6 steps to starting your own business

The business world has completely changed in the last two decades. Where massive corporations, hierarchies and glass ceilings once dominated, now the small business is the driving force in the South African economy. Male and female entrepreneurs contribute 35% of the country’s GDP, employ 55% of all private sector employees and pay 43% of all wages and salaries.

There are many reasons to start your own business – controlling your time, building real wealth, fulfilling your life goals – and an equal number of reasons not to – fear of instability and failure, lack of experience. Many people don’t realise how empowering the process can be, and stay with their dreary and low-paying corporate jobs instead of striking out on their own and turning their passions into lucrative business opportunities.

If you have a marketable idea or skill you want to transform into an enterprise, here are six steps to get you started.

1. Research everything
Researching extensively is a non-negotiable part of starting a business. Do as much research for as long as possible before you settle on the specifics. Does your area already have a similar business? Does anyone actually want or need your services? Are there any municipal rules, prohibitions or requirements that you need to take into account? Thorough research will tell you if you should go ahead and start your proposed business, or even whether you should drop the idea. This saves you a lot of work, stress and money upfront.

2. Make a plan
Once you have a good idea of what you want to do, write out a full business plan. It’s an excellent way for you to get your idea down on paper and think about the details. The business plan serves as a useful operational document once your business starts: refer back to the plan to see if your goals and achievements are on track. In addition, a professional business plan is required if you need to get formal funding from a bank or investor.

3. Learn the right skills
You may already be an excellent designer, lawyer or programmer, but do you know much about government business regulations, financial planning or marketing? All of these skills are essential to running a successful, legal and profitable business. Before you embark on your business venture, think honestly about the skills that you have and those that you still need to acquire. Either hire several specialists to deal with areas that you are unskilled in, or learn the skills yourself by taking a professional training course or doing a small-business diploma at a local college.

4. Sort out the legalities
A business cannot simply come into being – you need to follow a formal process of registering it. The rules for this can vary depending on location, so check with your local government or chamber of commerce for the specifics. Choosing whether to found a sole proprietorship, partnership or company is an important decision, so do your research – especially on the new Companies Act. Aside from choosing the business type, you also need to register for certain taxes, obtain permits, register your business name and so on.

5. Get funding
Getting the money together to start your business can be one of the hardest and most frustrating aspects of the process. You could simply save up enough money and use it for everything – but this funding is limited and it’s very difficult to build up enough. You could find a formal business investor who fronts the required amount of money, and then gets paid back as your business earns a profit. Or you could get a formal loan from the bank. This is the most common option, and it’s a good way to get funding at a reasonable interest rate. Also check with the local municipality to see if it has any support for small businesses; government grants can give you a much-needed boost.

6. Promote, promote, promote
Finally, market your business in as many ways and places as you can. Come up with an opening special (say, 50% off all services in the first month) or have a launch event with snacks, drinks and special offers – do something appropriate to your business. Try as many other marketing channels as possible to see what works best. Always keep an eye on your budget and follow marketing rules so you don’t annoy or spam your target audience.

For more information on the University of Cape Town (Law@Work) Start and Manage a Small Business course, which starts on 13 February 2012, call Nikita on 021 447 7565. Alternatively, visit GetSmarter for more information. www.getsmarter.co.za