There is estimated to be as many as 525,000 small, medium and micro-sized enterprises (SMMEs) in South Africa, employing as many as 6.6 million people. This shows that there is a large entrepreneurial spirit, and a big desire by many to start something for themselves - for whatever reason they may have.
There are many popular reasons for starting your business including seeing a gap in an existing market, having an innovative idea to solve a challenge, designing your own career which is flexible to grow along with you, working towards ultimate financial independence and of course, investing in yourself.
However, not every small business is set for success, some small business owners only find success in the second, third or even fourth attempt at creating a profit-generating company. In this article, we’ll explore ten steps to consider when starting a business successfully.
At this point, you’ve more than likely identified a business idea; now it’s time to determine whether you can make it a reality. Does your startup approach have the potential to succeed? As someone who is attempting to start a business, you need to take your idea through a process of validation before proceeding to the next step.
In order for your small business to be successful, it needs to solve a problem or fulfil a market demand. There are many ways in identifying this solution, including research, conducting focus groups and of course, trial and error through testing. As you explore and learn about your market, take the time to ask yourself the following questions:
Is there a need for your products/services?
Who needs your products/services?
Are their competitive businesses who currently offer similar products/services?
How stiff is the competition?
How will your business fit into the market?
2. Develop a plan.
You will need a solid plan to turn your business idea into a reality. A business plan is essentially the blueprint which you’ll use to guide your business from its startup phase through establishment and eventually its growth phase. It should be a non-negotiable document for anyone starting a new business. There are a variety of different types of business plans for different kinds of companies.
If you’re planning on seeking out funding via a financial institution or from an investor, having a traditional business plan is a must. These kinds of business plans are comprehensive and thorough with sections that investors or banks look at when validating whether your idea is viable.
If you predict that you might not need financial support, a simple one-page business plan can provide clarity about your business goals and how you plan to go about achieving them.
Starting a business will require some form of initial investment to cover the day-to-day expenses before your business starts turning a profit. We recommend putting together a spreadsheet which estimates your one-time startup costs, including, licenses, permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, opening events, property leases etc., as well as what you predict you might need to keep your business running for at least a year to eighteen months. This includes rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries and your personal salary, etc.
All of those figures combined equals the initial investment, which you’ll need to start your business.
Once you have determined a rough number, there are many ways you can fund your small business including:
Small business loans.
Small business grants.
Friends, family and fools (FFF)
Lastly, you could also attempt to get the ball rolling by bootstrapping. In short, bootstrapping refers to using as little capital as necessary to start your business. Some business owners might even recommend a combination of the paths mentioned above for best results. However, the goal here is to assess the options and develop a plan for obtaining the capital you require to get your business off the ground and to its break even point.
4. Selecting a business structure.
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
You also have the option of selecting a business structure at the offset and reevaluating and changing your structure as your business grows and evolves.
Lastly, depending on how complicated your business might be, it’s wise to consider investing in legal assistance to ensure that you make the right choice in the structure of your company.
5. Select and register your business name.
Your business name plays a role in various facets of your business, such as marketing, so you need to ensure that the title matches the brand, its product and services and resonates with your customers. Ensure that you carefully think about all the potential implications as you navigate your options when choosing your business name.
Once you’ve selected the name of your business, you need to make sure it hasn’t been trademarked or currently in use. If the name you choose is available, you will need to register it. A sole proprietor is required to register their business name with the government. LLCs, corporations and limited partnerships commonly register their names when their formation paperwork has been completed.
Lastly, remember to register your domain name once you’ve selected your business name.
6. Obtain licenses and permits.
Having all your required paperwork in a row is an essential part of starting your business. There are several small business licenses and permits you might need to apply for depending on your business and where it's located. Ensure that you conduct the proper research as to which licenses and permits apply to your business during the startup and growing phases of your business.
7. Accounting systems.
One of the most helpful tools for small business owners is having an effective and accurate accounting system. An accounting system is imperative to create and accurately manage your budgets, your rates and prices, to conduct business with others and of course, for filing your taxes. If you have the know-how, you can do this yourself, but if not, it’s wise to recruit the help of an accountant.
8. Set up your business location.
Setting up your place of business is vital for the operation of your company, whether you opt for a home office solution (in light of lockdown restrictions for certain companies), shared or private office space or a retail location.
You will need to carefully consider your location, equipment and overall setup and ensure that your business location works for the type of business you’re building. Furthermore, you also need to consider if it makes more sense to buy or rent your commercial space.
9. Getting your team ready.
If your business is one that will employ a team, now is the time to start the process of hiring your workforce. Ensure that you properly take the time to outline the available positions you need to fill as well as the responsibilities of each role. If you’re opting to outsource independent contractors, now is the time to consult with your legal counsel to ensure that proper independent contractor agreements are in place so that you can start your research into whom to recruit.
10. Promoting your business.
Once you’ve reached the point where your business is up and running, you need to begin the process of attracting your customer base. We recommend starting with the basics such as your crafting your unique selling proposition (USP) and devising and developing a sound marketing plan. Following this, you need to consider the myriad of small business marketing ideas out there so that you can adequately decide on the best route in promoting your business effectively.
Once you’ve addressed the above ten tips for getting your business started, you’ve effectively covered all the most important bases. Remember, Rome wasn’t built in a day, but by utilising your business plan which you need to continually revisit as your business evolves you will ultimately increase your chances at success.
For assistance with any of the above tasks, please visit our industry experts:
Legalese - Legal
Barrk Marketing - Marketing
Outsourced CFO - Finance
WhyFive Insights - Business Research & Insights