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Start-up Advice

Five Key Start-up Lessons all Entrepreneurs Should Hear

Entrepreneurs tend to make the same mistakes again and again – falling into predictable start-up traps. Here are five pieces of advice all young entrepreneurs should listen to.

Mongezi Mtati

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The excitement of starting a business, proving a model and building on every experience can often leave the founder juggling far more than they can keep a handle on.

It’s akin to living on the edge, leaving the safety net, or being on an endless dose of adrenaline. When things quieten down just after midnight for some – the lessons we should have learnt come to the fore.

We-recommend-tickWe recommend: 6 Things I Wish Somebody Had Told Me When I Started My Small Business

As an entrepreneur, I know these moments well. They come rushing at you all at once, making you wish you’d listened to that advice about a bedside notebook to record your thoughts, but you didn’t and now your mind is on overdrive.

Here are five simple lessons that all start-ups should – but rarely – apply.

Build thought leadership and educate

As one person, or a small team, all you have is your immediate network to find new clients and prove that your offer is worth the price you ask for it. The days of ‘open up shop and they will come’ ended with the emergence of the information age.

This assumes that you’re targeting a smart market of connected people who are interested in knowing more. They’re questioning everything, and they love stories that they can share, or that add meaning to their lives.

The first place any of us look when in search of advice or service providers is the web. As a start-up, it’s a huge opportunity: It’s a cost-effective and easy way to generate content and keep a relevant content stream going.

If you’re well-versed in your industry, you can even write for trusted industry platforms that position you as an expert while you build your business.

Stories that empower would-be clients and customers by sharing meaningful stories or educate them about what you do and why that serves them, spread.

Instead of trying to be at the centre of customer stories, let your business become part of their story. That’s when you gain credibility and the sales follow.

Ignore the Joneses

Keeping tabs on the competition is only important if it empowers you to improve your model, or enables you to create better products and make a bigger difference in your market. But be careful. An obsession with competitors can lead to a loss of identity.

Be who you are, as much as you can. People love products for different reasons. Trust that. iPhone lovers care about the differences that distinguish their smartphones from HTCs and Samsungs. No one wants different phones that are all the same. This is true of any product.

During my first encounter with my mentor I told him why other businesses in my chosen industry were doing certain things in ways that I could improve. He advised me to focus on my model, on why this makes sense as a business first and how I should build it in a way that targeted clients’ buy-in.

This advice ensured that we focus on our offering in the marketplace, that we build both the business and ‘our secret sauce’, instead of creating something that intends to beat the competition. It also means we’re unique in many ways, and not just copying our competitors.

We-recommend-tickWe recommend: 8 Musts to Start Your Business With Little to No Capital

Don’t cry over burnt cash

Cash is one of the most important resources in both growing and multinational organisations, but of course, the smaller the business, the more every cent matters and it’s guarded with everything there is.

Sadly, aside from investing in the business, building an organisation leads to burning money on some bad decisions that seem sensible at the time. This is an unavoidable part of starting a business.

As a business owner, networking is one of the easiest ways to build contacts and it also happens to be one of those things that lead to a collection of unused business cards.

Getting your business cards designed and a website up and running are important aspects of starting up and this should be done properly. They can be done cheaply or by an affordable designer who does a proper job.

Too many start-ups waste money trying to save money. More often than not, it’s better to do it right the first time, even if it costs a bit more upfront – you’ll save in the long run.

The identity that you create for your growing organisation contributes to your clients’ buying decisions.

Consistency is king

50% of all advertising and communication is wasted, as the famous adage goes. It’s true that most of the people you reach out to are not interested in your offering; in other instances people watch before they jump in. A business that has been around for two years has more trust and consistency on its side than one that started three months ago.

When a partner and I started another business, we went on a spending spree in the first three months where we bought advertising space in various newspapers and websites. We thought that getting exposure for our products would mean that phones would ring for offers to buy and they did.

Most of the serious customers needed a guarantee that only time in the business would afford us and that cost us a few potential sales that were important for our survival.

Consistency, even among the people who almost trust you with their lives, is key to letting them trust you with their wallets. And patience. You need to build a reputation. It takes time to launch a successful business. Hang in there.

We-recommend-tickWe recommend: Why Being So Serious Could Slay Your Start-Up

Not everything is an opportunity

“Your time is yours to pour into the business, not to use on non-paying efforts that present themselves as opportunities,” said a mentor who was discouraging me from taking on more work for exposure. Like my strong-headed peers, I allowed that advice to fall by the wayside. Unfortunately, he was right.

When you’re starting out, people offer you the opportunity of ‘exposure’ in lieu of billable work and hours and most of that exposure does not amount to billable work.

It ends up being a waste of time that could have been used to either make money (or more dreadful hours) in the business waiting for the phone to ring or drumming up sales. It could even have meant going to SARS for an hour or two, which saves you pain later.

Mongezi Mtati is the founder of WordStartWordStart, a word of mouth company that connects companies with organic conversations.

