Month: April 2016

It’s never too late to start your own business

Posted on by Webmaster

50 is the new 21 age for entrepreneurs

There is a common misconception among many budding entrepreneurs that starting a business is a journey that is best initiated at a young age. Entrepreneurship is however not just for the youth, and can be embarked upon at any stage of life.

This is according to Kobus Engelbrecht, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says despite the success stories about young individuals pursuing entrepreneurial ventures – such as  Facebook’s Mark Zuckerberg (then 20) and Airbnb’s Brian Chesk co-founder (then 26) –  these individuals are the exceptions rather than the norm. “The average entrepreneur tends to be a middle-aged professional who, through experience, has identified an opportunity to establish a business and fill a gap in the market.

He points to research conducted in the US by Kauffman Foundation titled the Anatomy of an Entrepreneur. Surveying over 500 high growth founders, it revealed that the typical successful high growth entrepreneur is 40 years old, and that there are more than twice as many successful entrepreneurs over the age of 50 compared to under the age of 25.

Our experience with the competition confirms that there are still are a number of ‘older’ entrepreneurs making a name for themselves – those that have had a successful career and have since developed a business after identifying  a gap in the market, says Engelbrecht. “Our 2013 Emerging Entrepreneur of the Year® category winner, Jonathan Pepler, spent 30 years in the corporate retail sector before embarking on his entrepreneurial journey in the construction industry.”

Engelbrecht adds, the 2013 Entrepreneur of the Year® overall winner, Tommy Makhatho – owner of BiBi Cash & Carry – is another example. “While he had entrepreneurial aspirations from a very young age, Makhatho’s business only thrived later in life due to the experience he had accumulated. Having left school after standard nine in 1976, he went on to pursue many avenues from hairdressing to a distributing of hair-care products. In 1998, Makhatho opened the first Bibi Cash & Carry Family Supermarket and subsequently Bibi Wholesaler and Bibi Cash & Carry. The retail group has grown in profit and size significantly, and today, Makhatho  employs over 500 people.”

The average age of an entrepreneur in South Africa is between 22 – 45 years, according to the latest Global Entrepreneurship Monitor (GEM) South Africa 2014 report. Although there is no prescribed age to pursue entrepreneurship, each age group has its advantages, explains Engelbrecht. “Young entrepreneurs benefit from their propensity to take risks, a characteristic that is synonymous with entrepreneurial traits, as well as a youthful energy to persevere should a risk not pay off at first.

“However, in contrast, older entrepreneurs have the advantage of experience, as well as the ability to take more calculated risks given that they are likely to have more weighing on the risks they opt to take, such as family or investment responsibilities. Older entrepreneurs, those with more working experience, also tend to have more skills in running a business and wider networks to utilise for business gains.”

Engelbrecht says that the fear of ‘being too old’ to start a business shouldn’t be a reason that aspiring entrepreneurs don’t take the leap. “Some aspiring entrepreneurs shrug off the idea of owning a business out of fear that their internal clock has long ticked past the proverbial deadline. This mind-set needs to change.

“There are many successful business men and women who, after years of experience in the workplace – whether near to or far from retirement – find that their minds and bodies are still active and fit enough to begin a new venture, even well into retirement years.”

Engelbrecht concludes with a reminder that it is never too early or too late to start a business – with calculated risks, sufficient research, a good business plan and the right support – opportunities for success are always in sight.

Scaling up your business: When is it the right time to expand?

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The urge to convert and scale up a small business to a medium to large enterprise is one of the most common goals among business owners. However, contrary to popular belief, scaling up a business is not just a goal for most entrepreneurs, but also a necessary step to running a business successfully.

This is according to Christo Botes, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who says that many entrepreneurs incorrectly believe that their business will grow organically, and that the necessary resources can simply be added to match current demand.

He explains that once a business has grown to a certain size, the owner must consciously choose to scale up rather than simply reacting to a growing market share.

When facing this cross road, Botes says that the entrepreneur should first consider the true reason for wanting to scale up before doing so. “Businesses often want to scale up to become self-sustainable, but starting this process without the necessary preparation and research can be detrimental for a business, as growing too fast can backfire.

“Upscaling a business is a lengthy procedure that involves complex introspection at almost every level. Business owners should be cautioned against the temptation to grow too quickly, and should aim rather to grow sustainably to ensure that the business continues to be a viable operation. As part of this sustainable growth there should also be a good balance between the management of regular operations and the expansion.”

Apart from the various processes and measures that need to be put in place to grow a business, it is crucial that business owners also adapt their mind-set. “Small business owners need to stop thinking and acting like a small business, but rather as a medium-size business and be cognisant of the fact that forward planning and measures – from anticipated turnover and management structure, number of jobs that can potentially be created and improving business processes – will need to be addressed in order to achieve the business results needed to run and maintain a larger scale business. Planning for revenue growth is a good example of the necessary forward planning that needs to be considered, as growing revenue by 10% is considerably easier when you have an annual revenue of R10 million in comparison to turnover of R30 million.”

