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Types of Businesses to Start

How To Go From A Clever Idea To A Viable Moneymaker

Unique ideas can work. But they need to be commercially viable, with the ability to be scaled and leveraged to handle increased volume and growth.

Harry Welby-Cooke

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One of the advantages of being a business coach is the opportunity to work with a lot of different businesses and business concepts, seeing what works and what doesn’t. I’ve been involved in a lot of different, unique and unconventional businesses from ladies fashion to premium dog food.

One of the more unconventional businesses we’ve worked with lately has been a South African company called the Liza Clifford Bra Fitting Studio — a niche company that addresses a need many women have: To find the perfect-fitting bra.

While Liza’s concept was an immediate success with customers, her issue, like that of most idea-driven business owners, was finding a way to make her idea commercially viable and sustainable, shifting responses to it from “That’s a great idea. I’d buy that!” to “That’s a great idea. Here’s my money!”

Related: 10 Business Ideas Ready To Launch!

A Systemised Model

Once that happens, you need to organise your entrepreneurial undertaking into a systemised model that gives you predictable results.

What does that mean? The business can run without you. This simply means there are systems and processes that drive the business, and if anything were to happen to the owner, the business could continue to grow because the business plan, growth strategies and day-to-day ‘default activities’ are on paper and shared with a team, not in the owner’s head.

This also helps deliver the concept consistently to create personalised customer experiences.

Systemisation doesn’t stifle personal creativity or service; it helps define and give parameters for the team to treat every client individually within the context of the company’s values and culture.

In Liza’s case, while each one of her customers is treated to the same private-fitting process that is consistent and repeatable, it is in reality an individualised experience for her clientele.

Related: Simple Money-Making Ideas for Entrepreneurs

Focus On What’s Measurable

Ideas can be nebulous and fuzzy. Numbers, meanwhile, are objective. How many customers at what price points produce profit? What profit margins are needed to sustain growth? How much business can be referral-based to reduce outside marketing spend?

Once those numbers are known, you can be very clear about what you need to do and what you need to pass on every day to be successful. For example, the proper training around a simple retail script can increase daily sales exponentially. Not buying the online discounted ad programme could save resources you need to buy new products. You can only manage what you know in order to measure for the results you need.

Related: How To Start A Side Hustle Without Quitting Your Day Job

Growth Is A Must

Room for growth is built into the company’s structure. Growth isn’t an option for being in business. It’s a necessity. Even if your goal is to be a home-based consultant or you want to manage and control your growth, you will need to get new customers to replace those who move on.

However, if your goal is loftier — such as multiple units, national expansion, franchising — you’ll need to document your processes to multiply and leverage your business concept.

The biggest reason businesses fail isn’t lack of capital, but rather lack of knowledge. Having an idea for a business is great, but knowing the difference between a good idea and a good commercial idea is literally money in the bank.

Harry Welby-Cooke is the Master Licensee for ActionCOACH South Africa. He is also the President of COMENSA (Coaches and Mentors Association of South Africa). ActionCOACH is the world’s largest executive and business coaching company with operations in 39 countries. It is also on the list of the top 100 franchises globally. As a highly successful Business and Executive coach, Harry is a master of teaching business owners how to turn their businesses around and accelerate their growth. Email him at harrywelbycooke@actioncoach.com or call 0861 226 224

Types of Businesses to Start

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.

Nicole Crampton

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“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

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.

Franchising opportunities

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.

Related: Enko Education Investments Matches Money With Passion


BIG DEALS IN THE EDUCATION  SPACE IN 2017

GetSmarter

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.

Mancosa

Undisclosed

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

A+ Students

Creative Minds

  • 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

Kip McGrath

Kumon Education South Africa

  • Investment: R50 000 to R100 000
  • Contact: 0800 002 775
  • Visit: www.kumon.co.za

MiniChess South Africa

Sherpa Kids

Young Entrepreneurs

  • Investment: R350 000
  • Contact: +27 (0)87 287 4038/ +27 (0)82 442 6267
  • Visit: www.younge.co.za

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Types of Businesses to Start

11 Uniquely South African Business Ideas

Having difficulty in identifying that unique ‘gap’ in the market? You can start your own distinctively South African business, using these 11 uniquely South African business ideas.

Nicole Crampton

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Business idea 1: Create A Uniquely South African Drink

South-African-flower-route

South Africa’s landscape is one of the most diverse in the world. Its Cape Floral Kingdom is one of only six floral kingdoms in the world. The country’s ecosystem supports 9 600 recorded plant species. 70% of these plants are found nowhere else on the planet.

This wonderfully diverse and unique environment brings with it the opportunity to develop and create products from uniquely South African resources, such as our rooibos plant, unique African spices, African aloes, or even distinctly different SA wheat and hops.

As with any business idea, you need to identify the good and the bad.

Businesses That Spotted The Gap

Successful founder of YDE, Paul Simon, sold his business when it had an annual turnover of R160 million at the time of its sale, to start his own home-grown rooibos iced tea brand; Über Flavour. Simon discovered a South African product being made in Stuttgart, Germany, and felt he had to correct this ‘injustice’.

Über Flavour sold out in the first six weeks of production, and within eight months it was in 150 locations in Cape Town and Johannesburg; from restaurants to grocery chains. 

Mikie Monoketsi is obsessed with healthy living and realised how ill-informed people in townships were about herbs and spices and its health benefits. So, she set out to capture the township market with her unique blend of healthier spices from her business Mama Spices; and it was an amazing success.

Now, she’s producing approximately 1.2 tonnes of spices monthly for Mama Spices & Herbs, to keep up with demand. 

