Starting a new business is daunting. But when starting a new business in the IT and Telecommunications field, things can get exponentially hairier, but done correctly, having a business in this industry can be extremely rewarding, both personally and financially.
One of the most exciting aspects of the technology industry is the rate of change we see. This allows for the creation of brand new, successful businesses on a daily basis. Although starting any new business is always a challenging undertaking, it also has the potential of being one of the most fulfilling experiences. If you see the potential to create a business, and you can make a compelling argument that the business model has longevity, I would encourage you to go for it.
I would like to share some of the important lessons I learned first-hand with those who are just starting out or thinking about creating their own business. These are by no means the only things you should consider, as there is by far a long list of things an entrepreneur should know before starting a business, and thankfully we have Entrepreneur Magazine for that, but these are some of the things I have learned that you should definitely consider and contemplate more than once.
1. Formalise your business agreements
One of the most important consideration for a new business is to ensure that there is a strict, formal, well-written agreement between you and your business partners.
Do not only plan the way the business is going to work, but also how it will fail, and what each party is liable for if it does. I have always insisted on putting such agreements in place and it has saved my relationships with friends in the past.
2. Cash flow is king
In addition, cash flow management remains a critical task for any business at any stage. Any business, particularly one that has just opened, is at serious risk of failure if cash flow becomes compromised.
Watch your cash flow like a hawk, which means planning and accounting for every little cent you’re going to spend. The margin between making it and failing can sometimes be as small as purchasing something for the business this month, when it could have waited another month.
3. Work towards the best, but plan for the worst
What happens when the business goes bust is a difficult thing to talk about, because when you are starting out, you are hopeful and idealistic, and you do not really want to talk about the downside. But you have to talk about it, and plan for a situation where the business goes under.
4. Beware the financing trap
To return to financial management, I would discourage new business owners from acquiring too much finance and being over-indebted from the first day, unless it is absolutely necessary.
Finance needs to be repaid, placing strain on that all-important cash flow, when often an innovative solution will reduced the reliance or even the necessity of finance.
5. Learn to walk before you try the 100m Olympic sprit
Nine out of ten times, I find that budding entrepreneurs have completely overestimated what they are going to need to spend to get started. New businesses often want to splash out on marketing, without asking whether they have a product to sell and whether people would want to buy it.
If you know that people will buy your product, go out and sell it first. Just get your first order. If someone is willing to pay you for something if you deliver it to them, you have your first order, and all you need is the cash to produce the product or service. This may mean starting smaller than planned, or maybe lower margins from the start, but it reduces the risk profile of the venture drastically.
What I have seen a few times before is someone leaving their job with enough money to pay themselves a salary for a few months, and then spending all that money on setting up a marketing plan, doing a little advertising, and on other operational expenses, without having sold anything yet, and then go bust due to a lack of revenue.
6. You are either all in, or all out
Something that always amazes me is people saying that they would like to get involved in a part-time business. I always draw parallels between having a business and having a baby. It is going to be kicking and screaming and be very fragile in the first few years.
If it is not, you are doing it wrong. If the business makes it past the first few years, it has a better chance of surviving.
Like a baby, the older it gets, the more it is able to look after itself. However, it needs your involvement at the outset. If you can only devote some of your time to the business, you might be absent during a crisis, and that could prove disastrous.
7. Be future first
Finally, it is important to plan well into the future. Basic business plans with a long-term outlook are one of the cornerstones of a successful operation. You should have a vision of where you want the business to be in 50 years, and how you want it to get there.
Chances are that the business will almost definitely not end up where you thought it would as it will evolve over time, but thinking into the future helps you to anticipate eventualities, and plan for how to deal with them.
With the best intention, a business may go bust due to market conditions that are completely out of your control. A fluctuating exchange rate may cripple you slowly, or a revolutionary development within your industry may render your product or service obsolete overnight.
These can impact everyone, so rather focus on what you can control; focus on the things that you can have a direct and tangible impact on the outcome. The 7 point I have listed are those that I found to be the most important in my journey, however your journey may present others that impact on you even more.
Keep a list of the challenges you face and the lessons you learn, and always refer back to them to help you to keep developing.
