There are many factors to consider before starting your business such as what product or service to launch and whether there is a market for it. You will also have to decide how you will fund your new venture and what the legal requirements you will need to comply with.
Starting a new business can be an exciting, but overwhelming time. To up your chances of success, think about these important factors.
1. Decide on a business idea
Every successful business venture begins with a good idea. There are two types of businesses that you can explore – service or product. Service-based businesses typically involve the “selling of skills, competencies, and resources”. Some examples are plumbing repair companies, business coaches, and personal training services. Product-based businesses sell a physical, tangible product. Food items, clothing, makeup, and beauty products are examples of product-based businesses.
There are various ways to go about finding a good business idea. Some entrepreneurs are inspired by their environment and are able to identify where the biggest needs lie, while others spot a gap in the market for a particular product or service.
2. Conduct market research
A key factor to consider when starting your new business is whether the business solves a problem. Validating your business idea can save you both time and money by ensuring that you are selling the right product or service.
Tanya Haffern, author and wealth coach, in the article ‘South African entrepreneurs share what they wish they had known before starting a business’ advises entrepreneurs to get feedback from potential customers as early as possible.
“It is important to take a product or service to the market before launching – test the idea, test the demand before you put too much time and effort into it. It is a lot easier going about it the other way, check the demand first, and then if there is demand, go ahead and create the product or service.”
3. Secure startup funding
Most businesses will require some sort of startup capital. The amount and type of funding will depend on the nature of the business and its requirements. There are a number of funding options available to entrepreneurs in South Africa. The more traditional options for financing your business are bank loans and development funding such as government grants. Alternatively, entrepreneurs can consider crowdfunding. In South Africa, however, most new entrepreneurs bootstrap their businesses and use their personal income and savings to fund their new businesses.
4. Meet your legal requirements
Starting a business comes with legal obligations that all business owners should be aware of. All businesses need to be registered with the Companies and Intellectual Property Commission (CIPC).
There are many benefits to registering your business, including adding credibility to your name. Registering your business also affords you certain protection and access to opportunities.
As a business owner, you will also have to register with SARS as a provisional taxpayer. You must collect and pay VAT if your business has an annual turnover in excess of R1 million. Businesses with a turnover of less than R1 million per annum qualify for turnover tax which is a simplified tax system introduced to reduce the cost of compliance for small businesses.
5. Master your sales processes
Regardless of your area of expertise, one of the most important skills required to succeed in business is selling.
According to Mike Anderson, founder, and CEO of the National Small Business Chamber, one of the biggest mistakes business owners make is forgetting that they are key to making sales.
“Business owners most often outsource this function within the business when they should, in fact, be the primary ‘rainmaker’ – the person who secures many clients and brings in profitable sales. If the business owner has passion, perseverance, and persistence, success is assured,”
Below are Anderson’s top negotiation hacks to ensure a win-win with your potential clients:
- Think like a doctor – focus on taking their pain away.
- Only talk to the decision maker.
- Be the last one to speak.
- Be a great listener.
- Know when to walk away.
- Be on top of your knowledge.
- Have the ability to solve a problem there and then.
- Be able to make decisions quickly.
- Have patience and composure during the process.
- Be able to build a good rapport with your client or prospective client.