Month: April 2014

Identifying entrepreneurial opportunities in the SA marketplace

Posted on by Webmaster

“Innovation distinguishes between a leader and a follower” – Steve Jobs

While the current South African economy may present challenging times for local businesses, this period also presents opportunities for entrepreneurs to explore new business ventures or to investigate new ways of taking a business to the next level.

This is according to Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, who says that during unpredictable market environments, entrepreneurs should focus on their business’ key competencies, relevance in the market and competitive advantages. “Analysing these areas could lead to innovation as to how the business is run or the introduction of new services and products.”

Given the many changing trends shaping society and consumer needs, as well as improved technology, now is the time for businesses to innovate and shape their business according to these many developing needs, says Botes.

“Many entrepreneurs have started businesses in challenging times with great success due to the business filling a gap in the market. There are many business opportunities currently available in South Africa, and it is vital that entrepreneurs are aware of these opportunities and that they know how to capitalise on them.”

He says one such gap in the market currently is the need for private schooling and education. “It is well documented that the quality of public education has become a concern for parents. Private school Curro saw a gap in the market for affordable private schooling in the market and due to the roaring success of the business have established various primary and high schools all around the country.”

Curro Holdings CEO, Chris van der Merwe, recently said the affordable private schooling market was much larger than initially envisaged, noting that by the end of this financial year the company would already have beaten its 2010 prelisting forecast of 40 schools by 2020.

Other sectors currently offering opportunities include alternative energy sources, the shortage in student accommodation and the African markets which are expanding rapidly, says Botes.

He also points to the most recent Global Entrepreneurship Monitor which revealed that in 2013, 37.9% of South African respondents believe that there are opportunities to start a business in the country, up slightly from 35% in the 2012 report. Botes says that this highlights the opportunities that are increasingly presenting themselves to entrepreneurs. “Many examples, Curro being one of these, display the value and potential available to entrepreneurs who simply analyse the marketplace around them for opportunities and then capitalise on these gaps with smart business solutions.

“As the local economy continues to grow, so will the number of opportunities begin to grow. This provides opportunities for those entrepreneurs wishing to start a business, as well as opportunities for those entrepreneurs with established businesses to relook at their business and analyse how they are able to improve or expand product lines,” says Botes.

Successful entrepreneurs have a craving, a desire and a need to constantly know more, says Botes. “It is those entrepreneurs that ask industry specialists about the latest trends, those that know which individuals are operating within their sector and those that research new technology that are able to identify the gaps currently in the market.”

He adds that often entrepreneurs think they have to reinvent products or services to have success, but this isn’t always the case. “Entrepreneurs should look at the small things that may have been overlooked or ignored by others, or look for good ideas that were poorly executed. With the right expertise and experience, an entrepreneur may be able to improve on an otherwise failed product or service.

“Entrepreneurs should also research international products and services that may not be known to the local market which could provide opportunities locally.”

Botes says that another secret to success is securing the maximum reward, for the lowest risk possible. “While this often isn’t the reality, if an entrepreneur knows all the risks associated to an investment decision for a new business, a successful entrepreneur should have the ability to consider the risk and commit themselves to a particular business decision,” concludes Botes.

Entrepreneurial freedom comes with responsibility

Posted on by Business Partners Limited

One of the major reasons why entrepreneurs decide to start their own business is the freedom that this lifestyle offers. They want to take their own decisions and are prepared to take the consequences.

Entrepreneurs are by nature risk takers and they realise that it may culminate in serious or negative results, but they always see the positive and remain forever optimistic. If the decision was the right one, the benefits and results offer a great deal of personal satisfaction and a wonderful sense of achievement.

If entrepreneurs only realised the extent of the risks that they take on a daily basis, they would probably not take these decisions, or be much more cautious or research the matter to a larger extent before making the call. But, a call needs to be made. Unlike in the corporate environment where a team, commissions and task groups of specialist disciplines debate a solution, running your own business means making decisions by yourself. It may be tough, but it is also great, exciting and satisfying. You make the decisions; the buck stops with you. No reporting. No writing of motivations. Complete freedom to do what your gut tells you.

Freedom also comes with responsibility. The decisions taken will influence the position or situation not only for yourself but also others around you. You have to understand how your decisions will affect you, your business, your staff, your clients and also the community.

Entrepreneurs are free to make decisions but are they really free? Not really. You may not have to report to a line manager, but you have other bosses. The most important boss in the life of an entrepreneur is his or her customer. They dictate. If you do not satisfy their needs you have no business, so they are your boss. They call the shots. They have options. They have the money in their pockets and as they say, “the customer is king”. Other bosses are the Government (think of SARS as an example or the laws you need to abide to), your family responsibilities and those who work for you. Your suppliers are also bosses.

Yes, entrepreneurs are the master of their own destiny. They make the decisions. They have the freedom to do what they want and when. But it comes with a great level of responsibility and like all things in life; freedom comes at a price.

