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Start-up Advice

Alan Knott-Craig Answers: Branching Into eCommerce And Finding All The Angles

Finding funding and getting started are two of the biggest barriers for start-ups. If you look at all the angles though, there might be a solution for you.

Alan Knott-Craig

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I’m busy renting a property where I have a business running. It’s very dilapidated. I took over about 20 years ago. The owner has offered me an option to buy the property. How do I go about getting a loan? — Ashley

There’s only one way to get a loan: Go to your bank. If you’re really brave, go to your family and friends. All other loans will be too expensive and dangerous.

Banks will only lend you money if first, you have property as collateral, and/or you have a salary to cover the repayments. The alternative is to pay cash. The way to do that is to save up. If you can’t get debt or pay cash, you have one last option: Cut a deal. Tell the seller you’ll pay off over five years. Or give him a share in future profits. Or figure out some crafty way to give him what he wants, while allowing you to afford the deal.

Related: A Comprehensive List Of Angel Investors That Fund South African Start-Ups

I’m a tool and die maker working in the steel industry in South Africa. I have been working in this industry my whole life but it’s no longer the right fit for me.

I’ve been reading about fast-growing eCommerce merchant opportunities. I’ve done some research and I’ve found out about Shopify, Dropshipping and that Oberlo.com is an app that works within Shopify. I have no idea how to take this research and make a business a reality. — George

You are right, the steel industry is not a rising tide. So perhaps it’s not the right place to be if you’re trying to get ahead in life, ie. attain financial freedom. It’s probably not even safe for a comfortable job and pension.

Starting a business is not for sissies, but better to rely on your own wits for your financial security than the wits of whoever moves the steel industry needle.

Onto eCommerce. First thing to understand: The less you know about a subject the more likely you are to underestimate what you don’t know about that subject.

I know nothing about tool and die making, therefore I am highly likely to underestimate how little I know, and therefore overestimate my chances of success should I decide to start my own tool and die making shop.

eCommerce is in everyone’s face; that’s why every Tom, Dick and Harry is dreaming of starting an eCommerce venture. Only people that have experience in logistics and retail truly understand the complexity.

That said, nothing ventured, nothing gained. The first step to attain your eCommerce dreams is to find something to sell. Anything. Then add 100% mark-up. Then sell it using your new-found Shopify/Dropshipping/Oberlo apps.

Once you have a complete fulfilment cycle, and the cash is in your bank, then you can decide whether this is a bicycle you want to ride.

Hint: The hard part in eCommerce is not making/finding stuff to sell. It’s the actual marketing and sales part that kills folks. Easy to make. Hard to sell.

It’s always been my dream to own my own business, and I finally took the leap, registering a company together with my wife and brothers. Our next challenge is finding funding as a start-up cooperative. Our plan is to manufacture cement-based building materials such as hollow bricks, stock bricks, maxi bricks, pavers and pillars, but it’s not limited to this as we intend to do construction on a small scale in a year’s time. Any advice? — Joseph

There is a lot of funding available for start-ups and small businesses in South Africa — over 200 funders providing more than 350 different finance products for SMEs. Unfortunately, most entrepreneurs don’t understand the different finance products. They don’t know who all the funders are or where to start to find them.

Related: The Definitive List Of South African Business Incubators For Start-Ups

It’s a very frustrating situation. Entrepreneurs waste a lot of valuable time and money going in circles when it comes to accessing finance.

At best, some know about a few government grants and most know about the banks. The problem is that banks very rarely fund start-ups and early stage businesses.

Fortunately, there is a great website, called Finfind, that can link you with all the funders and finance products that match your specific funding needs.

They also give you a lot of information about what the different finance products are, how funding works, what funders require from you and much more.

All the information is written by entrepreneurs for entrepreneurs so you’ll find it very easy to understand and best of all, it’s FREE. To find the right funder go to www.finfind.co.za.


Read this

13-rules-for-being-an-entrepreneur-coverAlan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.

What it’s about

It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur.

