The first year of entrepreneurship is always the toughest. Long hours, countless teething problems, hundreds of bills to pay, and even more cups of coffee.
The truth is that many start-ups don’t make it past the first year. Reasons may include insufficient market research, leading to a product or service that no one wants or needs; not having a comprehensive marketing and distribution plan in place; not having enough human resources to execute plans; and simply not having the perseverance to push through challenging times.
That said, thousands of entrepreneurs DO make it first year. In fact, many of them come out with a thriving business.
So, if you are determined to make it in your first year, make sure you have these five key elements in place:
Often it happens that your business takes off at lightning speed. Although you are initially thrilled, you quickly realise that things can just as quickly go wrong. Things aren’t going as planned, employees and customers are complaining, yet you can’t find time to manage and rescue it all. The answer here is structure.
You need a comprehensive vision and action plan. Nothing will work sustainably without it.
Finances: don’t try to wing this. Get accounting software from day one. Track your finances religiously and have daily, weekly and monthly financial reports issued.
Follow profitability per product, per service, per week, per customer and per department.
Organise: Spend time upfront to learn and implement organised systems. It will save you thousands of hours in the long term. Find a system and stick with it. Trello, for example, is a great tool to create boards and lists for daily, weekly and monthly tasks that need attention. Whatever organisational system you choose (there are many out there), be disciplined enough to look at, and update them every morning.
Surround yourself with positive individuals and competent co-founders from the start. These early cheerleaders will help you through the tough times. Don’t try to do it all. It just won’t work. Include people who have different strengths to you. And remember, 10% of a R100 Million Rand company is worth more than 100% of a R1 Million Rand company.)
Delegate. Start-up founders often make the early mistake of trying to do everything themselves and not hiring more team members before they need to. Anticipate growth and hire accordingly.
You may be the most capable multi-tasker on the planet, yet learning to delegate and entrust others with responsibility, is the only way you will build a lasting business.
Incorporate your company and open a bank account. This is probably the most obvious things you need to do, yet it is often overlooked. If you are serious about growing your business, you need to have a business identity. Sending your customers your personal banking details to make payment, sets an unprofessional tone from the start.
Having a separate legal entity further limits your personal liability, should something go horribly wrong.
Furthermore, be sure to formalise your relationship with your fellow business partners and/ or start-up founders. It’s extremely important for each shareholder in your company to know exactly what is expected of them.
By formalising this relationship with a shareholder or founders’ agreement, you can avoid having those awkward founder disputes and power struggles.
Not having clarity in this area wastes crucial time that should be focussed on building value in the business.
The core and fundamental requirement of any business is to sell something that people actually want. If you approach 20 people right now, you’ll easily come back with 20 new ideas for products or services.
Having an idea is easy. But, building something that solves a problem or need isn’t that simple.
Product-market fit is the golden rule for any start-up. This requires you to be in a good, growing market with a product that can satisfy this market. It is essential to understand this fundamental principle or your business will fail.
If you aren’t satisfying the market, it is essential to be honest about it as soon as possible. Don’t wait until you run out of money. Have the courage and vision to adapt and change your offering.
The rationale for every business is to attract customers to purchase its products and services. Without customers, there is simply no reason for any business to operate. Your goal, however, shouldn’t be only to create an awesome product or business; it should also be to help your customer.
Research your customer. Do your research and get to know your customer during your first year of business. If you understand their needs, you are able to adapt accordingly. If your customer sees you as a brand that exists to understand their needs, they will be more loyal to you – increasing sales.
By executing on your research you’ll be able to lower your cost of customer acquisition and reduce your churn (drop-off rate i.e. customers unsubscribing/ not coming back for more).
And of course, keeping your customers happy and building trust with them will result in referrals, which is a much-needed revenue resource for any business in their first year.
The process of launching a start-up and leading it down the path towards success requires stamina. It is sometimes a very lonely and depressing journey with lots of roller coaster moments. Enjoy celebrating the small successes, however keep your eye on the ball and don’t get distracted from your vision.
Starting your own business is tough – there’s no two ways around it. However, if you have the right attitude and apply these key principles, you can be your own success story.
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 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.
- 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.
- 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.
- 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.
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.
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.
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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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.
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.
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.
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
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.
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.
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