Here’s what you need to consider when setting out to accomplish this:

Pros

  1. You already have access to uniquely South African resources.
  2. You already know how to create a product using those resources.
  3. You already know there’s a market for your new product.
  4. The raw material will be cost effective because you’re sourcing it locally.

Cons

  1. You will have to develop a network of suppliers, for example; rooibos tea farmers.
  2. You may require a food technician to assist in developing your distinct South African flavour.
  3. You’ll need to make sure there’s a market for your new product.
  4. There will be a significant capital investment.

Related: A – Z Easy Small Business Ideas

Next up > The growing demand and profitability of education

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Types of Businesses to Start

The Benefits Of Manufacturing Locally

Alistair Barnes, Founder and CEO of Ballo, comments on our local manufacturing sector.

Alistair Barnes

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Over the last couple of years, we have seen a boom in the growth of local business. And what I find most interesting is the growth, especially with small artisanal businesses, that place a focus on creating the best quality products in a niche market.

It seems to have become a norm to go to a small specialised shop that produces one item of great quality. From alcohol to socks, gone are the days of the one-stop-shop and mass production. This trend seems to have been led by the ‘love of local’ attitude, that has always been a part of South Africa’s identity. With this supportive attitude, comes the aspect of encouraging local entrepreneurs to support their community, rather than importing from countries that mass manufacture.

I founded my own company, Ballo, five years ago in Woodstock. We create hand crafted, sustainable wooden sunglasses. I decided to go the local route, creating a product of a high-quality standard, rather than source cheaper goods from overseas.

Related: Why Is It Important To Grow Manufacturing? 

That’s not to say that manufacturing locally has been easy, but it was something I felt strongly about and has formed the foundation of my brand.

Boosting your local economy

I wanted to start a company that improved the local economy by creating job opportunities, and this is one of the main pros of manufacturing locally. You get to know the faces behind the product and it gives your business a personality and a story to tell. My general guiding business focus is “principles before profits”, I love that to make more sunglasses I have to employ more people.

Local production is important to me because it creates jobs. We live in a country with one of the highest unemployment rates in the world. Unemployment is the reason we have high crime rates, but instead of creating jobs most businesses choose to automate, compounding the problem.

Using local waste materials from other industries to make sunglasses also doesn’t require the shipment of raw materials across oceans. The 50 000 freight-liners in the ocean produce triple the amount of greenhouse gasses than all the cars in the world, I don’t want to add to that.

The only negative aspect of employing local staff rather than outsourcing to overseas manufacturers is the cost of wages, but on the other hand it also eliminated import costs. 

Service and adaptability

Manufacturing locally also increases the quality of service and dealing with smaller quantities of product allows adaptability. For example, if a client requests a bespoke item it is easier to meet their requirements. Our range comes in different shapes and sizes with locally inspired prints, which means that every pair is different. I also get to be a part of the creative process from start to finish.

This isn’t really an option when you mass produce. Finding a reliable manufacturer can also be a nightmare. I love getting to oversee every aspect of the process to guarantee a high standard of quality.

Related: Start Manufacturing Toilet Paper Today

Sustainability

ballo-sponsorsWith the rise of the environmentally conscious consumer, came the increased need for people to buy items that are not only great quality, but also sustainable. I came up with an idea, to design and create a pair of sunglasses that are unique and sustainable. We do this by using completely recycled and upcycled materials for the frames.

Our glasses are made from locally sourced wood veneer offcuts, recycled paper and tree sap bio-resin that are pressed, cut and shaped by hand. The workshop uses no water during the production process, and minimal electricity, using a few yet, highly skilled staff and almost entirely recycled and upcycled materials.

With a passion to “see things differently”, I was determined to break down what people see as acceptable forms of production, I wanted to lead by example.

Something that is very close to my heart is giving back; Ballo sponsors the South African Eco Film Festival, that is geared towards showcasing films that introduce sustainable living choices and world issues alike. My vision is for Ballo to be an anti-fashion or ethical fashion brand- trying to educate consumers as a part of a slow-sales process. Sustainability is not something I focus on for PR reasons, it’s something that I live and feel. I feel a responsibility to this planet. I am not trying to exploit a trend, I actually care and consider the impact on the environment that every business decision has.

We are always on the lookout for new ways in which to help give back to the earth and to help educate people on making the right choices for the planet.

Production

Each pair of Ballo sunglasses is individually handcrafted. We can produce up to 50 pairs of sunglasses a day and every single pair goes through a series of 22 design processes requiring a huge amount of precision and detail. This is one of the limiting factors that need to be considered when manufacturing locally, especially by hand. When outsourcing to countries that mass manufacture, the product turnover is a lot higher and standard is consistent; although quality might not be as good.

When it comes to handmade items, there is always room for mistakes which mean that quality control has to be a priority. For us it is the last step before the frames are laser etched with branding and beautiful packaging. The brand’s attention to detail is unparalleled throughout the process.

Related: Aluminium Door And Window Manufacturing

Price

Although manufacturing in a country like China is more efficient and standardised it decreases the value proposition when it comes retail prices. People like to buy a product with a story, a product that they know was made by hand and with attention to the smallest of details.

A couple of years ago no one seemed to take notice of the process, cheaper was better and people weren’t willing to pay more for well-made items over their cheaper counterparts. That has now changed, although the production might be slower when it is done by hand, it has a large impact on the price point which evens the playing field.


ballo-south-african-sunglassesCheck out all the products and news online at www.ballo.co.za or pop in to the store and try some on for yourself. Bo Op, 102 Wale Street, Bo Kaap, Cape Town.

Follow Ballo on social media:

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