A Step-By-Step Guide To Selling Consulting Services
Do people often ask for your professional advice? It’s time to start charging for your consulting sessions.
Ever since I launched my YouTube channel where I talk about different strategies regarding B2B selling and inbound marketing, I’ve gotten a lot of requests from my audience to hop on a call with them and help them out.
This is how I got started offering consulting services to different companies and entrepreneurs. Based on what I’ve learned, here’s how to structure these consulting calls so you can start selling them on your own.
I usually use a pretty simple email whenever I’m asked a detailed question that requires a decent amount of my time.
This email includes the price for the consulting call, which can vary, but generally starts at $300. Usually, that email is enough to get viewers to buy in.
You want to price your consulting services in a way that it makes you want to work for that amount (even if you’re not in the mood). By charging a certain amount for the consulting call, you make sure that you’re adding value and the other person is also taking your notes more seriously.
For those who are just getting into coaching and consulting, the best way to start is to assume that the person on the other end is going to get good information out of your session.
People usually join a coaching session either because they have a burning problem or they are so close to a solution that only few words are enough to solve it for them.
In some cases, people paying for a consulting session already have an idea or solution to a specific problem, but they want to have your ideas or expertise.
It is important to remember that the person won’t reach out to you for coaching if she didn’t like something about what you’re doing.
To get this meeting on the calendar, I use a tool called Calendly. There are a bunch of alternatives out there, but Calendly is a pretty popular solution.
The tool is free, but I use a version that charges about $10-$15 a month and plugs directly into my Google calendar. There are a lot of similar tools out there that you can choose from if you don’t like Calendly.
I recently discovered and started using Google Wallet. It is a free tool from Google and its pretty similar to Venmo. It allows you to input your credit card info and the amount billed is directly transferred to your account on the same day.
I’ve previously also used Venmo and Paypal, and as a company (Experiment 27) we used Chargebee for a while. With Chargebee, we had a problem where it would mess up our revenue numbers and our churn rate.
A lot of these coaching sessions are one- or two-time purchases for a very small amount of money compared to our main service offerings, so it would mess up our purchase rates.
Setting up a Google Wallet account is pretty simple and it also provides invoices. The last coaching session I did, an invoice was paid within two hours.
It is important to know whether the person purchasing a coaching session is getting value out of it.
I picked up this idea from someone with whom I used to do a bunch of coaching sessions who runs his coaching session using Google docs.
He opens up a blank Google doc at the start of a coaching session and adds notes there. Using that model, my clients and I go over different goals and questions by writing them in a Google doc and I also assign homework.
Here’s an example of a document like that.
And because all of it was done in a Google doc, everyone has easy access to it. At the end of each coaching session, I think it’s necessary to have a homework assignment that would set up the attendees on something to work for the next week.
Bonus: Should your consulting landing page have short or long copy?
There’s been a long debate among the copywriting community about whether short copy or long copy is the best. Some say that you need long landing pages outlining data point after data point in order to make someone take action and buy your services.
But, there’s another group of copywriters who believe that the short copy is more effective because of its to-the-point approach and easier click and buy operation. There are always two sides to all advice, but for us, short copy didn’t work.
Our coaching funnel normally consists of our clients watching a YouTube video and then booking a consulting call directly.
The clients would usually find the consulting page and would be welcomed by the headline, “Want me to help you double, triple or maybe even quadruple your revenue for the next quarter?”
Our landing page was converting about two clients a week who wanted consulting services on how to improve their agency business.Being a fan of testing, I thought we could do better.
My favorite coaching page of all time is one that is literally a picture of the coach’s face along with a description that says “Did you know Neville takes on four different private consulting clients?” along with one paragraph of copy and a “buy now” button – that’s it.
So, we wrote a version of our consulting page based on Neville’s, but we saw our conversions drop from where they were before down to almost zero. We had just one conversion for the entire month that we had this landing page.
Since this approach clearly wasn’t working for us, we changed back to our previous landing page. We kept a few items from the other approach.
For example, we changed the pricing section and began offering consulting packages. Having packages on the copy page increased the revenue dramatically.
