Aspiring entrepreneurs often flirt with the idea of starting their own business as part of their New Year's resolutions. However, every indicator points to a sluggish economy, but the courage to see it through may just be the leap of faith that sets you apart in 2017.
Mags Ponnan, Head of Customer Value Propositions at FNB Business, says the South African economy is taking strain, the World Bank and Treasury are not posting significant GDP growth– it's definitely a challenging environment for any business, more so a new business. The upside to it is if you launch and successfully function in a depressed economy, your business will grow in leaps and bounds when the upswing finally does come.
Ponnan shares a few tips for entrepreneurs that want to start businesses in 2017:
Research and understand the market need – start-ups fail because entrepreneurs bank on a good idea that has not been thoroughly tested in the market. A good idea alone is not enough, you need to research the industry you are going into, understand who the competitors and customer base are, interview potential customers so that you can design products or services that answer the market's need.
Businesses need solid plans – most business plans tend to speak the wishes of the entrepreneur and not the realities of the industry that the entrepreneur is looking to operate in. A water-tight business plan goes into the details of what it will cost to launch the business, the value proposition offered, cash flow needs and revenue projections, marketing strategy that will grow the customer base and the risks around the business model. The business plan must be the ultimate blueprint.
Minimum capital required – the dot.com era has proven that one can launch a business with little to no capital, which has a lot of people romanticising about being the next Zuckerberg. Try to apply the same strategy in your business since this will allow you to get your business off the ground without any pressures to pay back loans or investors. You will need to run your business in the leanest way possible which will allow you to keep your costs low and allow you to maximise your profit margin. Once you have proven the business model has been stress tested and has start generating sustainable profits, it will become much easier to approach banks or investors for funding to grow your business.
Become a "jack of all trades" – the greatest gift that entrepreneurs in the 21st century have is the internet, one can literally build a website online, contract a delivery company, buy software to manage your finances, hire consultants for filing taxes - all with great ease. However, in the early stages of your business, the approach is do as much you can by yourself before trying to outsource the relatively easy tasks to external consultants. This will not only allow you to personally learn and grow with your business but also to keep your costs to a minimal during the early stages of your business where your revenue stream still needs to grow.
Cash is King – any venture is built on good cash flow. Managing cash carefully allows a business to operate without fear of not being able to pay suppliers for stock or for an unplanned expense. Implementing good cash flow management principles from the onset is vital.