For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy.

This book is a collection of tips and wisdom that will help you make money without forgoing happiness.

Get it now

To download the free eBook or purchase a hard copy, go to www.13rules.co.za.  To browse Alan’s other books, visit bigalmanack.com/books/ 

Ask  Al

Do you have a burning start-up question?

Email: alan@herotel.com

Alan Knott-Craig is a successful entrepreneur and best selling author. Founder of over 20 companies in the tech space, he was named as a Young Global Leader by the World Economic Forum in 2009. To find out more about Alan’s new book, The 13 Rules for Entrepreneurs, go to www.13rules.co.za.

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Start-up Advice

Put On Your Wellies: It’s Time To Wade Into Risk

Entrepreneurs aren’t all leaping into the unknown like lemmings off a cliff, but they do need to consider it…

Chris Ogden

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You’ve had a great idea. You’ve looked into its development. You’ve recognised that it has potential beyond just what Auntie Mabel and Mike From The Grocer think. And you’ve clearly nailed a pain point that can make money. Now it is time to take the risk of running with it.

Every big idea comes with risk. You can’t step out into the world of entrepreneurial thinking and business development without it. Your idea may fail. It will also be time consuming, demanding, hungry for money, and hard work. It is unrealistic to expect that your project will leap out into the world and be an unmitigated success.

It is also unrealistic to assume that it isn’t worth taking this risk.

There are steps that you can follow to ensure that your risk is managed so you aren’t blindly leaping off that cliff…

Step 01: Do your research

No, canvassing your neighbours, friends and family is not doing research. You need to know that your idea will appeal to a broad market and that it will have significant legs. This may sound like daft advice, but you would be surprised how many people think an idea will take off just because Susan in Accounting said so.

Step 02: Understand the costs

Projects are hungry for money and investment. Realistically work out your budgets and how much it will cost to take your project off the ground and then stick to it.

A calculated risk is a far better bet than one that shoots from the hip and hopes for the best. You can also use this as an opportunity to draw a clear line under where you will stop investing and end the project. If it keeps eating money and isn’t getting anywhere with results you need to be able to walk away.

Step 03: Know when to walk away

As mentioned before, this can be defined by a line you’ve drawn in the proverbial sand (and budget) but no matter where you draw this line, you have to stick to it. Often, when time, money and energy have been poured into a project it can be incredibly hard to walk away.

You think ‘but I have put so much into this, just one more’ and then it gets to a point where the ‘just one more’ has taken you so far down the line that walking away feels impossible. Leave. Learn the lessons. Apply them to your next project.

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Start-up Advice

Mind The Gap

The entrepreneur’s guide to finding the gaps and building the right solutions.

Chris Ogden

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Innovation may very well be the key to business success but finding the gap into which your innovative thinking can fit is often a lot harder than people realise. Some may be struck by inspiration in the shower, others by that moment of blinding insight in a meeting, however, for most people finding that big idea isn’t that simple. They want to be an entrepreneur and start their own high-growth business, but they need some ideas on how to find that big idea.

Here are five…

1. Network

It sounds trite but networking is actually an excellent way of picking up on patterns and trends in conversation and business problems. The trick is to note them down and pay attention. Soon, you will find patterns emerging and ideas forming.

2. Look for pain

Just as networking can reveal trends in the market, so can spending time reading. The latter will also help you find common business pain points. These are the touchpoints that frustrate people, annoy business owners, affect productivity, or impact employee engagement.

Be the Panado that fixes these pains.

3. Luck

luck

This is probably the most annoying of the ideas, but it is unfortunately (or fortunately) very true. Luck does play a role in helping you capture that big idea. However, luck isn’t just standing around and random people offering you opportunities. Luck is found at networking events, it is found in research and it is found in conversations with other entrepreneurs.

4. Luck needs courage

You may have found the big idea through your network, a pain point or pure blind luck, but if you don’t have the courage to take it and run with it, you will lose it to someone else.

