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Selling New Business Ideas

7 things I learned from overseeing the GIBS business plan competition.

Greg Fisher

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This last weekend GIBS hosted the second annual MBA Business Plan Competition. 38 student teams from the Entrepreneurship MBA and Modular MBA programme participated in the competition.
The day was filled with energy, nerves and excitement as all the students presented their business ideas to panels of judges in the morning with the seven best business plans going though to the final in the afternoon. In the final there were a broad range of ideas from businesses delivering solar power solutions to a debtor financing platform to a furniture manufacturer to a massive mining operation. In the end the winner was Colin Daniels with his business plan for a mobile ticketing platform. In arranging this competition for the MBA students I gleaned some interesting insights about entrepreneurship and selling new business ideas. Here what I learned…

1. Small things make a big difference

When presenting a business idea, the details matter. People are making a judgment about you and about the business in a very short window of time. They are therefore inferring a lot from a very small amount of information. Make sure that what you present to them is excellent. The slides must look good, the plan must be perfectly coherent, you attitude must be right and you must answer questions with care and humility. Focus on the small details to have a big impact.

2. Execution is everything
There are many good ideas floating around. What sets them apart is what people do with them. Those students who were already executing on their idea where in a much stronger position than those who were just presenting a concept. Ultimately you will be judged on what you are already doing and not just on what you say you will do. To build traction for your business make sure that you assemble a team, develop a pilot product or service, get some early customers and report real results. It sets you apart!

3. Borrow what you can and build only what you have to
Many would be entrepreneurs think that they need to build everything from scratch. They think they need to design and build the product, write the software or establish a new distribution channel. One thing I realized at the business plan competition is that savvy entrepreneurs borrow everything they can and assemble what they borrowed to create an innovative new product or service. Many times a significant part of the solution has been developed elsewhere and it is the entrepreneurs role to get the right to use what has been developed and to adapt it to a new market space. Building stuff from scratch takes time, is expensive and very risky. Borrowing everything that you can and building around it means that you can get to market quickly, without breaking the bank.

4. People want to help
One of the things that struck me about the competition was just how much people in the community want to be part of it. My greatest joy in arranging the competition was finding judges. Everyone I asked to participate as a judged gladly agreed or if they were unable to do it asked me to keep them in mind for next year. People want to see new business ideas succeed and they want to play a part in making that happen. They just need to be given the opportunity to contribute. For entrepreneurs this means that you have to be active in seeking out a support network for your business. When you ask people will respond. Ask experts to be on your board of advisers, seek counsel from those in the know and never be scared to call in a favor to make your business succeed.

5. Make the numbers work but its not about the numbers

A new business concept needs to make sense financially. Based on the calculations that you present, you need to show that the business can make a profit within a reasonable period of time and you need to demonstrate that you have thought clearly about the economics of the operation. But that’s not enough. Investors know that anyone can make a business look profitable on an excel spreadsheet. To really sell the business idea you need to demonstrate that you know everything about what you are doing. Use a discussion about the numbers to show that you really understand the industry, show that you have investigated the competitors and show that you have really delved deep into the drivers of business success within the context in which you are operating. Talking about the economics of the business provides an opportunity for you to demonstrate the real passion that you have for what you are doing. The more you know, the more passionate you will appear, and the more others will be interested in what you are doing.

6. Get going
At one point during the final presentations one of the judges looked at the participant and said to her, “You can keep planning, you can keep researching, you can keep developing financial forecasts but in the end you just need to get going. There comes a time in the business creation process when you need to stop planning and just start doing. You will learn so much more from doing compared to planning.” The risk with a business plan is that it seems like it is never complete. We always want to do one more thing, check this, confirm that or run one more spreadsheet. This approach is anti-entrepreneurial. The true entrepreneur uses the plan up to a point and then sets it aside and takes action. There comes a time when you just need to get going.

7. FNB cares about entrepreneurship
Without me even asking, and without expecting anything in return, FNB offered to come on board and sponsor a significant cash prize for the winner of the competition. Having worked with FNB on a few of their Biznetwork events, I have always know that they care about entrepreneurship in South Africa but I was taken back when they approached me offering to support the winner of the competition with a chunk of seed capital in an FNB account to help them get their business off the ground. What a great gesture confirming that as an organization they are looking for opportunities to help bring good business ideas to fruition. Thanks FNB!!!

Thanks to all the judges, participants and supporters that made the 2011 GIBS MBA Business Plan Competition a great learning event for all involved.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Silver Linings For Smaller Businesses In Budget 2018

Comments by Pieter Bensch, Executive Vice President, Africa & Middle East at Sage.

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As expected, the Finance Minister and Treasury have proposed some tough measures to address South Africa’s tax collection shortfall, growing budget deficit, and new spending priorities such as free education. Higher VAT, fuel levies and import duties on luxury goods will no doubt crimp consumer spending, which could be bad news for smaller businesses.

