The first 1000 days of business are make or break for a business. Statistically, very few entrepreneurs survive past 1000 days (3 years) of business. Santam is profiling diverse businesses to get their advice on how businesses can succeed to 1001 days – and beyond.
Meet JesseJames: a successful start-up founded when two childhood friends turned their mutual passion for design into a budding business that produces custom interiors, installations, activations and products for corporate clients.
Day 1 of 1001: Starting out
After studying and then working abroad, Jesse Ede and James Bisset returned to South Africa. “There were not that many jobs”, says James. “The environment was very stark with few opportunities.” One day, surfing at Milnerton beach in Cape Town, the duo decided to start a design business that “makes things”. Their first ‘studio’ was James’ bedroom, and their first workshop was in Jesse’s artist father’s garage. They began by working for friends.
“We made a bookshelf for R1000. We made no profit, maybe R100”, Jesse remembers. But slowly, through word of mouth, they got more projects.
“Those first days were tough”, explains James. “We were living off our savings and having to make sacrifices in terms of lifestyle.” One of the first marketing exercises they did was to create a website, which they built themselves, and continue to update regularly.
Tip: “A lot of what we do has to do with attention to detail. When you’re starting out, it’s so important to form good relationships with your clients and the way to do that is to make everything absolutely perfect. That way, you build trust, and then a reputable brand.”
Day 155 of 1001: Created a creative hub
One of the first JesseJames standout jobs was a project for ELLE Magazine, designing the award for their “Rising Star” competition. Around this time, they decided to take the leap and acquire offices.
They found a great space but couldn’t afford the rent. They decided to sub-let the space to like-minded creatives. This not only covered overheads but also proved to be a valuable incubator. “We were all spinning off one another’s ideas and really learnt from one another”, James reminisces.
Tip: “Consider sharing your premises with other businesses to keep overheads low.”
Day 577 of 1001: Creating systems
Another turning point was to start implementing an invoicing system. “We use Freshbooks and it has really saved us time. One of the biggest surprises of running a business is the amount of time spent on emails and not actually doing work!” laughs Jesse.
Tip: “Don’t spend your precious time on a task if an online solution or another person can do it.”
Day 763 0f 1001: A breakout client
JesseJames landed a breakout client in 2013: a yearlong project for a medical aid company. “We had to create a mobile lab that would tour around South Africa,” James explains. “It was very challenging as there were many innovations we had to brush up on.” The client was very happy and this retainer really helped to develop the business into what it is today.
Tips: “In client service, communication is key. If something is going wrong, let a client know early. Always try to get clients to commit some money on a job upfront. Even if it’s 10 or 20%, it will make them have a vested interest in the project.”
Day 1001: Refocus your offering
In 2014, they decided to put new product development on hold and focus on commissions. “The retail world is fickle and suffers from recession”, explains James. “Service-based work always does well. Commissions will hone our skills and give us opportunities to do R&D that can be used on product development in future.”
Tip: “Sometimes you need to keep it simple and focus on what you’re really good at. Don’t try to do too many things at once.”
The next 1000 days
What is on the JesseJames agenda for the next 1000 days? “We would like to invest in more hi-tech machinery as a way to improve further on quality, hire another designer and do more community-based work”, says James.
Top Sectors For SMEs In 2019
“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.
This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.
“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”
The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.
“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations have been relaxed and the sector is once again poised for growth,” he says.
Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”
He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.
“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.
“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.
In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.
Data and information technology
Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.
“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.”
It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.
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SME Insurance Checklist For New Year
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.
Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.
He advises SMEs to consider the following factors when reviewing their policies:
- Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.
This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.
- Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).
SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.
- Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.
More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.
- Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
- Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.
Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.
- Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
- New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.
“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.
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