Deciding to go it alone has many advantages if you manage to get it right. Be sure to evaluate your options carefully.
There are many great reasons why people start a business. It gives you the opportunity to be your own boss. The only person you have to answer to is yourself. You also get to do what you're interested in and to set your own deadlines. Being an entrepreneur gives you the freedom to express yourself and develop your concept in any way you choose. And of course, it can be very profitable.
There are many stories of entrepreneurs hitting on a great idea, exploiting it, and being well on their way to their first million by the end of the first year. But the start-up process can be tough, with long hours and little money, so be prepared to work harder than you ever have.
The contents of this BizConnect guide will help you to decide if starting a new business is right for you.
Common characteristics of successful entrepreneurs
There are a great number of common characteristics that are shared by successful businesspeople.
1. Do what you enjoy
What you get out of your business in the form of personal satisfaction, financial gain, stability and enjoyment will be the sum of what you put into your business. So if you don't enjoy what you're doing, chances are you won't succeed.
2. Plan everything
Business planning is important because it requires you to analyse each business situation, research and compile data, and make decisions based on facts. You can use the plan as a roadmap to success.
3. Manage your money
The lifeblood of any business is cash flow. You need it to buy products, pay for services, promote and market your business, repair and replace tools and equipment, and pay yourself and your employees.
Often start-up entrepreneurs make the mistake of trading from their personal bank account. This makes it harder to differentiate between your personal expenses and business expenses. It also doesn’t allow you to build up a credit risk profile for your business, which is an important factor should you ever want to approach a bank for financing. Rather, start trading as a business from the get-go by opening up a Business Current Account.
4. Ask for the sale
Remember that marketing, advertising and promotions are worthless if you don't ask for the sale.
5. It's all about the customer
Your business is not about the products or services that you sell, or the prices that you charge. Your business is all about your customers. Everything you do must be customer focused, and you must know them inside out.
6. Project a positive business image
Make a positive and memorable impression on people with whom you intend to do business. Go out of your way to always project the most professional business image possible.
7. Level the playing field with technology
Know how to take advantage of technology. One of the most amazing aspects of the internet is that a one or two person business, operating from a home office can have website that rivals that of a multi-million rand company.
8. Build a superb team
No one can build a successful business alone. You'll need to work with suppliers, partners, employees, sub-contractors, industry and business associations, local government and the community.
9. Become an expert
The more you become known for your expertise in your business, the more people will seek you out to tap into your expertise, creating more selling and referral opportunities.
10. Create a competitive advantage
Have a clearly defined unique selling proposition. Know what is going to separate your business from your competition - better customer service, better selection, longer business hours, flexible payment options, or lowest price, for example.
Pros and cons of starting a business
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- You have flexibility. You may work longer hours, but you can do so on your own terms, when and where you want to. When you're the boss, you set the rules and it can be exciting and uplifting.
- You can be creative. Many entrepreneurs are driven by the need to build something great, help other people, or leave a legacy. Regardless of your motivation, creating something from nothing is extremely fulfilling and chances are you won't get to do that if you work for a boss.
- It's rewarding. When you're successful, you have financial and emotional rewards. You get to see your product on shelves, provide great service to clients, make a big sale, and turn a profit too.
- It's demanding. You will need to manage the stress of having all your assets on the line, meeting your own deadlines, working long hours and building the business into a sustainable entity.
- It's never-ending. You can't leave work behind when you go home and the impact on your family and social life may be far-reaching. As an entrepreneur, the workload can be intense, especially in the beginning, when you are wearing many hats.
- It's frustrating. Your partner may not work as hard as you do, your supplier may deliver faulty goods, or you may have to deal with a PR disaster from time to time. You never know what's around the corner and it can be exasperating when you have planned a strategy meeting only to find out that you have to put it on hold, to address an unexpected issue.
Top 10 start-up pitfalls
Knowing why new businesses fail can make a big difference in the ultimate success or failure of your own start-up. Here are some of the most common reasons behind new business failures:
- Running out of cash. Always raise more than you think you'll need. Take that budget and increase it by another 50%.
- Not doing your homework. Putting together a business plan may take months, but before you throw away your money on any idea, make sure that you have done all the research and that you know what your customers want.
- Doing what you don't know. Avoid entering an industry you are unfamiliar with. Rather use the knowledge and expertise you already have to build your business.
- Buying a job rather than a business. The ultimate goal is to grow your business into much more than just a job where you work hands-on every day. Work on the business, not just in it.
- Competing on price alone. Business is about profit, and having smaller revenue with a larger profit margin will always be better than winning tons of business but earning almost no profit.
- Skimping on staff. How long your company stays around is, in part, determined by the quality of your employees. You get what you pay for when you hire cheap, inexperienced staff.
- Poor management. Poor management is often highlighted as the number one reason for failure. New business owners frequently lack business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees.
- Focusing on only one area of your business. Business success involves three main areas: sales and marketing, finance and administration, and operations. You have to keep all three working and growing together.
- Over-expansion. This happens when business owners confuse success with how fast they can expand their business. Slow and steady growth is optimal. If expansion is warranted after careful review, research and analysis, identify what and who you need to add in order for your business to grow.
- Thinking too small. Don't start a business if you just want to earn a salary. Aim to make a profit and to build something significant.
How to succeed with your start-up
- The first step toward starting a business is to have a plan in place. Most successful businesses take the time to make sure they have a strategy blueprint to success. It will give you direction and structure your thinking.
- Consider starting the business part-time while you're still employed so that you can get it up and running and start generating revenue before you quit your job.
- You may want to hire a credible, trusted business mentor to keep you focused and guide you through the planning, launch and development of the business.
- Set up lines of credit as soon as possible. The advantage of a line of credit over a regular loan is that interest is not usually charged on the part of the line of credit that is unused, and you can draw on the line of credit at any time you need to.
- Keep your costs and overheads as low as possible. Work from a home office, or rent offices that are affordable. Put your money where it can bring in the most bang for your buck, such as marketing and product development.
- Choose something you know. If your business is related to your existing profession or a personal interest that you have, you'll have an extra edge because of your background or expertise in the field. It is easier to fire up passion to move forward as well as generate credibility in an area where you have solid understanding and knowledge.
- Build your network. Business associations, social media sites like LinkedIn and interest groups like Toastmasters or the Black Management Forum provide opportunities for networking. Hand out your business cards and make contact with people who are in your industry.
- Build a great website. One way to market your business is to create a website that holds people's interest and is easily found by potential customers. Search engine optimisation and a campaign to get people to visit the site are essential.
- Review your business. Set benchmarks and targets - and review how well (or not) the business is doing. It is important that you take time to regularly review, revisit and revise your business strategy. Look at changes in the overall economic situation, analyse your industry and determine how and where your business stands.
- Learn from your inevitable mistakes. You will make mistakes, some big and some small. But the key is what you learn from those mistakes, how you correct them, and how you improve your business based on those lessons.