5 Tips For Starting A Business
The Grabouw Development Agency is dedicated to supporting entrepreneurs across the Grabouw and Elgin Valley, providing hardworking people with the tools they need to get ahead in business and life.
Very few people are natural born entrepreneurs; people who were born to hustle their way to the top. In fact, the vast majority of us are so scared of losing that we seldom participate in the excitement of building a new business. Don’t get me wrong, there is significant risk in starting a new venture. Not only can bad management and cash flow sink a new organization but external factors such as red tape and regulations may bury your great idea even before it gets off the ground. So, what should one keep in mind when starting a new venture?
1. Know Your Market
Great businesses are all built on excellent customer awareness. You need to understand why a person or business will part with their hard-earned money for something you have to offer. If you understand the needs of the customer, you will be able to customize your product or service to them. Being the cheapest is often the goal but often not the best strategy since there is always someone willing to undercut you even further. If your product or service truly meets a need then people are often willing to pay a premium. Good quality and decent service is fundamental to your long-term success.
Market research is an important tool in helping you to understand your customer and competition. It need not cost you much in financial terms, but you must spend sufficient time with your customer group in order to understand their requirements.
Knowing who you are selling to is crucial to starting any new business.
2. Put It In Writing
Business plans are often used to help sell your business idea and raise funding. However, a business plan need not be a formal document. Spend some time to write a business plan – focus on what you are trying to create, what are the measures and steps you must take and what are the risks you have to avoid. And voila – you have a business plan.
3. Money Talks
Funding is always core to establish your business. Make sure you have a very good idea where your initial funding will come from and continue to invest in your business as you grow. Early startup companies require a lot of funding so make sure your revenue is ploughed back into your company.
4. Location, Location, Location
It is very important to determine your geographic focus. If you focus on too small an area you may not have enough customers. Too big an area and you wont be able to service it properly.
Focus you business on a particular geographical region to ensure you’re not spread too thin initially.
5. You’ve Got a Friend In Me
Lastly, it is extremely important to leverage the network of friends and family members you may have. Speak to people in your network about the help you need and try to see if there are unmet needs they have that you may assist with.
Bonus Tip: Pick Your Battles
If you want to compete in markets where the competition is high or where there is a monopoly by one or a few large players it is very hard for new businesses to enter the market. It isn’t impossible, but it may be very hard. Large companies can easily lower their prices to get rid of smaller competitors or collude to push out new rivals. You must be very clear on your competitive advantage; what is it that makes your product or service unique, attractive and in demand? What do you need to do over time to maintain your advantage? Having great customer interaction is already a step towards success in an environment of poor customer service in South Africa.
Most sectors have some level of regulation. Make sure you familiarize yourself with the requirements of your chosen sector.
To conclude; Starting a new business is daunting. But with the right planning, loads of hard work and a bit of luck you may be able to grow your income, help to create jobs and be part of the solution for this country.
About the author: Cornelis van der Waal is CEO of the Grabouw Development Agency, which is tasked with helping to grow the Grabouw economy and create jobs. If you have a good business idea but need some help to get it off the ground you can contact him at cornelis@wesgro.co.za