Being bold in business is highly underrated because most people assume that everyone is bold and prepared to take big leaps into the unknown. However, not all brilliant entrepreneurs were ready to throw their family funds to the wind and leap into an idea – they were courageous enough to figure out a way of harnessing their ideas realistically.

5. Pay attention

This is probably one of the most vital ways of finding a gap in the market. Often, people are so busy that they don’t really pay attention to that niggling issue that always bothers them on a commute, or in a mall, or at a meeting. This niggling issue could very well be the next big business opportunity. Pay attention to it and find out if that issue can be solved with your innovative thinking.

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Start-up Advice

5 Things To Know About Your “Toddler” Business

As you navigate this new toddler phase of your business, here are five things to bear in mind.

Catherine Black

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Ah, toddlers. Those irresistible bundles of joy bring a huge amount of energy, curiosity and fun to any family – but there’s also frustration and worry that comes with their unpredictability, as they grow and start to become more independent. If you own a business and it’s successfully past its “infancy” of the first year or so, it’s likely it will also go through a toddler stage of its lifecycle.

Pete Hammond, founder of luxury safari company SafariScapes, agrees with this. “Our business is now three and a half years old, and we’ve found that we’re not yet big enough to justify employing a large team of people to handle the day-to-day admin tasks, yet we still need to grow the business as well,” he says. “As a result, our main challenge is finding the time to step back and see the bigger picture. Kind of like when you are raising a busy toddler and you spend most of your time running after them!”

As you navigate this new toddler phase of your business, here are five things to bear in mind:

1. This too shall pass

Everything in life is temporary – and that goes for both the good and the bad. It’s as helpful to remember this when you’re facing the might of a toddler temper tantrum, as it is when you’re facing throws of uncertainty in your business. If your new(ish) venture is going through a rough patch in its first few years, it can be easy to think about giving up – but don’t. As long as you have an overall big idea that you believe can add value to your customers, keep pushing through the rough parts until you come out the other side.

2. Appreciate what this phase brings

The toddler years mean that the initial newborn joy is officially behind you. But these small humans also bring their own kinds of joy, as you watch them learn new skills, say funny things, and give affection back to you. While your two-year-old business may not hold the same exhilaration for you as it did during those first few months, there are now different things to appreciate about it: Maybe you’re expanding your product range, or employing new people who can take the workload off you.

3. Establish boundaries

Toddlers thrive on boundary and routine – and your toddler business will too. As it grows into a new phase, try and establish limits in terms of the type of clients you want to work with and the type of work you’ll do. It’s also a good idea to make a decision about the hours you’ll work and when you’ll switch off, which will help you establish a good work-life balance.

4. Take a break

Every parent with a toddler needs a break every now and then, even if that means a walk around the block (on your own!), a dinner out with friends, or even a few days away. The same is true for a demanding small business: every so often, remember to take time out to rest properly, where you switch off your laptop and completely unplug. You’ll return much more inspired and resilient to deal with the everyday uncertainty that it brings.

5. Give it space to make mistakes

While the unpredictability of a young business can be stressful and tiring, it’s also a time for trying new things without the risk of huge consequences if they don’t quite work. After all, it’s much simpler to change your USP if you’re a small business employing a few people, rather than a big company where 50 people are relying on you for their salary, or where you’ve received a huge amount of investment capital. While you may fail in some of the things you try with your business (in fact, this is almost guaranteed), see it as a toddler that’s resilient enough to pick itself up, dust its knees and keep moving forward.

During this phase of business growth it’s also essential to have the right type of medical aid cover. There are medical schemes such as Fedhealth which has a number of medical aid options and value-added benefits to ensure that your health and wellness is taken care of too. After all, the healthier you and your staff are, the more productive your business will be – during the toddler (business) stage and beyond.

While this phase can be frustrating, it’s a sign that your business is growing and adapting, rather than remaining in its infancy, and that can only be a good thing! So embrace the difficulties, learn from them, and watch as your business strides forward confidently into the next exciting phase.

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