The other thing that this experiment taught us is that we needed a more intense email drip to sell people on coaching. We rewrote our email sequence, which is now a five-day drip in which we basically hard sell people on coaching as they sign up for any of our lead magnets on our YouTube channel.
Even though the short copy approach wasn’t right for us, we did gain some valuable insights from the experiment.
This article was originally posted here on Entrepreneur.com.
Want To Start A School? Your Guide To The Education Sector
The education sector continues to show remarkable growth and opportunity as the private sector fulfils the increasing need for quality education in South Africa.
“The education sector is interesting as it’s one of the few sectors in South Africa showing very strong fundamental growth, almost independent of general economic growth,” says Rory Ord, head of unlisted investments at 27four Investment Managers.
“Education is highly demanded across all sectors of South African society, and this ties into a global trend of increasingly educated populations.”
Demand creates an opportunity for the private sector
There are two major themes in education that make it interesting from an investment perspective.
“First, it’s clear that government cannot meet the demand for the different levels of education required by South Africans, and neither can it meet the standards required on a very large scale,” says Rory.
He adds that beyond the top performing government schools and universities, the population using these services want better education and many are willing and able to pay for it. This has created an opportunity for the private sector, which has experienced huge growth in private schools, to the benefit of companies like Curro and ADvTECH.
“Both companies have grown strongly in recent years, with Curro achieving higher percentage growth off a lower base. Curro has been highly valued by investors who have been willing to pay for the expected growth. ADvTECH is a bit more mature as a business, but has still delivered growth of 20%+, and on a much lower earnings multiple. Private education is still a small percentage of the whole, so expect more growth, but it does take time to deliver this growth in large numbers,” advises Rory.
The investment opportunity of education technology
“The second theme,” Rory says, “is how technology can increase the penetration of quality education. In essence, the way education is delivered has not changed with the advent of technology, but there are many areas where change is possible.
“The best example of this in South Africa is GetSmarter, which partners with global brand universities to provide high quality online short courses. Founded in Cape Town, this business was acquired by 2U, a US based company doing similar things in 2017, for R1,4 billion.
“Technology also promises more focused learning by tracking the progress of each student and adapting to make sure no child is left behind. We expect plenty of disruption and change in this part of the market.”
Related: How GetSmarter Got Smarter
What’s next for education?
In the unlisted space, Milpark Business School was bought out by private equity buyers several years ago and has recently been purchased by Stadio, Curro’s tertiary education spinout and Brimstone Investment Company. A third theme is consolidation. Scale is important in education and established players with capital are likely to continue purchasing smaller players to achieve this.
What the education sector looks like today
The education sector is divided into three separate investment and business opportunities, namely: High income schools, low income schools and franchises. Before investing in any of these sectors you’ll need to understand them.
Low income schools
Low-fee or independent schools are growing at a rapid rate in South Africa. In its 2015 report, Low-Fee Private Schools: International Experience and South African Realities, the Centre for Development and Enterprise (CDE), reports that low-fee private schools that charge annual school fees of less than R12 000, are educating an estimated 250 000 learners. The schools fill in the education gap left by insufficient or dysfunctional public schools in disadvantaged communities.
“The private education sector is not well researched or understood,” says Jane Hofmeyr, policy and advocacy director at the CDE. “But there is considerable potential with new players, local and international, coming into the market, looking for opportunities in South Africa and Africa.”
The growth in the independent school industry emanates from for-profit and not-for-profit chains of private schools at all fee levels. The main source of income for low-fee independnt schools is school fees, government subsidies and donations.
Investors in this sector face a number of challenges. A convoluted regulatory environment can impede the establishment of new schools. You’ll also face high compliance costs, and more accountability with severe sanctions for non-compliance. Further challenges are acquiring affordable premises, high teacher turnover and late or non-payment of school fees.
High income schools
ADvTECH, a listed private education provider, reported a 22% rise in revenue to R2 billion for the first half of 2017. Operating profits grew by 28% to R344 million, while earnings climbed 6% to 38,6 cents per share, and a dividend of 15 cents per share was declared. ADvTECH’s schools division comprises 90 schools across 47 campuses under the following brands: Abbots College, ADvTECH Academies, Centurus Colleges, Crawford Schools, Junior Colleges, Maravest Group and Trinityhouse.
