start-up phase and at the same time avoid tunnel vision, it helps to keep track of Key Performance Indicators (KPIs) you’ve set in place.
KPIs are used to measure performance and success in your business, and help you towards your business goals. These can be as simple as 100% customer satisfaction, zero injuries on site, or minimal defects, for example.
Each KPI should be constructed with a particular purpose in mind – the KPIs for finance will be different to KPIs for sales, for example. Some kinds of KPI include: Marketing, production, IT, supply chain management, finance, business government, sales, etc.
Focusing on high-impact tasks
With limited amounts of time and energy given to each day, week, month and year, it’s important to assess your business goals, set realistic milestones and plan accordingly. It is of use for every entrepreneur to do some research into the 80/20 principle: Where 80% of the results come from 20% of the causes.
Focus on your best customers, on selling and improving your best selling product or service. Enable your best staff to do better – fundamentally focus your attention on high impact tasks rather than being bogged down in emails for example.
Types of small businesses
Are you ready to start your business? Here are three kinds to mull on:
- Consultancy – If you have expertise in a particular field, you can start a consultancy providing professional expertise to those who need it.
- Part-time – Believe it or not, you can start a business while being employed at the same time. This kind of venture will be quite demanding, but also worthwhile as you will be able to determine whether your business idea is ready to support your financial needs before cutting off the monthly salary. It is advisable that your employer be aware that you’re running a side-line business, as most employers will support you in your entrepreneurial endeavours provided that it’s not infringing on your work time and the company’s resources.
- Hobby – if you’ve got a personal interest or hobby that can be used to create a profit, then you have a potential business in your hands. Make sure you do your market analysis though and carefully evaluate the amount of time and capital required and versus the income you can gain.
Related: Start A Part Time Business
From here, evaluate whether you can run your business from a home-office, whether you’ll need to rent office or manufacturing space – and can this space be shared with another business, and whether you’ll need staff. Will your staff need to be full-time, part-time, temp, or even a virtual assistant, and will they need training and/or specialised skills to assist you and your business?
When hiring staff, ensure that an employment contract is drawn up with all terms, conditions and expectations in writing, that it is signed by both you and the employee, and that it conforms with the Basic Conditions of Employment Act.
Simple Strategies For Financing Your Small Business
Below is some useful information on simple strategies to finance your small business.
So, you have found your passion and now want to start a small business? One of the first steps to fiscal success is to look for simple ways to finance your new venture. This might sound difficult and you might not know exactly where to start, but it can be done with the right know-how and tips.
You could start by looking for small business funding online. There is also the option of attracting an “angel investor” or crowdfunding, but if you are just starting out it is best to keep things simple. Below is some useful information on simple strategies to finance your small business.
Look for small business-specific loans
There are financial companies in South Africa that are geared specifically towards helping small businesses. They believe that small businesses are making a difference in the country and are building a better solution by striving for excellence. Simply put, these financial companies want to help you reach your goals of success.
You will have to meet certain criteria for some of these companies, such as having at least three of the most recent months of bank statements for the company to scrutinise. You will be scored according to the performance of your company, but if you are just starting out, the process will be slightly different. If you look for small business funding online, you will need to find out the stipulations, such as having been in business for at least a year, earning R500 000 annually and being based in South Africa.
Try out crowdfunding
Through crowdfunding sites such as Indiegogo or the South African version Candystick, you will have access to thousands of investors who could help fund your business. One of the benefits of crowdfunding is that many of the contributors are not necessarily interested in acquiring equity in your company but simply want to get their hands on your product.
You will need to ensure that your crowdfunding campaign will attract investors and contributors. An effective way to draw the attention of investors is to offer an incentive, such as sending the first 100 people to contribute funds a sample of the product you are planning to make in your small business.
Be sure to read all the terms and conditions to find out if you have to pay any fees to the crowdfunding website to join or maintain your campaign.
Run a pre-sale campaign
If you already have a product, you can run a pre-sale campaign to earn funds to finance your small business. This way, you can keep the entirety of the money you earn and use it to build your business and make more of your product for new and returning customers.