But we are pleased that the Finance Minister has raised his GDP growth projections and proposed interventions to help grow Small & Medium South African businesses. We welcome the steps government is taking to restore fiscal credibility, rein in spending, and hold off another credit ratings downgrade – it may be painful in the short term, but we should be rewarded in the longer term.

On small businesses, competition policy and market access

It was great to see the Finance Minister talk extensively about the hopes and concerns of entrepreneurs and small businesses in his Budget Speech today. We welcome his acknowledgement that low market access and high barriers to entry are constraining the growth of the country’s small businesses.

Minister Gigaba mentioned that government will take action against anti-competitive behaviour that harms these businesses.

That is a worthy goal, but we think we should also be looking more closely at how big businesses can play a constructive role in nurturing the growth of small businesses through mentoring and partnership. Small businesses are tomorrow’s customers, suppliers and employers, so it’s in everyone’s interest to grow this sector.

Related: How South African Small Business Owners Can Overcome Economic Uncertainty

On small business funding

We heard more about the R2.1 billion fund Departments of Small Businesses and Science & Technology and the National Treasury are developing to benefit small and medium enterprises during the early start-up phase. It’s good news that government is investing in innovative startups, but it’s important that the funding is spent in an efficient and productive manner. Picking winners and losers isn’t easy, so we’d like to hear more details about how government will choose to allocate this money.

On public procurement

It makes enormous sense for government to use public procurement to support black economic empowerment, industrialisation and development of small businesses. We are glad to hear that government sees its billions of rand in procurement spend as a lever to empower small business owners – we look forward to more detail about how government will enable more small and micro businesses to participate in procurement opportunities. And of course, it’s critically important that government follows through on its promise to pay small businesses within 30 days of invoicing.

Cash flow is a major challenge for small businesses and few of them can afford to wait three to six months for payment on a big project.

Related: How South Africa’s Small Businesses Plan To Invest Their Money In 2018

VAT

Most consumers and businesses have been preparing themselves for a VAT increase in this budget. As unpalatable as many people will find the one-percentage point hike in the VAT rate, it was an obvious choice for a Finance Minister wanting to raise more revenue without dampening business investment or consumer spending.

The VAT hike will take some money out of people’s pockets, but will probably have less impact on business confidence than higher corporate taxes and less impact on consumer spending than further personal tax increases.

As expected, government has preserved the zero-rated status of some staples to lessen the impact on the poor. Small & Medium Businesses will need to make sure their systems are ready to cater for the new VAT rate, but this should not be too much of a challenge for those with automated accounting systems. By international standards, VAT in South Africa is still relatively low – we can just hope that this increase is not followed by another in the next year or two.

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4 Budget Speech 2018 Outcomes To Know For Your Business

2018 Budget Speech commentary by Rob Cooper, tax expert and Director of Legislation at Sage.

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The increases to taxes across the board are less painful than I expected. The general improvement to the fiscal framework and the reduction of expenditure by R86 billion over three years seem to have gotten us over the hump – for now, in any case.

1. Personal income tax

There were no surprises as far as personal income tax (PIT) is concerned. The top 45% rate remains unchanged and tax bracket creep relief is given only to those who earn below R410 000 per annum. Bracket creep in personal income tax, along with fuel levies, offers low-hanging fruit for the Finance Minister.

Related: What It Will Really Take For South Africa’s Businesses To Scale And Create Jobs

National Health Insurance

It’s good news that the Medical Tax Credit is still with us, even if it has received a below-inflation increase. This Medical Tax Credit is relatively small – especially with this year’s low increase – but it does help to make private medical cover affordable for millions of low-income South Africans.

2. Travel reimbursements

Great news for taxpayers and employers from the Budget: Government has scrapped the 12,000km a year limitation for using the prescribed rate per kilometre to calculate travel reimbursements.  This will simplify travel reimbursement administration, but could open the door for increased levels of non-compliance in respect of travel reimbursements. On the whole, however, this will make life much easier for businesses.

Related: Silver Linings For Smaller Businesses In Budget 2018

3. Employment tax incentive

The Minister of Finance has decided that six special economic zones (SEZs) should be recognised by the ETI Act. Employers will thus be able to claim the Employment Tax Incentive for all employees working in one of these SEZs, irrespective of an employee’s age, but subject to qualification tests such as minimum wage and maximum remuneration. Outside of the SEZ, employers can only claim for the incentive for employees aged 18 to 29 years. This is a great way to generate more employment in the SEZs.

4. VAT

The VAT increase was expected and inevitable, and so were the VAT exemptions and increases to social grants the Finance Minister has applied to shield the poor from the impact of higher VAT.

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Tsogo Sun Entrepreneurs Takes On 30 New Businesses

22 Women and 20 men – attended a three-day induction at Tsogo Sun’s Crowne Plaza The Rosebank hotel in Johannesburg from 31 January to 2 February.