There are also challenges in this sector: “The difficult economic climate and unsettled socio-political environment had a more significant effect on enrolment numbers than had been anticipated. We have seen a consistent rise in the number of families emigrating and this trend had a negative effect on enrolled numbers as we lose students in grades where it is difficult to replace,” says ADvTECH. “In addition, we have seen an increase in withdrawals and exclusions as a result of financial pressures. Therefore, while actual new enrolments have been in line with expectations, net student numbers have been adversely affected by these two negative influences.”
These factors, along with costs of investments in greenfield projects and school expansions, are constraining profits.
Education franchises continue to grow and spread across South Africa, fulfilling parent’s needs to invest in their children’s early learning and critical skills development through enjoyable, educational programmes.
BIG DEALS IN THE EDUCATION SPACE IN 2017
SOLD FOR R1,4 BILLION
2U, a Nasdaq-listed technology education business acquired Cape Town start-up GetSmarter for R1,4 billion. GetSmarter was founded by brothers Sam and Rob Paddock. The education business focuses on developing online short courses in partnership with higher education institutions, including Cambridge University, Harvard University, the Massachusetts Institute of Technology and the Universities of Cape Town, Witwatersrand and Stellenbosch (Business School).
Both companies focus on delivering “high-quality, high-touch digital higher education from world-class colleges and universities,” said 2U in a statement.
Milpark Business School
SOLD FOR R320 MILLION
Milpark Business School was sold to Stadio, in partnership with Brimstone, for R320 million. Brimstone will pay R96 million for a 30% stake, and Stadio will pay R224 million for a 70% stake in Milpark Business School. Stadio, which falls under the Curro umbrella, says this acquisition is just the beginning; it intends to acquire several additional programmes, including degrees, higher certificated and diplomas.
Yusuf Karadia sold Mancosa to UK private equity firm Actis, two decades after he launched the distance learning school to teach South Africans business skills. Mancosa is now a part of Actis’s expanding African higher education portfolio. Since 2014, it has spent R3.65 billion investing in educational institutes across the continent.
CURRENT OPPORTUNITIES IN THE MARKET
- Investment: R700 000 to R900 000
- Contact: +27 (0)11 958 2910
- Visit: www.aplusstudents.co.za
- Investment: R200 000 to R300 000
- Contact: +27 (0)82 785 7763/ +27 (0)21 939 6344
- Visit: www.minds.co.za
Innovatus FET College
- Investment: R700 000 to R1 million
- Contact: +27 (0)32 541 0045/6
- Visit: innovatus.co.za
- Investment: R100 000 to R200 000
- Contact: +27 (0)31 903 5352
- Visit: www.kipmcgrath.co.za/franchise-opportunities
Kumon Education South Africa
- Investment: R50 000 to R100 000
- Contact: 0800 002 775
- Visit: www.kumon.co.za
MiniChess South Africa
- Minimum investment: R55 000
- Contact: +27 (0)12 347 6464
- Visit: www.minichess.co.za
- Minimum investment: R150 000
- Contact: +27 (0)11 792 4679/ +27 (0)82 853 6479
- Visit: www.sherpakids.co.za/franchise-opportunity
- Investment: R350 000
- Contact: +27 (0)87 287 4038/ +27 (0)82 442 6267
- Visit: www.younge.co.za
10 Business Ideas Ready To Launch!
Where do you find a good business idea? Right here. Here you’ll find several innovative business ideas that are ripe for plucking.
Where do you find a brilliant business idea?
It’s not as hard as it may seem at first. In fact, the idea is arguably not all that important. There’s a reason investors talk about backing the jockey and not the horse: It’s often not about the idea, but the execution.
A great entrepreneur can turn even a mediocre idea into a success; all that’s needed is a USP and great customer service.
That said, some ideas are undoubtedly better than others. And some businesses are easier to get off the ground. In the following pages you’ll find a curated list of business ideas that have reached a point where they’re just waiting to be exploited.
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