In a country like South Africa, where job creation is critical, there is a great deal of emphasis being placed on the development of small medium and micro enterprises (SMMEs).
Small businesses, in particular, provide opportunities where smart entrepreneurs can thrive, especially if they pay attention to the advice of experts who have already been down that road. David Seinker, chief executive of office and co-working space, The Business Exchange (TBE) in Johannesburg, has the following top tips for entrepreneurs about to embark on their own journey.
1. Offer a product that offers a solution
Many budding businesses believe in their idea or the products they envisage selling, but the key to success is in knowing, first and foremost, how that idea or product will offer a solution. “Before you even begin to do anything else to set up your business, you need to thoroughly investigate the market you plan to service,” says Seinker. “A product or service must fill a market need. It must go beyond just something that’s a nice idea. Know what problems your offering can solve, or what hole in the market it will fill. At TBE, for example, we recognised the need for serious entrepreneurs and business people to have a space that meets their requirements. They didn’t want a space that offers free drinks and foosball. Instead, they need a space that is as focused about business as they are”.
2. Understand the start-up costs and keep track of your cash flow
Once you know what you want to offer, the next step is to work out how much it is going to cost to set up the business. Apart from costs in terms of finding and kitting out premises and paying monthly rent, you also need to factor in everything from office supplies to staff members and the costs they will incur. This also includes your own personal expenses and how much money will be required to meet your own commitments. “From there,” notes Seinker, “it’s also crucial to keep a careful track of all cash flow. Most often, businesses fail not because of a bad idea, but because they simply didn’t manage their cash flow.”
3. Choose your working space wisely
A work environment conducive to doing business is critical for a new company, and many entrepreneurs start theirs working from home, but this may not necessarily be the best option for clients to take the business seriously. However, neither is splashing out from the start on expensive offices and incurring the many costs that such a set-up can entail. “Enter the rise of the co-working space,” notes Seinker. “This is an environment where new businesses can rent anything from a desk to an entire office, but where they literally just enter, plug and play. Co-working spaces such as The Business Exchange take the hassle and expense away from infrastructure costs such as capital equipment in terms of everything from office furniture to copiers, the provision of reception and maintenance staff, or the costs associated with technological requirements such as the setting up of Wi-Fi or video conferencing facilities.”
Co-working options also offer new businesses enormous flexibility to enable them to grow when more space is required, or scale down if they need to tighten their belts. “Plus,” says Seinker “there are no obligations to sign leases and no FICA requirements to fulfil. But at the same time – because first impressions really do count – co-working spaces – especially those in prime business locations – provide a professional environment that says your new business really does mean business.”
4. Sort out your tax obligations and insurance from the start
Consult with experts beforehand to find out what tax obligations your new business is required to meet, as well as which insurance policies you may need. From a tax perspective, make provision to pay for the services of a qualified bookkeeper (even if it’s only a part-time agreement or one based on a few hours’ work per month to keep financial records in order), or an accountant who will look after your annual tax submissions. On the insurance front, make provision to protect yourself in terms of medical issues or loss of income, risks to your business such as theft or damage to your stock or items such as computers and cellphones, and even public liability insurance that protects you against claims made by members of the public resulting from accidents or damage to property. “Many new business owners make the mistake of thinking that their home insurance covers their business as well,” notes Seinker, “and this usually is not the case.”
Connectivity is about everything from investing in a digital online presence for your business from day one (whether it’s a website or even just a presence on Facebook, Twitter or Instagram) to networking with like-minded or reciprocal business people. This is another area in which a co-working environment can assist, notes Seinker: “A co-working space worth its salt will offer excellent online connectivity from the moment you walk in the door, solving what could be a huge headache for many new businesses. Plus they are renowned for bringing people in similar or complementary industries together to exchange ideas as well as business opportunities. But outside of the work environment, it’s also about attending as many networking events as you possibly can and getting your name and that of your business ‘out there’ as quickly as possible. At TBE, we hold regular networking sessions for our members. This not only means that they are meeting the people who work next to them, but it also provides an opportunity to possibly meet someone who would be able to help with a particular service down the line.”
This article was first published by iol.co.za on the 1st May 2019.