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With new hope burgeoning throughout the South African business environment as fundamental political change sweeps through the country, the Tsogo Sun Entrepreneurs programme has inducted 42 new beneficiaries from 30 different SMMEs for a year of intense training, coaching, mentorship and support – to assist them to professionalise and grow their businesses. This brings to 242 the total number of entrepreneurs supported by the programme.

The inductees – 22 women and 20 men – attended a three-day induction at Tsogo Sun’s Crowne Plaza The Rosebank hotel  in Johannesburg from 31 January to 2 February. This represented the commencement of the programme’s 2018 development year, which incorporates the provision of customised analysis and strategic plans tailored to the specific needs of each enrolled business, business management courses provided by the University of Cape Town and facilitated by GetSmarter; Financial literacy courses through the Colour Accounting system, Microsoft Office courses, and Sales & Marketing training.  The beneficiaries are each assigned a business analyst, a financial mentor and a leadership coach who work with them to implement their business strategies throughout the year.

Related: Before Time In Soweto – The Décor Hire And Catering Entrepreneurs That Are Growing Their Business Annually

This year’s class of 2018 entrepreneurs is made up of 30 small businesses operating in provinces across six provinces in South Africa in a diverse range of market sectors that include: tourism, ICT, cleaning, professional services, manufacturing, retail, health and beauty, agriculture and secretarial and administrative services. Candy Tothill, Tsogo Sun’s GM of Corporate Affairs, says “Part of the value of such a diverse group is that it creates opportunities for the businesses to trade with each other.”

She adds, “Job creation is increasingly crucial in South Africa, as unemployment has reached unprecedented levels, particularly among the youth. Through the Tsogo Sun Entrepreneurs programme, we identify and assist people running their own businesses to professionalise their operations in an effort to make them viable employers who are sustainable businesses and contributors to the growth of the country’s economy.  At the same time, we encourage them to be “conscious” consumers who procure local products and services and support each other by keeping it local and proudly South African.  We are interested in changing their approaches from “managerial” mindsets to “leadership” mindsets, and so we motivate them to be fearless in their approach to growth with purpose. The programme provides them with the skills to enhance their strategic planning and performance and the wisdom to “pay it forward” by training them to become leaders in their communities.  The role that the programme’s mentors and coaches play in instilling these values is of great significance to the achievement of our objectives.”

Belinda Francis, MD of Tych Solutions, a generalist recruitment agency based in Durban with offices in Johannesburg and Eastern Cape, was enthusiastic about joining the Tsogo Sun Entrepreneurs programme. “Tsogo Sun is an amazing brand to be associated with, but more so, having met the team at a Supplier Showcase and heard others’ success stories, I was hungry to learn more and be a part of this journey. I don’t have an active partner and so I believe this programme will help to grow and empower me and my entire team even further. I am big on empowering and developing people and small businesses – and this will certainly create the platform for me to do so.”

Related: Gemkids – From Montessori Method To Micro Enterprise

Entrepreneur Carol Mlangeni, director of Enhle Creatives Photography & Design, also based in Durban, says she was browsing the internet looking for guidance on how to resolve issues within her company when she saw a Tsogo Sun Entrepreneurs advertisement – and immediately responded. “I have issues within my business and I have been looking for answers on how to resolve them and grow my business and my brand awareness – I hope to achieve this through this programme.” Mlangeni adds that her future plans include providing job opportunities for “other aspiring enthusiasts like me”.

Thato Senosi is Founder of Magauta Designs and Projects, which supplies custom-made curtains, upholstery, and furniture repairs, and is based in Katlehong in Ekurhuleni. He was introduced to Tsogo Sun Entrepreneurs by his mother, Carol Senosi, who joined the programme in 2016 and was a finalist in the Entrepreneur of the Year Awards. He says he joined the programme because

“I believe that entrepreneurship is a science, and one needs to put together all the necessary tools and formulas to build a successful business – and this programme offers that. My expectations this year are to identify missing formulas and find solutions, to be monitored and supported, and helped to become a great version of myself so I can inspire others, because no man is an island.”

His plans for the future include starting his own textile manufacturing company and bringing industry into the township to help combat some of the social challenges in his local community.

Says Tothill, “It’s encouraging to see the growing reach of Tsogo Sun Entrepreneurs throughout the country and in a diverse range of businesses, and we wish our new beneficiaries – the Class of 2018 – every success through the year as they discover new ways to develop themselves and their enterprises.”

Tsogo Sun has a portfolio of over 100 hotels and 13 casino and entertainment destinations throughout South Africa, Africa and the Seychelles. For more details, visit https://www.tsogosun.com, follow on Twitter @TsogoSun or like on Facebook /TsogoSun.

Visit the Tsogo Sun Entrepreneurs on Facebook: Facebook/TsogoEntrepreneurs and follow #TsogoEntrepreneurs on Twitter and Instagram.

Tsogo Sun Entrepreneurs Class of 2018 with Hezron Louw

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