Botes adds that entrepreneurs need to carefully assess their execution strategy. “While a brilliant product or service offering can increase competitiveness and grow market share and revenue, a clear and achievable execution strategy will ensure ongoing success. A business owner will need to deliver on his/her intent of taking the business from a small operation to a mid-sized business.”

Cash flow is another aspect, says Botes. “The business owner must have a clear idea of cash flow and have accurate forecasts in place. With growth and expansion, larger volumes of money and transactions will need to be closely managed.”

Most importantly though is the need to return to the original vision of the business. “Having a clear vision in mind makes internal and external changes less distracting from the broader business goals,” concludes Botes.

Botes provides four key aspects for business owners to keep in mind before committing to an expansion plan:

  1. Set goals: Business owners should create a list that details why they have made the decision to scale up their business. These should also be linked to the business’ goals, with at least one overall long-term goal (achievable in 15 – 25 years), as well as short-term goals (achievable in 3 – 5 years) which will serve as tangible measurables for the long-term goal.
  2. Have an implementation plan: This plan should list actions that must be taken with responsible persons allocated to each action. Empowering the team of staff to manage their own tasks and responsibilities is vital, and business owners should take heed to equip all staff to effectively work toward one, collective goal.
  3. Analyse the finances: Before embarking on an expansion journey, entrepreneurs are advised to increase their financial reserves. Each business’ cash conversion cycle should provide a good indication of how long an investment takes to convert into a return – the shorter this timeframe, the better.
  4. Communicate: One of the most important aspects during an upscaling journey is to communicate with staff throughout the process. Business owners should keep the whole team informed of the vision, strategy and steps of the process. This will ensure that all parties feel involved and are encouraged to work towards achieving this one common goal.

Open communication can turn family into a valuable business asset

Posted on by Business Partners Limited
By Jeremy Lang

Regional general manager of BUSINESS/PARTNERS

In a sense, almost all owner-managed businesses are family businesses. The fortunes of even those run by a single entrepreneur without the direct involvement of other family members are heavily influenced by what goes on at home.

Such lone-operating business owners can turn their families into one of their greatest assets – a refuge of emotional support and healing when things are tough at the business, a source of inspiration during tedious times, a sounding board to help with difficult decisions. But like all relationships upon which an enterprise depends, this relationship requires concerted effort and focus.

The ideal is to get your family to incorporate your goals for your business into their own goals. They must know what your goals for the business are and they must want you to reach them. If they do, they will always be ready to support you when you need them.

This does not mean that you are unnecessarily burdening your family with the worries of the business world. Aligning your goals with theirs allows them to be part of your ups as well as your downs. It lets them share in the adventure of your business journey and allows them to be engaged in your life, which, after all, is what most family members need from one another.

Here are a number of principles and pointers for engaging with your family about your business:

  • The basis of making your family part of your business is open and transparent communication. Keep them abreast about good and bad developments in your business. “They have to understand why they can’t go to the restaurant this month (when your business is going through a hard time),” says Lang.
  • Don’t try to shield your family from the bad news in your business because it may make them anxious. They are much more likely to become anxious by noticing that you are under pressure without knowing the context. Rather try to allay anxiety by describing to them the whole picture.
  • The first step in communicating to your family about your business is to clarify your goals. You have to explain to them what your definition of success is. For some entrepreneurs, success is reaching a certain net-worth target, for others it means financial independence, retirement at a certain age or freedom from eight-hour work days.
  • Invite your spouse and children to spend some time in your business. Make a point of celebrating the achievements of your business with your family. If you land a big contract, for example, arrange a family treat.
  • Allow your family to take care of you when you’re down. Keep communication channels open and honest so that your family can offer emotional support when you need it.  Being vulnerable takes courage and always leads to a stronger family bond. Use technology to communicate with your family when you are at work, and vice versa. Accept that the work life of a business owner is more difficult to separate from home life. Fortunately, modern technology makes it possible for you to sort out a crisis at work or at home without always having to physically go in.
  • When you have to spend long hours at work, try to make it up to your family by spending quality time with them on another day.
  • It is always a good idea to have a mentor, someone who can help you with the business side of things, but also with family issues. An ideal mentor would preferably be someone who has successfully managed the same kind of lifestyle.
  • If you miss the goals which you have set for yourself and communicated to your family, renegotiate. Don’t just ignore them and hope that no one will notice. The more seriously you take your own goals, the more seriously your family will take them too, even when they change from time to time.