Calculate the value of existing and new clients

Posted on by Sanlam

Article written by Jannie Rossouw, Head: Sanlam Business Market

There are basically three ways in which to grow a business, namely:

  1. by getting new clients;
  2. increasing the share of wallet, and
  3. increasing the frequency of transactions with existing clients.

Determining the value of a client can therefore be very useful. There is definitely a difference in the way we look at a potential client that is worth R50 vs R50 000 to our business.

Below is a formula you can use for such a calculation:

The value of existing client base ($) = N x V x F
N = number of clients (number)
V = average amount spent by clients at your business (value)
F = the number of times a year they spend the above-mentioned amount at your business (frequency).

The value of every new client you add = ($ x Y) / N
$ = the value of existing client base
Y = number of years the client remains with your business
N = number of clients.

This information gives you a better insight into the value of your existing client base and of new clients.

There are a few more questions the answers to which could help you focus your marketing actions for maximum results.

  • What are your clients’ spending patterns? (These provide insight into which products and services sell the best.)
  • How did clients hear of your product or service? (This enables you to determine which marketing elements work best, so you can make more use of them.)
  • List your existing clients (also approach them to buy other products or services from you – make special offers available).

If you are not serving a customer, your job is to be serving someone who is.
Jon Carlson (Swedish businessman, CEO of SAS Group)

To receive similar articles from Sanlam on a regular basis please click here to subscribe

Trading up

Posted on by Webmaster

Rent-An-Artisan-web

Entrepreneur finds business success in promoting others

Gerald Ndlovu saw an opportunity to create employment for 250 artisans, and he took it, writes Jane Steinacker-Keys.

Gerald Ndlovu by his own admission did not thrive in the corporate environment. His education, which includes a BComm in financial accounting as well as a post graduate in business management, made him the perfect candidate for a series of corporate posts including the Head of Operations for Liberty Properties and a Member Services Manager at the South African Institute of Chartered Accountants (SAICA).

Despite his success in the corporate world he found the rigid structures frustrating, which fuelled his yearning to venture out on his own. “In the corporate world there are rules for everything,” he says, “I found it stifling.”

“I am an entrepreneur, uncontrollable by nature,” says Ndlovu.

Whilst at his last post, he started attempting to fill the gap between corporate companies and black business. “I wanted to give black entrepreneurs a chance to penetrate the market.”

“This was a huge learning experience,” he says. Ndlovu discovered that corporates lamented the fact that there were no reputable black businesses and reputable black businesses felt that weren’t given a chance.

However, despite this need for there to be a connection between the two, Ndlovu found that many corporate companies had no “deliberate strategy to find new suppliers and no procurement policy focused on sourcing from black owned enterprises.”

A few months later, as he walking into Builders Warehouse he noticed that there were many artisans standing outside the store offering their services. What Ndlovu could not comprehend was why the store was not promoting them.

To him it was obvious that there was a synergy between the retailer, the artisan and the customer that was not being realised.

This was the gap in the market that Ndlovu had been waiting for. Starting with Builders Warehouse, he started Rent-an-Artisan.

Ndlovu realised that to be able to create a system where artisans could be sourced, he would need to be meticulous about the artisans he chose to represent.

His system starts with a basic vetting system, where the artisan’s details are checked. “I do a full background check, which includes checking for criminal records and the legal status of the guys,” he says.

After this, courtesy of funding from Builders Warehouse, the artisan is required to complete an evaluation on his skill set by an FET builders training college in Soweto.

“This can take up to three days,” he says. “For example, if a guy says he can do plumbing, we check all his skills and find out which he is most apt at,” explains Ndlovu. Who adds that plumbing has many sub-sectors and the skills required for a geyser installer would be very different to someone who could install a toilet.

Once this evaluation is complete the artisan receives a certificate of competence, a work overall and access to tools he may require. These are all courtesy of Builders Warehouse.

The artisans are also taught how to quote and are given guidance through regular workshops on matters such as customer service, safety and project management. Ndlovu runs a tight ship where artisans are rated to instil a work ethic that keeps customers coming back.

With two offices outside the Builders Warehouse in Fourways and Gleneagles, customers wishing to fix or renovate something in their homes can approach Rent-An-Artisan and find a vetted, reputable and credible artisan to complete the task required.

What Ndlovu believes is the key to the success of his business is that customers are receiving “value for money”. “Contractors have lots of overheads which pushes the prices up, our guys don’t have these which makes our pricing competitive,” he says.

The customer pays 50% upfront and 50% on completion of the project. The artisan receives 60% and Rent-An-Artisan retains 40%.

The benefit for Builders Warehouse, other than the fact that “they look good by helping small entrepreneurs,” says Ndlovu, “the link between the quote and the purchase of the materials required drives business directly into Builders Warehouse.”

“We’ve been open for about 6 months and have about 60 projects coming through the business every month,” says Ndlovu. The most sought out service is plumbing and tiling.

