Month: October 2013

Ten simple rules for a successful startup

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While the thought of starting one’s own business may be exciting, it can also be intimidating – even for someone with a successful business career behind them. The difference between owning a business and working in one is significant – as an owner you’re directly responsible for every aspect of the business’s success.

The good news is that, by following a few basic rules, it’s easier to start a business than you think – and the chance of success is much greater.

Choose an option that’s right for you

When thinking of starting your own business, choose one that will suit your lifestyle and preferably one in which you have some direct knowledge and experience. For instance, if you want to work regular hours, opting for a fast food franchise is not a good idea. Similarly, if you’re thinking of buying a boat-building business, it is important that you have some knowledge of what is involved, even if you are not a professional boat builder yourself.

Do your market research

Market research does not have to be complicated. It is important to make sure that there is a need for your product or service, though. Check out whether there is any competition already established in your area, whether your offering is unique or whether it fills a special gap in the market.

Draw up a business plan

Writing a business plan is like drawing up a road map. You are not likely to reach your destination unless you know where you are going and what you will need to get there. Like market research, this does not have to be complicated, but you need three or four pages that will give the business operational and financial direction.

Choose a specialist investor

When looking for investment, choose a company that has specialist knowledge of the challenges facing entrepreneurs, as well as of the sector in which you intend to work. This could be one of the most important decisions you will ever make – for yourself and for your business.

Employ the right people

Not all startups employ people from the start, but if you do, it is important to choose carefully. In a small business, people spend a lot of time together, so you need to select employees that you feel you will be able to work with. Also, choose people that have experience in the business you will be starting – this will give you a valuable support system.

Market your business

Business does not come to those who wait – it comes to those who go out there and tell people what they have to offer. Even the smallest business needs to market its services by, for example, placing ads in the local papers, distributing flyers, putting up notices in shopping centres, recreation centres and schools and developing special offers for special needs or occasions.

Put in financial systems from the start

Even if you are not a financial expert yourself, put in simple but solid financial systems right from the start. There are excellent, user-friendly software packages that can be used to do this and it is even worth contracting the services of a bookkeeper or other financial professional to assist you on a regular basis. Lack of financial discipline is often where startup businesses go off the rails.

Manage your cash flow

Cash is the life-blood of a business and it is important to manage cash flow carefully. The right investor will be able to assist you in doing this.

Supplement your own knowledge with specialist skills

No entrepreneur can be a specialist in every aspect of business and it is important to contract specialist skills and services when you need them. For example, if you’re thinking of setting up a small factory and do not have much knowledge of the production process, an experienced production manager will be worth his or her weight in gold.

Enjoy yourself

One of the best things about owning and running your own business is that you have total independence. There will be good days and bad days, but it is important to enjoy what you are doing. Owning one’s own business is an adventure – enjoy it every step of the way.

Bosses must support retirement planning

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With 51% of surveyed pensioners not making ends meet and 62% of job changers still not preserving their retirement savings, South Africa’s employers and business owners have a vital role to play in solving the country’s retirement savings shortfall.

This is the conclusion drawn by Sanlam after analysing the results of its 2013 Sanlam Benchmark Survey. Dawie de Villiers, CEO of Sanlam Employee Benefits (SEB), says National Treasury is keen to address the issue, but proposed measures will likely only take hold in 2015. This is why Sanlam believes its research points to the need for employers to step into the breach.

“According to the principal officers of stand-alone retirement funds, 47% of retirement fund members turn to human resources (HR) for retirement queries throughout their working lives and 32% ask HR for advice at retirement,” says De Villiers. But only 52% of employer funds have formalised strategies to advise active members. And the fact that only 26% have a built-in preservation strategy as a default option ends up perpetuating the trend for employees to spend their savings before retirement when they resign or are retrenched, adds De Villiers.

“An employee’s retirement journey starts on day one of employment and continues for the rest of their life,” says De Villiers.

Taking into consideration that employees would have contributed to some form of retirement vehicle for an average 28 years by the time they retire, it is disconcerting to think that nearly three decades of saving would not be enough to secure a comfortable retirement. De Villiers feels this is enough hard evidence for employers to step in and nudge their staff towards making informed decisions about their retirement financial planning.

Since the shift from defined benefit to defined contribution benefit structures, the risk and responsibility for retirement provision has rested largely with the employee. De Villiers does not advocate a return to the “paternalistic era” of the 1980s, but believes current results are unsatisfactory.

Most employees do not seem to care very much about retirement planning, with only 10% bothering to review the retirement benefit option they selected when they joined the fund. “They consider retirement as a very distant event and are not interested in the detail around it. In fact our research shows that people only seek financial advice on average 12 years before retirement,” says De Villiers. “If the employer or business owner works with every employee to develop a retirement strategy that fits into their overall financial plan and also helps them to understand the consequences of certain actions or inaction during their employable years, we would see a marked improvement in retirement statistics in this country.”

Happily, three out of four pension funds surveyed do offer pre-retirement counselling, but only 41% have a stated target pension. Retirement industry stakeholders such as trustee boards and benefit and asset consultants should make a real effort to ensure that the fund structure can support a successful retirement for each individual member, says De Villiers. Retirement funds need to gently nudge their members towards making decisions that would benefit them in retirement, without being prescriptive or taking away member choice, says De Villiers. And to make this a reality, many more employers need to put in place counselling strategies and ensure skilled resources are allocated to ensure their successful implementation, adds De Villiers.

“Over the past number of years our research has consistently pointed to a need for regulatory change in the retirement industry and we are extremely pleased that the wheels have been put in motion with Treasury,” says De Villiers. But until these proposals become reality, employers can do much to aid matters, concludes De Villiers.