A pre-sale campaign means that you will sell prototypes or early versions of your product through a PR (public relations) campaign, attracting new customers and benefitting from the traffic that it will draw to your website. You might end up selling all of your prototype products, which is fantastic as this revenue will allow you to build more and improve your profits. Be sure that you have enough product for the sale or you could arrange an exclusive event for a select few customers before you the official release of your product.
Ask friends and family
This might not sound like the best idea, but asking friends and family to invest in your business can often lead to success. You could ask a close friend or a family member who supports your vision to provide a percentage of money to help fund your business, with strict plans in place to repay them with interest.
Before you approach anyone asking for a loan, you will need to have a sound business plan in place, as well as a legally drawn up contract stating how and when you plan to repay the loan. This will reduce the likelihood of unpleasant surprises and shows your investors that you take their money and trust seriously.
You will need to seriously consider how the arrangement will be structured. Are you offering them an investment in your small business or is it a loan? This will affect the repayment options as well as the risk involved for them.
Explore all options
As a small business, start by looking for small business funding online and for small business loans in South Africa, then move onto the more creative outlets. If you explore all of your options, you will soon find the perfect solution to build your small business.
The best way to start is with a small business loan, as this is the most reliable way to gain funding and use other ways as secondary sources when the time comes to grow your venture. Remember to have a business plan in place first before you apply for any loans, whether it is from friends, family or a financial institution.
How Small Businesses Can Give Back Without Breaking The Bank
If you are not sure how to start giving back, below are some top tips on how to do just that… without breaking the bank.
As a small business owner, you might think that charitable giving is impossible on your small budget. But, this is not true. You can donate to a charity or contribute to a fundraiser, even if you have a startup or small business budget. You just have to be creative about it.
In today’s world, more and more consumers care deeply about social causes, which means that you need to seek ways to incorporate giving back into your business strategy. If you are not sure how to start giving back, below are some top tips on how to do just that… without breaking the bank.
Encourage your team to volunteer
You will see many calls from charities, such as MSF, to donate time and resources. One way to give back without breaking the bank is by encouraging your team to volunteer and offering paid time off as an incentive for them to volunteer at a charity.
You can give your employees a specific amount of time each month or quarter for volunteer work, and you will soon notice morale improving. It will also increase your community involvement and visibility in your community. You will have to ask your team which days they would prefer to volunteer, as many people might prefer the weekend over a Monday or other weekday.
Use your talents
Giving back does not always have to mean making a monetary donation. You can use the talents of the people in your business to give back to clients, or you can offer your services pro bono to charities that could use them.
For example, if you are a marketing agency, you can offer to upgrade a charity’s website or write content for their social media pages. If you are a financial business, offer a free day of accounting services to a charity that desperately needs some bookkeeping help.
Using your talents costs you nothing but can help to make a significant impact on the cause that is closest to your heart.
Set up a collection jar in the office
If you have chosen a charity, such as MSF to donate to, it can be difficult to find the funds in a small business. A simple but effective way to collect some funds is to set up a collection jar in the office for employees to contribute to.
Be sure that your collection jar is placed in a high traffic area of the office, such as in the kitchen or on the way to the coffee machine. You can make it fun by running a competition of who can donate the most and offering a prize, or you could ask those who bring in their own lunches to donate what they would have spent on purchasing a lunch that day. Be sure that your staff never feel forced into giving a large amount of money, but remind them the jar is for a good cause.
Launch a charity drive
If money and time are in short supply in your small business, you can still give back by launching a charity drive. You can collect anything from books and clothes for children, tinned food and bedding for an animal shelter or even tinned goods for a soup kitchen.
Be sure to choose a charity that everyone in your office agrees with supporting, otherwise it will be difficult to encourage everyone to take part. Take it one step further and ask your local community to contribute to your charity drive. Set up a place in your office where people can drop items off and offer them a thank you card or note so that they feel appreciated. Make posts on your social media platforms before, during and after the drive, and ensure that you share photographs of your company donating the goods to your chosen charity.
