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How do I start a retail energy business with Eskom being the only provider in South Africa?

It is true that Eskom generates a good deal of the country’s electricity, as well as owning and operating the national transmission system.

Entrepreneur

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There are retail opportunities within the energy industry, especially in terms of renewable and green energy solutions.

Private-sector participation is allowed

In 2003, Cabinet approved private-sector participation in the electricity industry and decided that power generation capacity will be divided between Eskom (70%) and independent power producers, or IPPs (30%). Go to the government energy website for more information regarding independent power producers in South Africa.

Find research information

The National Energy Regulator of South Africa (Nersa) has undertaken research into the resale or retail market and they would be able to assist you as well. You could also look into becoming a reseller of bulk pre-paid electricity. Upgrading your research skills will also assist you in determining the gaps and needs within the local market.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Start-up Industry Specific

Want To Start A Property Business That Buys Property And Rents It Out?

Information on starting a property renting business.

Shawn Theunissen

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Start your property rental business using this guide

I would like to start a property business where I purchase the properties and I rent it out, I already have a paid up property that I am renting out but my taxes are too high on the rental income so I am considering starting up a business. Could you advise me on where I can get more information on the requirements to start this and provide some guidance on whether it would be wise to pursue this business?

Before starting any business, it’s important that you’re absolutely clear about why you’re doing it – and that it’s going to be something that excites you, drives you and challenges you in the long-term.

If you’re only considering starting a property investment and management company to try and reduce your taxable income, then I don’t believe this is an appropriate – or a sustainable – solution.

Related: How The Property Brothers Built Up A Real-Estate And Entertainment Empire One Brick At A Time

You should rather consult a reputable financial adviser about other investment options that would better suit your personal needs.

If owning and managing properties is, however, an opportunity you would like to pursue, I would then recommend that you start off by equipping yourself with a proper understanding of what it actually means to be a landlord.

This will help you to make an informed decision about whether or not you want to start this (ad)venture as an entrepreneur. At a very basic level, here are some of the things you might want to consider to determine if this is the right business for you:

Initial cost

initial-cost-and-property

This is what you need to consider, cost wise, when you start up your business

You need to consider the initial cost that you will be incurring when setting up the business, especially since you have a property in your personal capacity.

You will need to transfer the property from your personal capacity into your business and pay transfer fees and transfer costs.

These costs will be calculated based on the current value of the property.

The work and planning

No matter whether you’re a residential or commercial landlord, property management requires a great deal of work and planning. Remember you will be responsible for all aspects of the property: From purchasing it to maintaining it on a day-to-day basis.

Related: Real Estate Business Plan Sample

This involves everything from transfer to managing the monthly utility bills, all the way through to replacing the geyser when it bursts and ensuring your tenants behave appropriately in the building. You would also need to source your tenants and ensure that they pay you on time.

All by yourself

business-owner-development

Starting your business alone? You need to know this

From a start-up perspective, you would probably need to do all of this yourself in the beginning. As such, you would need to work to build up your own database of reputable suppliers: Plumbers, electricians and handymen.

It’s important that you find experienced, qualified suppliers that you can trust, and who will be able to deliver on time and cost-effectively.

Related: Handyman Joshua Cox Of Trade-Mark On Thinking Like A Tech Start-Up

This can be a very time consuming process. Also consider that you would need to be on hand to facilitate all of this work: Arranging the call-out with the supplier and the tenant; overseeing the work delivered; paying the supplier etc.

Business owner development

Above and beyond that, you’re then going to need to develop yourself as a business owner. You will need to equip yourself with the skills and knowledge required to lead and manage this business in order to make it both sustainable and profitable.

This will require a significant investment from you: Time, effort and money. The more you commit to this journey of personal and professional development, the better your chances of success.

If you can picture yourself doing – and enjoying – all of the above, it’s then equally important to consider if this is a viable opportunity.

The greatest barrier to entry in this sector for you as an entrepreneur is probably going to be finance.