Sanlam Employee Benefits is a leading provider of group life and disability benefits, institutional investments, risk services, fund administration, derivative based structured solutions to institutions and retirement funds through a number of specialist divisions. For more information visit the Sanlam Employee Benefits webpage or call 0860 100 539.

EOY entrant moving forward in the transport industry

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Ashley-Van-der-berg_MD_Rail2RailIn light of October being Transport Month we chat to 2012 competition entrant Ashley van der Berg, Managing Director of Rail2Rail, about his journey as an entrepreneur in the transport industry.

1. Briefly describe your business and the industry you operate in?

Rail2Rail is a specialised concrete railway sleeper manufacturer, based in Kimberley in the Northern Cape.

2. Where did the business concept originate from and when did you start your business?

I noticed a project initiative being undertaken by Transnet (in respect of their enterprise development programme) and established the business in 2007 after we were commissioned to supply one million concrete sleepers to Transnet Freight Rail, for the maintenance of railway lines through South Africa’s 22 000km network.

3. Have you always aspired to start your own business?

I have always effectively been an entrepreneur from an early age. I am currently an active shareholder in two other businesses namely Levenbach Building & Roofing, a construction company and A & H Salvage, both of which are based in Cape Town.

4. Briefly describe some of the challenges that you have experienced as an entrepreneur?

Making concrete railways sleepers is a lot more complicated than it sounds, especially with the technology that is imported from Germany. The skills required to operate this technology have been in short supply, but as a company we have made huge strides in educating our employees, thus ensuring that our products produced are of the best quality amongst our competitors. Being able to secure a reliable supplier in the Northern Cape remains a challenge, particularly in light of our rapid growth.

5. What advice would you give to aspiring entrepreneurs?

Never give up! Find your niche, ensure that it is different and use it to your competitive advantage.

6. Where do you see your business in the next 5 years?

Being a key player in the in the supply and production of concrete railway sleepers in South Africa and continuing our company growth plan to expand our current client base and increase production capacity, which will aid our company to become more sustainable. Taking advantage of opportunities in the SADC region.

7. What does a day-in-the-life of Ashley van der Berg consist of?

My focus is on ensuring I keep a finger on the pulse of all aspects of the business, including the daily production reports completed by day and night shifts. I oversee and manage all financial aspects of the business, including cash flow updates. I also make a concerted effort to have regular meetings with customers, both existing and prospective.

8. What is your most memorable experience as an entrepreneur?

Witnessing the construction and opening of our factory, followed by experiencing the factory become operational, as well as seeing the business grow to a level which at first I thought was impossible.

9. What benefits has the development of the transport industry had on South African SMEs?

Transnet Freight Rail and the Department of Transport, as the decision makers in the development of the transport industry, have ensured that there are opportunities for SMEs to grow in this sector. Both entities have created realistic, achievable targets and have played an impactful role in the implementation thereof. In addition, transport (in other non rail sectors) play an important role for all SMEs as the sector ensures they receive supplies and deliver their finished goods and end product to their markets.

10. What are some of the key challenges SMEs owners face in transport industry?

The main challenge is a lack of competition. As we operate within a niche market, we are unable to compare our products to that of our competitors. I feel competition is healthy for any business as it ensures that the end product is of the best quality. Another challenge is the availability of financial assistance for entrepreneurs; this is a key barrier which hinders the growth of entrepreneurship within South Africa.

11. Why would you recommend that fellow entrepreneurs get involved with initiatives such as Sanlam / Business Partners Entrepreneur of the Year?

As an entrepreneur you have the opportunity to meet other entrepreneurs and listen to their success stories and advice. The media exposure you receive is also extremely valuable and lastly, it is an excellent benchmarking exercise.

Mentorship: Adding invaluable outside skills to your business

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Entrepreneurs are often exposed to duties, situations, problems and opportunities that many have never had to face before. Entrepreneurs also rarely have someone to discuss common problems with, or to turn to, for objective advice and honest feedback and this can sometimes lead entrepreneurs to feel like they have the loneliest job in the world.

According to Nimo Naidoo, project manager of the Sanlam / Business Partners Entrepreneur of the Year® competition, a mentor will not only help an entrepreneur avoid isolation, but also become someone that he or she can confide in, as well as share uncertainties or successes.

She says that it is rare to find entrepreneurs who possess all the right qualities to make a business tick. “Entrepreneurs could be technically strong, yet lack financial knowledge, which is a vital cog in a business.

“Cash flow management, procurement and information analysis are just some of the challenges that specialised entrepreneurs find themselves facing in today’s complex business environment – which contains many risks that determine a business’ success or failure. Highly skilled in their own fields of expertise, entrepreneurs sometimes find themselves floundering when it comes to the overall management of their companies, and working with a mentor will effectively close these gaps.”

Naidoo adds that often many business owners just don’t know where or who to turn to for assistance and this is when a mentor can be so valuable, particularly when a business is in financial or operational difficulty and needs turnaround management in order to become profitable again.

“A mentor is able to provide specialist skills, not only when urgently required, but also as a preventive measure to ensure the entrepreneur doesn’t find himself in a challenging situation.”

While mentorship is a relatively new concept in the small and medium enterprise (SME) sector, there is a growing trend among entrepreneurs for industry-related mentors, due to the immense value they are able to offer an independent business, says Naidoo.

“For the first time ever, entrepreneurs have access to the same skills and experience that the country’s biggest businesses have and are able to harness the skills of experienced business and professional people to assist them in the successful management of their businesses.”

When seeking a mentor, it is important for entrepreneurs to look for experienced business professionals in the same business, or industry, as their company, or someone who has accomplished similar goals. “Selecting someone who has relevant knowledge and experience will not only help entrepreneurs get their business to where they envision it being, but will also accelerate their own learning and growth as an entrepreneur,” concludes Naidoo.