If you’ve taken the plunge and decided to start your own venture, there’s quite a bit of preparation to do before you can get to business.
Our panel of experts guide you through the essentials.
The business plan
The purpose of a business plan is to give your idea a blueprint and a step-by-step guide to getting it going.
A business plan won’t determine the success of your business but the old saying still holds true – if you fail to plan, you are planning to fail, say academic and finance and business consultant Professor Ricardo Peters.
“There are many exceptions and examples of successful micro enterprises around the globe and in the poorest of countries that achieved unprecedented success without a formal business plan,” he says.
However, a plan is crucial if you need to raise finance from a bank, financial development institution, or investor to fund or expand operations.
“You’ll need to show you have put a great deal of thought into your business idea and provide the reasons, in writing, you believe you’ll achieve success in the marketplace,” he says.
Siya Sakuba, senior business advisor at the Small Enterprise Development Agency (Seda) Western Cape, says a business plan usually includes several elements, such as:
A business executive summary – background information about the business, such as a description of it, the finance required and information about its owners and management.
A SWOT analysis – this stands for strengths, weaknesses, opportunities and threats. It should also include the business’s key success factors, which show why it has a competitive advantage in the market.
A marketing plan – outlining your market research, an analysis of customers or clients, competitors, your target market and potential market share.
A human resources plan and budget plan – detailing the business structure, staff costs, job descriptions and other legal requirements.
A summary of key management systems – what’s in place and what’s needed. This should include a cash-flow plan.
A financial review and risk analysis – this looks at potential sources of funding, and includes a risk assessment and risk-mitigation plan.
A technical review of equipment needed – a production plan or office layout describing the businesses processes.
An implementation plan – showing the time frames to get the business up and running, or its expansion.
Sometimes you can manage without a business plan, says Celeste Stewart, director of Bold Curiosity, a learning and development consultancy. But you have to have a pretty clear outline of what you want to do.
“I started without a business plan and, in fact, I delayed the decision to go on my own because I felt overwhelmed by the dreaded business plan,” she admits.
“It’s more important to know why you’re starting your business and to have a vision.”
Entrepreneurs have the option of trading as a sole proprietor, which means the business is registered in the owner’s personal capacity and not as an independent entity, or registering as an independent company, Siya explains.
“The disadvantage of trading as a sole proprietor is that if things go wrong, the entrepreneur will be held personally liable for all claims,” he says.
Sole proprietors need to register their businesses with SARS for tax.
To register as an independent entity, you can go to the Companies and Intellectual Property Commission website (cipc.co.za) or use a consulting company to assist. The CIPC website contains downloadable guidelines for the registration of a company and other useful resources.
“When registering a company for the first time on the CIPC website, you will also receive a B-BBEE Certificate,” Prof Peters says, adding there are many people on hand to help for a minimal fee.
“Sometimes it makes more business sense to use someone who can do the registration faster and more efficiently than you can. After all, in business time is money and you can spend your time doing what you do best and leave the rest to the professionals.”
Celeste agrees, and notes some banks offer assistance as well.
“It’s good to find an expert who can help you set up your business to ensure you follow the right steps,” she says. “If you don’t have money to pay someone, find someone in your network who is willing to help, and you can exchange professional services as a form of payment. Money shouldn’t hold you back.”
Help with funding
Organisations such as Seda and the National Youth Development Agency (NYDA) have business advisors, and some offer grants, Sakuba says.
There are many governmental and non-governmental institutions that can assist with funding, including SA SME Fund, the Small Enterprise Finance Agency and the National Empowerment Fund and the Industrial Development Corporation of SA.
Marketing your business
It’s not easy getting your business noticed but it’s important to be consistent and visible, Celeste says.
“Join organisations like the Cape Chamber of Commerce or business or networking groups in your field.”
Prof Peters agrees an effective marketing strategy is crucial – you must know your target market. You can use research to investigate the habits, interests, and demographics of your customers to create campaigns that more accurately address their needs.
Public relations activities such as press releases, promotions, and blog releases, among other media platforms, can spread awareness of your business.
Social media can create good brand awareness, but avoid mixing your business and personal social media accounts, Siya warns, as this may not necessarily be appealing to some clients.
Celeste says it takes time to get results on social media but consistent work on the various platforms will yield results. However, word of mouth and referrals remain powerful forms of marketing.
“People are more likely to trust referrals from a friend or one of your clients,” she says.
Before you start hiring, it’s best to consult with a labour expert, Prof Peters says.
“I don’t recommend using generic contracts. It’s advisable a contract is in writing and subscribes at least to the Basic Conditions of Employment Act.
“It’s recommended that you consult the Department of Labour, as well as read an overview or summary of the Labour Relations Act, the Basic Conditions of Employment Act, the Skills Levy Act and the workings of the Commission for Conciliation, Mediation and Arbitration (CCMA),” he says.
Employing staff is a huge commitment, Celeste says. “Especially at the start of your business when things are volatile.”
But an employment contract is essential, “because I can’t tell you how many of us entrepreneurs have burnt our fingers or run into trouble because we trust everything will be okay”.
“Contracts are there to protect both parties, so get one. I’d strongly suggest finding someone who can draw up a contract, as generic ones may be too open-ended, which defeats the purpose of having a contract in the first place,” she adds.