“One of our guys has just completed a paving job in a golf estate worth R350 000 and another guy is busy with a R70 000 painting job. A couple of months ago these were the guys sitting outside the store with a homemade sign,” he says with pride.

His goal is to have a Rent-an-Artisan office at every one of the 350 Builders Warehouse stores in the country, but realises that even if he wishes to add 50 sites in the next six to 12 months, that this may be an arduous task. Ndlovu is currently researching a franchising model to further empower black business men.

In addition to his success at Builders Warehouse, Ndlovu has installed artisan finder kiosks at eight CashBuild stores. Here, customers go to a self-service kiosk, type in what they require, choose the artisan best suited for the job by reading his profile and then can opt for the artisan to contact them.

The artisans on this system have to pay a registration fee of R550.

Ndlovu just pulled the figures and over the past year 2 500 calls have been logged of which 2 100 have been converted into work for the artisan. On January 31 this year the total value of the jobs created by this kiosk amounted to R750 000.

For Ndlovu’s 250 skilled artisans, 45 % of whom are builders, 20% plumbers and the balance an array of skills, there is a sustainable system that has been created to give them an opportunity to work.

“People aren’t just going to support you because you’re a black service,” says Ndlovu, “They will support you if you provide quality service that is value for money.”

 

Entrepreneurship attractive on the continent

Posted on by Webmaster

But SA hesitant to take the leap

South Africa’s economy is projected to steadily grow with 2.7% in 2014 and 3.2% in 2015, and according to Kobus Engelbrecht, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition, this growth will result in many opportunities for local entrepreneurs. He says that as South Africa’s economy grows, so will the amount of business opportunities available for entrepreneurs to take advantage of.

“South Africa currently offers many new and exciting opportunities for entrepreneurs. However, in order to capitalise on these opportunities, the country’s entrepreneurial spirit needs to be both promoted and encouraged amongst the public.”

The recently released Global Entrepreneurship Monitor 2013 Global report, which measures the levels of entrepreneurial activity between economies, revealed that in the Sub-Saharan African (SSA) region an average of 69% of all respondents believe that there are opportunities available to start a business, 47% have intentions to start a business and 74% are confident in their own skills to start a business.

Engelbrecht says that these figures are extremely encouraging for the growth of an entrepreneurship culture in the region, yet South Africa – ranked as the largest economy in Africa by the World Bank – achieved levels below average in these categories. He says that when taking a closer look at the attitudes and perceptions of South Africa, the report reveals that despite slight increases from 2012, perceptions of entrepreneurship in South Africa remained rather low.

“The 2013 report reveals that only 37.9% (up from 35% in 2012) of respondents believe that there are opportunities to start a business in the country, and 42.7% (up from 39% in 2012) believe that they possess the perceived capabilities to open and run a business. These figures highlight the need for a culture of entrepreneurship to be fostered as opportunities are abound and many individuals possess entrepreneurial characteristics. Awareness around how to capture these opportunities and how to develop these skills just need to be created.”

The report also revealed that SSA had the highest average of Total early stage Entrepreneurial Activity (TEA), which refers to those individuals in the process of starting a business and those running new businesses less than 3.5 years old, when compared to the other global regions.

“While SSA reported an average of 26.6%, South Africa’s TEA is however only 10.6%, and the lowest in the SSA region.”

The report also revealed that South Africa’s established business ownership rate is only 2.9%, which ranks the country last in the SSA region. When comparing South Africa to Brazil, a fellow BRICS economy, the country reported an average of 17.3% and 15.4% for TEA and established business ownership rate respectively.”

While TEA contributes to dynamism and innovation in an economy, established businesses are an important source of stable employment for the economy. Engelbrecht says South Africa’s low business ownership rate is concerning.

“These figures need to remain balanced as while it is important that entrepreneurship is promoted, it is also key to support business growth in order to ensure that SMEs survive the first three year of existence, which are the most risky.”

“Government has acknowledged that small businesses play a pivotal role in job creation and economic growth, and in order to grow both these numbers, investment into small business must be provided. As a result training development initiatives offered by Government, such as Small Enterprise Development Agency (Seda), have been put in place to assist with the development of entrepreneurs and therefore minimise risk.”

He says that the culture of entrepreneurship in the country is growing slowly and it is starting to be viewed as a legitimate career option. “The 2013 report highlighted that 74% of respondents in South Africa, believe that entrepreneurship is a good career choice.

“While many respondents regard entrepreneurship in a positive light, this doesn’t always translate into individuals actually starting a business. Fostering a culture of entrepreneurship in the country and promoting entrepreneurship as a career path, along with support and advice on how to turn an idea into a reality, is important for improving entrepreneurship levels in the country.

“Individuals starting their entrepreneurial journey do however need to be aware of the challenges they may face so that they are prepared for the ups and downs of running a business. Although they may experience bumps along the road, it will be the most rewarding challenge they have ever undertaken,” concludes Engelbrecht.