Daily communication around the dining room table is crucial to keep the family informed, but nothing stops entrepreneurs from having a more formal discussion, perhaps once a year, about the state of their business to their family, just as they would to a shareholder or a potential joint venture partner. It helps to focus the exercise and give it weight. The family is, after all, one of an owner-managed business’s most important stakeholders.

Why financials are important even to non-financially savvy business owners

Posted on by Sanlam
By Jannie Rossouw

Head: Sanlam Business Market

Many business owners manage the finances of their businesses by means of their bank account. This is a risky practice as the bank account does not provide a true reflection of the real cash flow status of the business.

Here are four actions you can consider applying in your business:

1. Control your cash flow by reviewing the management accounts for the last 12 months

Look for trends where your cash flow was under pressure. Try to determine what the reasons for the cash flow “pinch” were. Are these events likely to repeat themselves in the next 12 months? What can you do to pro-actively plan the cash flow bridging of these events.

2. Do a cash flow forecast

Ask your bookkeeper or accountant if you do not already have a cash flow forecast (12 to 18 month period) for your business. A cash flow forecast can help you to make more informed decisions about taking on more staff, changing your prices, tendering for a big contract, moving premises or changing suppliers. It also helps you to identify the suppliers who are instrumental in floating your cash flow. Once you know who they are, you can work on cementing the relationship with them, bringing about more business surety. It can also help you to pro-actively identify cash flow challenges, making it possible to plan actions to bridge the cash flow gap by acquiring finance, or planning on how to create increased cash flow over the impacted period. Understanding the consequences of just some of the main problems which may occur, can significantly reduce the impact they will have on your business – forewarned is forearmed!

3. Become leaner

The cash flow forecast can help you to identify areas in your business where expenses can be trimmed down. With costs you can decide to “keep it, reduce it or eliminate it”. A rand saved is a rand towards a positive cash flow.

4. Get more cash in by considering the following options

  • Offer cash discounts to customers instead of payment terms – get the money into your bank account a.s.a.p.
  • Sell off excess stock – carry the optimal stock levels.
  • Have a sale and focus on cash sales.
  • Sell redundant assets – maybe a machine which has already been replaced, or reached the end of its productive life cycle.
  • Reduce your debtors’ book – debtors discounting can be a consideration to release cash in your debtors’ book.
  • Make sure your staff compliment is aligned to the workload requirements – nobody wants to lay people off, but in the larger scheme of things it might be the saving grace for the business.

When it comes to money, ignorance is NOT bliss. What you don’t know CAN hurt you.
Sandra S. Simmons (Author)

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Hard work and a passion for excellent customer service leads entrepreneur to success

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For most entrepreneurs, the journey of entrepreneurship starts at the very bottom of the proverbial ladder. Yet, a keen eye for gaps in the market, coupled with willingness to learn and master every skill, climbing the ladder one step at a time comes naturally and with ease. This most certainly rang true for Christopher Kapanga, owner of Randburg based We Clean It All and a 2016 Entrepreneur of the Year® competition entrant, who embarked on his entrepreneurial journey at the tender age of 26.

Like many entrepreneurs, Kapanga grew tired of working for someone else’s vision. As he grew up with an entrepreneurial family, Kapanga always had a desire to become known for doing something great.

He describes himself as ‘street smart’ rather than ‘book smart’. “I was never a great student and found university difficult. I felt like a failure for not completing my studies, until one day I realised that life is what you make of it. Through my work experience I discovered that there was more I could offer once I understood what I excelled at, and I soon discovered that it was delivering on excellent customer service,” says Kapanga.

Having started his working career as a floor sales assistant at a large clothing retailer, Kapanga quickly learnt the importance of excellent customer service, and was swiftly promoted to supervisor. Soon after he was head hunted by Builders Warehouse, and in his position as a junior manager, he soon learnt that customer service was non-negotiable. In this role, he also enhanced his communication skills through his liaisons with suppliers, and realised he could in fact run his own business.

With the seed planted, Kapanga opted to enter the service industry and joined a carpet cleaning company as an area manager. It was during his five years with the company that his inspiration for growing a business increased, and which ultimately sparked his entrepreneurial journey.

“My then manager was very strict and had an eye on everything. He always knew who worked hard, who slacked, how much stock was on hand, how much petrol was in each van for example. His drive and determination to make his business succeed was what I admired most about him, and so I aimed to be just like him one day,” says Kapanga.

After starting to clean carpets over the weekends for extra money, Kapanga identified a gap in the market for high quality and reliable carpet cleaning services in households and with homeowners who continued to ask for additional cleaning services. He subsequently started his own carpet cleaning company, We Clean It All.

Kapanga says that he knew that delivering unrivalled customer service would set his business apart from competitors. “We don’t only provide a cleaning service to our clients, but also create a beneficial relationship by providing clients with long term advice and solutions for maintenance of their material goods.”