You need to be conscious of this from the outset.

  • Do you already have access to the funds you need to purchase the properties you are going to rent out?
  • If not, what are your plans to secure this funding? And what are the returns you are expecting?
  • Also consider the funding of the business itself. How will you finance this, especially during the first year?

My recommendation here is to take the time to do your homework – and the maths. While this could be a business opportunity, it might not be something that will be possible for you to do on your own.

Related: What You Need To Know To Become the Next Property Entrepreneur

If you have a feasible plan regarding the above, you then need to start working on developing a model for this business – as well as a strategy and plan. All of these will require research on your behalf: From reading Entrepreneur to accessing websites, possibly visiting walk-in centres etc.

This will include unpacking the actual opportunity itself – and determining if there really is a demand for your service offering.

Please note that the above are thinking or “trigger-points” – listed simply to give you an idea of some of the things you need to consider, as well as the mindset you will potentially need to adopt as an entrepreneur. Your response to them should give you a good sense of if this is the path you wish to walk.

Related: 9 Quotes Every Entrepreneur Should Live By

Remember that entrepreneurship is a journey – and every day on this road is a learning opportunity. If it is for you, embrace it whole-heartedly, don’t be afraid of failure and be sure to seek out the assistance available to you.

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Start-up Industry Specific

How do I start a placement agency?

A guide to starting a placement agency.

Entrepreneur

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The first step is to have a comprehensive business plan. Once you have decided on a name for your company, you have to register the business.

There is a governing body Association of Personnel Service Organisations (APSO) that acts as the governing body for the industry and provides credibility to the agency.

However, it’s costly to and complex to register with them. You don’t have to be a member of APSO to start a placement agency, but it is beneficial.

Related: Free Sample Business Plans

Seda (Small Business Development Agency) will be able to advise and guide you through this process and they do not charge for their help.

“As most of the staff that works for placement agencies are employed on a contract or temporary basis, you have to apply for an IRP30 through the South African Revenue Services.

The reason for this is so that the contractors that the agency places are safe-guarded and that PAYE and UIF are paid on their behalf,” explains Janine Lombard, director of ABC Resourcing.

Do your research

It is very important to understand and be familiar with the Labour Law of South Africa. Obviously you do not have to understand the entire act, but you must be aware of what minimum wages are, how to conduct hearings and dismissals and understand how to register for PAYE and UIF.

Choosing candidates

For a placement agency to be successful, an honest workforce is crucial. To achieve this you have to run screening and background checks on your candidates as you do not wish to compromise your reputation because you haven’t done your homework.

“It is a good idea to do a criminal and educational check and obtain references where possible. Companies such as Kroll can do this on your behalf, but you can do them yourself.

Even if the candidate has good references you must test their skills to ensure that they are competent”, says Lombard.

Minimum wage

Normal domestic workers minimum wages for those who work more than 48 hours a week:

  • Urban area: R6.88 per hour; R309 per week; R1340 per month
  • Rural area: R5.63 per hour; R253 per week; R1097 per month

Permanent placements

If you place staff on a permanent basis a fee is payable by the client when the worker starts.

Related: Hiring Your First Employees

It can be anything from 7% to 14% of annual salary plus VAT, covered by a three month warranty and you must have a set of terms and conditions which the employer must sign and accept.

Other responsibilities

If you are setting up a small office, the law is clear that in this kind of business you must have a separate interview room and a separate office.

Before you send a candidate to an interview, you must prepare a resumes and letter of introduction for the potential employer. You must draw up an employment contract for your candidates and or clients to sign.

The CCMA will be able to assist you in this regard.

Dealing with the client

Interview the client and find out exactly what they are looking for so that a comprehensive job specification can be gathered. From this you should be able to short list candidates that are suitable for the client.

Discuss and inform the client of your terms and conditions and make sure that you have an agreement in place that the client signs when accepting a candidate from your placement agency. In terms of the contract the successful candidate would be subject to a probationary period of up to 90 days.