Company Posts

Register A Company In South Africa

With over 120 Start-up Services, Company Partners is the perfect Partner for Company, Tender and Contract compliance.

Company Partners

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Company Partners is the leading Company Registration Service Provider in South Africa, offering a One-Stop-Shop for all the Company Registration and Tender Compliance Documents.

With over 120 Start-up Services, Company Partners is the perfect Partner for Company, Tender and Contract compliance.

Established in 2006, Company Partners guarantees that the services they offer meet the standards of the best in the industry. Over 30 full-time Consultants offer services and standards of the highest quality.

Company Registration Benefits

Your Company Structure is the first consideration you need to make when you want to register a new Company at the CIPC. The preferred choice of a legal entity for most Businesses is a Pty Company.

Related: Business Model Design – Picking The Business Model That Works For You

Here’s why:

  1. You protect your personal life and assets from your business when you register a company. If one runs a business, it is necessary to operate in a safe legal structure where your business assets and risks are separated from your personal ones.
  2. You look more professional when you operate under a registered company name. If you want to obtain a large contract or a tender, it appears more professional to trade in a Pty Company capacity than in your own name.
  3. Most Suppliers and Government Departments require businesses to be registered as a Company to apply for their Tenders and Contracts.

How to Register a Company

Step 1: Complete and submit the easy online sign-up form here.

Step 2: Your dedicated Consultant will call you to assist you with any questions you may have.

Step 3: Email your ID and easy supported documents – which your Consultant will explain.

Step 4: Within a few days you will receive your brand new Company ready to use for Tenders and Contracts, via email. You can contact your Consultant at any time on a toll-free number.

Related: New Fund For Small Businesses To Be Developed

Need a Company fast? Perhaps consider a Shelf Company

Company Partners offer a variety of Shelf Company Options to suit your needs, including 2016- year Registration Number Shelf Companies. Within 24 hours after purchase, you will receive the registered Shelf Company.

You can start using your Company Registration Number and Bank Account (for income) immediately.

Each Shelf Company includes a 2016 Year Registration Number, Free Share Certificates, a Free ‘Tax Number’ and a Free ‘Official BEE Affidavit’.

You can also make use of a Nedbank Business Bank Account that’s active for your Shelf Company.

Luckily, getting your own Shelf Company is easy in terms of compliance. All that’s required is that you are at least 18 years of age, an ID document / Passport and a South African Business Address.

Why use Company Partners to Register a Company?

Fast timeframes: Your Company will be registered fast and effectively online. Your documentation is set-up in less than 24 hours, after which CIPC will process it.

Simple requirements: The only requirement for Company Registration is an ID / Passport. Everything gets done online, so you can be based anywhere in South Africa or the World.

Dedicated Consultant: Your own dedicated professional Consultant takes care of the entire process – he or she is available on his / her email and also on a toll-free number.

Professional Service: With years of experience of representing our Clients in Government, the entire process runs smoothly over the Internet. No lost documents and no frustration.

Company Partners completes all necessary applications correctly and reviews all the paperwork for you. You simply have to wait for your company documents via e-mail, confirming when you may start trading using your registration detail.

Related: Beauty Of Failure: The Art Of Embracing Rejection

After Company Registration

Any new Business needs guidance to prepare for Tenders and Contracts. After Company Partners gets you registered for your Company, Company Partners can assist you through the entire Company start-up process (optional).

That means they will ensure you have everything you need for a Tender or Contract application like a new PTY Company, BEE, Tax Clearance, VAT Registration, Logo Design, Website, Business Plan, COID, Letter of Good Standing, NHBRC, Accounting, Payroll and more.

Get Started

To start, just complete and submit the easy application form here and a friendly Consultant will contact you. Alternatively contact Company Partners toll-free on 0800 007 269 (toll-free from landlines and cell phones).

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Start-up Advice

Alan Knott-Craig Answers Your Questions On Money And Partners

From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.

Alan Knott-Craig

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If I get rich will I be happy? — JC Lately

Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.

In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.

These are the top three for old folks:

  • I wish I’d spent more time with family.
  • I wish I’d taken more risks.
  • I wish I’d travelled more.

Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.

But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.

Related: Your Questions Answered With Alan Knott-Craig

What is the magic number? — Mushti

The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.

Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.

Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.

In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).

I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike

If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).

Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.

Related: Alan Knott-Craig’s Answers On Selling Internationally And Researching Your Idea

What do you think of WiFi in taxis?— Ntembeko

It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.

It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?


Read ‘Be A Hero’ today

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Start-up Advice

What You Need To Know About The Lean Start-up Model

The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.

Entrepreneur

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The model follows key precepts that include:

Taking untested products to market

The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.

When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.

The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology

The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.

Utilising an investigative development method called the ‘Five Whys’

This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.

Lean isn’t only about spending less money

It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.

Progress in manufacturing is measured by the production of high quality goods

The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.

Source: theleanstartup.com

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