Use your voice
If you know about a cause, such as the outbreak of Ebola in the DRC in 2017, then as a business you can use your voice to make people aware of it. You can create a social media campaign for a charity or join in their advocacy, lobbying, letter writing, and other efforts.
By adding your voice to theirs, their cause becomes louder and it is likely that more people will be interested in donating to them. For example, you could set up a Facebook page for your local animal shelter and create informative posts about pet health for their followers to share. Or you could post blogs to your company website detailing the needs of a local homeless shelter and how people can help them.
You do not have to stick with monetary donations when helping a charity, although these are much appreciated. You can look for creative ways to give back without breaking the bank. As a small business, it is important to build your presence with consumers, and helping a charity is an effective way to do so.
You can encourage your team to volunteer, use your skills to help your chosen cause or you could set up a collection jar in the office. Whatever you choose to do, make sure it is creative and in line with what your employees can achieve.
The Importance Of Training In A Small Business
Having happy and satisfied employees is great for business and will put you two steps ahead of your competition.
As a small business owner, you might not think that training your staff is as important as it would be in a larger company. This is where you are wrong. A small business is still a business and, in order to be successful, you will need to have staff that understand their roles and their responsibilities completely.
They should also be trained in other aspects that do not relate to their position, such as computer literacy and general administrative duties. Skills development facilitation is an effective way to ensure that your employees perform to their highest levels and feel appreciated and valued in your company.
It can help to address weaknesses
While you are not trying to make your employees feel bad about their performances, training programmes can help them (and yourself as the business owner) to address any weaknesses they might have.
By addressing these weaknesses, you can find ways to improve their skills, such as sending them on computer courses or communication courses. Training your staff also allows everyone to be elevated to the same level of competency, making for a more productive and proficient business. Any employees who feel they have weaknesses will be able to improve their skills and reach the same level as the other employees.
Employee performance will improve
If weaknesses and shortcomings are addressed during skills development facilitation courses, this will obviously help to improve your employees’ overall performance levels. You should be sure to send employees on relevant courses that are targeted to their roles and responsibilities so their departments can improve too.
Your staff might be feeling unmotivated or overwhelmed, and a training programme can help to improve their confidence and performance. Improved employee performance is a huge positive for a small business, as it will mean a faster turn-around time and projects being met on-time and within the client budget. Training your staff in their areas of expertise is a sure-fire way to boost their confidence and performance levels.
It can provide direction
If you have a department that is not operating at its full capacity, then a training programme might be the perfect tool to help this department reach its full potential and find direction. Having direction when working in a small business is vital to any employee, as it helps them to be productive and reach business goals.
You can choose from a range of skills to train your staff in, such as computer skills or office administration skills, targeting a certain department that might help with direction in their work. Skills development facilitation can also help those employees who are not sure of their roles or whose skills are too “general” to fit into one department.
If you only have a few employees, sending them on training courses can help to show them what roles and responsibilities in the company are.
Training provides consistency
Sending your employees on skills programmes will ensure that everyone who works in your business has the same level of experience and expertise. This consistency is particularly important when it comes to policies and procedures, as all employees need to be aware of the expectations and procedures within the company.
Putting all staff members through the same basic training will ensure that everyone has the same exposure to every department, which can help the office run smoothly and improve employee relations. Having consistency in your office means that everyone is operating at the same levels and that your business is able to finish projects at a much quicker rate than before the training. Be sure that you also look into more targeted courses for your different departments.
It gives you an edge on the competition
Human capital and skills can help a small business to get an edge on the competition. This is especially true if your entire workforce has been trained in their fields and has received the same training across the board.
Having an edge on the competition is not only beneficial to you as the business owner, but will help your staff to have a sense of pride in their work and can even help to retain your talented employees. Being able to outdo your competitors relies heavily on the abilities of your employees, which means that you should take your training programmes seriously. If you want to be a success, put the needs of your staff first and see how quickly your business improves.
Happy employees means better business
Sending your employees on training programmes can help immensely with job performance, employee retention, office consistency and addressing any weaknesses there might be. Your employees will feel valued and respected, which, in turn, will improve their loyalty to your company and help with quicker turnaround times.
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