The contract falls within the parameters of the Basic Conditions of Employment Act and clearly outlines all duties and obligations for both parties.

Preparing candidates for interviews

The responsibility of the owner is to set up appointments with prospective employers for candidates and finalising agreements between parties (employment contract). Prepare the candidate carefully for the interview.

Explain that they must be well spoken, polite, smartly dressed and guide them so they know the right questions to ask:

  • What time they start and finish work
  • Discuss tea breaks
  • How they should answer the telephone
  • What their duties and responsibilities are

Establishing a client base

Any new business has to be advertised and a marketing plan must be in place in order to attract business.

Take a small advertisement in the local newspaper offering your services, drop pamphlets from door to door in the area in which you intend to operate.

“In order to attract big contracts with large companies it is very important to have BEE accreditation.

This can be obtained through SEESA who offers clients professional, round the clock employment law support and representation in labour, BEE, skills development and facilitation and all employment matters”, advises Lombard.

Related: How 5 Businesses Built Up Their Client Bases

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Start-up Industry Specific

How do I start a funeral parlour, which organisations must I register with and where can I get franchise finance?

Understand the basics of starting a funeral parlour.

Entrepreneur

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Starting your on funeral parlour business follows the exact same procedure as starting any business, but you will need a Certificate of Competence.

To begin, choose a business entity, i.e. Sole Proprietorship, Closed Corporation or Private Company.

Related: The Basics Of Registering A New Company

Before you start a business you need to register with the South African Revenue Services, Employees tax (PAYE), Value-Added Tax (VAT) and Unemployment insurance fund (UIF). For more details go to our Start-up Registrations section.

The exceptions – a certificate of competence

Government regulations state that a Ccertificate of Competence must be applied for in order to open funeral parlour.

Before you submit an application for a Certificate of Competence, you must publish two notices in two different official languages in newspapers that circulate in the area in which such premises are situated. This must be done 21 days before submitting the application.

The applicant makes an application for a Certificate of Competence in writing to the Local Authority in whose area of jurisdiction the funeral undertaker’s premises will be situated.

The application must be accompanied by-

  • A description of the premises and the location
  • A complete ground plan of the proposed construction or of the existing buildings on a scale of 1:100
  • A block plan of the premises on which north is shown indicating which adjacent premises are already occupied by the applicant or other persons and for what purpose such premises are being utilised or are to be utilised
  • Particulars of any person other than the holder or any of his employees who prepares or will prepare corpses on the premises.

Subject to the provisions of regulations R 237 of 8 February 1985, no person is allowed to prepare any corpse except on a funeral undertaker’s premises in respect of which a Certificate of Competence has been issued and is in effect.

Dealing with other issues

As a funeral home owner, you will have to deal with various insurance providers. It is important that you understand how funeral insurance cover works.

Related: How To Start A Funeral Business

Your staff must know how to assist the family in claiming the policy. Other matters you must have knowledge of are:

  • Registration of Death
  • Purchasing of Graves
  • Cancelling of Identity Documents
  • Arrangements with Church and Minister
  • Crematorium protocol
  • Health Department documents

Using an existing CC to run the funeral parlour

You can use an existing CC to operate a new business; however, you must inform the Companies and Intellectual Properties Registration Office (Cipro). Complete the CK2A application that allows you to amend the Founding Statement. Download and complete the CK2A online. Go to www.cipro.gov.za for details.

Franchise finance

If finance for a franchise cannot be arranged through commercial banks, you can contact Franchise Finance. They will explain the funding criteria and facilitate the application with their funding partners.

Business Partners, a specialist risk finance company for formal small and medium enterprises (SMEs) may also be able to help you.

The Business Partners Umsobomvu Franchise Fund is a public/private sector joint venture between Business Partners Limited and the Umsobomvu Youth Fund initiative of the national government. Business Partners has extensive knowledge of entrepreneurial enterprise in general, and of franchising in particular.


Related: The 20 Most Common Reasons Start-ups Fail And How To Avoid Them

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