YESTERDAY started Global Entrepreneurship Week so, until it ends on 19 November, SunMoney focuses the spotlight on small business owners.
While most people talk about the importance of entrepreneurship, the biggest problem for most is the lack of support.
Viresh Harduth, vice president of new customer acquisitions for start ups and small businesses for Sage Africa and Middle East, shared some tips.
“It’s exciting that so many South Africans create a better life for themselves but 70% to 80% of these businesses fail in the first five years.”
Don’t freestyle your business plan
If you’re not looking for external investment or a bank loan, you might be tempted to “wing it” or make it up as you go along rather than write a structured business plan. Don’t do that – rather write a business plan that covers these issues:
- The sort of market your business uses.
- The customers you are targeting.
- Milestones such as launch dates, customer targets, expected revenue and possible profits.
- Funding plans.
Spend as little as possible
The reason new businesses usually fail is that they run out of funding. It’s important to keep your cost base as low as possible while you wait for revenues to start flowing in – especially if you have a long sales cycle in your industry or need to spend time developing your product before you can start selling it.
How to cut your costs
- Use contractors and freelancers rather than hiring full-time employees so you can access skills on demand.
- Don’t rent an office when you can work from your garage or study.
- Low-cost online channels, such as Facebook, are less costly for marketing than print and radio ads.
- Hire smart but inexperienced interns and train them rather than hiring expensive people with industry experience.
- Review expenses each month and always cut away anything you don’t need.
- Use free or cloud software rather than buying expensive licences.
Get professional advice when needed
Professional human resources, tax and financial advice are worth paying for and a good accountant definitely helps, but focus on saving money where you can.
Start with what you know
Start off doing what you know well, then expand as you get to get to know and understand more about business.