He pegs the first few months of 2008 (after launching his business) as the most challenging – struggling to attract and retain even two clients during the winter months, and having their pricing structure dictated to them by their biggest source of clients – the real estate agencies, many of whom took advantage of his business’ youth in the market.

Today, Kapanga can look back and smile at the growth his business has achieved over the past eight years. His services have broadened to include window cleaning, floor cleaning, post renovation cleaning and flood damage among other services. His staff complement has also increased significantly, with additional office and operational staff members. There are also new exciting projects on the cards which Kapanga hopes will bring the business to the forefront of delivering on-the-go services that will be easily accessible to future customers.

When asked what advice he would give budding entrepreneurs, Kapanga provides three top tips:

  1. Write all your business ideas down;
  2. Do it now: Don’t wait for the perfect time as it will never come. The know how to run the business only starts when you are in it;
  3. Hard work will make your business a success.

He also stresses that education is important. “While I may have struggled with formal education, I make sure to constantly surround myself with business-minded individuals by attending workshops, online education courses, networking events and business management seminars.

“I firmly believe that lessons are not only learned in the classroom. To succeed, you need to always be in the know, and this is why I strive to read as many books on entrepreneurial subjects and stay in touch with business owners and motivational speakers,” Kapanga concludes.

Are you thinking of scaling your business?

Posted on by Webmaster

We discuss when it is the right time to do so

By Christo Botes

Executive director at BUSINESS/PARTNERS and spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS

The urge to convert and scale up a small business to a medium to large enterprise is one of the most common goals among business owners. However, contrary to popular belief, scaling up a business is not just a goal for most entrepreneurs, but also a necessary step to running a business successfully.

Many entrepreneurs incorrectly believe that their business will grow organically, and that the necessary resources can simply be added to match current demand. However, once a business has grown to a certain size, the owner must consciously choose to scale up rather than simply reacting to a growing market share.

When facing this cross road of whether to scale up or not, there are a few things business owners should first consider:

1. What is the true reason for wanting to scale up

Businesses often want to scale up to become self-sustainable, but starting this process without the necessary preparation and research can be detrimental for a business, as growing too fast can backfire.

2. Upscaling is a lengthy procedure that involves complex introspection at almost every level

Business owners should be cautioned against the temptation to grow too quickly, and should aim rather to grow sustainably to ensure that the business continues to be a viable operation. As part of this sustainable growth there should also be a good balance between the management of regular operations and the expansion.

3. A change in mind-set is needed

Apart from the various processes and measures that need to be put in place to grow a business, it is crucial that business owners also adapt their mind-set.

Small business owners need to stop thinking and acting like a small business, but rather as a medium-size business and be cognisant of the fact that forward planning and measures – from anticipated turnover and management structure, number of jobs that can potentially be created and improving business processes – will need to be addressed in order to achieve the business results needed to run and maintain a larger scale business. Planning for revenue growth is a good example of the necessary forward planning that needs to be considered, as growing revenue by 10% is considerably easier when you have an annual revenue of R10 million in comparison to turnover of R30 million.

4. An execution strategy needs to be carefully assessed

While a brilliant product or service offering can increase competitiveness and grow market share and revenue, a clear and achievable execution strategy will ensure ongoing success. A business owner will need to deliver on his/her intent of taking the business from a small operation to a mid-sized business.

5. A clear idea of cash flow and accurate forecasts must be in place

With growth and expansion, larger volumes of money and transactions will need to be closely managed.

Most importantly though is the need to return to the original vision of the business. Having a clear vision in mind makes internal and external changes less distracting from the broader business goals.

Side note:

Have you consciously chosen to scale up your business? Make sure you tick these 4 key boxes before embarking on your expansion strategy:

  1. Set goals: Business owners should create a list that details why they have made the decision to scale up their business. These should also be linked to the business’ goals, with at least one overall long-term goal (achievable in 15 – 25 years), as well as short-term goals (achievable in 3 – 5 years) which will serve as tangible measurables for the long-term goal.
  2. Have an implementation plan: This plan should list actions that must be taken with responsible persons allocated to each action. Empowering the team of staff to manage their own tasks and responsibilities is vital, and business owners should take heed to equip all staff to effectively work toward one, collective goal.
  3. Analyse the finances: Before embarking on an expansion journey, entrepreneurs are advised to increase their financial reserves. Each business’ cash conversion cycle should provide a good indication of how long an investment takes to convert into a return – the shorter this timeframe, the better.
  4. Communicate: One of the most important aspects during an upscaling journey is to communicate with staff throughout the process. Business owners should keep the whole team informed of the vision, strategy and steps of the process. This will ensure that all parties feel involved and are encouraged to work towards achieving this one common goal.