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Thread: First Business

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    First Business

    Hi guys I'm 19 and trying to start my first business. I'm very new at this and obviously have no experience. I am planning on putting my clients on a debit order and I plan on using Netcash to do it. My question is: How do you get people to trust you with debit orders? Are there security measures to keep you from emptying their bank accounts or do people just have to trust you?

    Thanks a lot guys. And any tips for me will be greatly appreciated.

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    Diamond Member Blurock's Avatar
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    Welcome to TFSA Tristan.

    As far as I know you have to obtain approval from a bank to institute debit orders and you may also be requested to give guarantees. The Reserve Bank and the Payment Association of South Africa governs the rules and regulations regarding debit order transactions.

    The collector/beneficiary of the debit order, commonly referred to as a "User" by the banks, must be approved by a participating/collecting bank and is facilitated by such bank into the EFT Payment System to be able to collect funds, mandated by customers of the Paying Banks.

    There are a number of organisations that can assist in facilitating this service; Mygate, AC Blink, and others.
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    Quote Originally Posted by Blurock View Post
    Welcome to TFSA Tristan.

    As far as I know you have to obtain approval from a bank to institute debit orders and you may also be requested to give guarantees. The Reserve Bank and the Payment Association of South Africa governs the rules and regulations regarding debit order transactions.

    The collector/beneficiary of the debit order, commonly referred to as a "User" by the banks, must be approved by a participating/collecting bank and is facilitated by such bank into the EFT Payment System to be able to collect funds, mandated by customers of the Paying Banks.

    There are a number of organisations that can assist in facilitating this service; Mygate, AC Blink, and others.
    Thank you for your help. I went onto the PASA website and I saw what you were talking about. With Mygate or AC blink will they be able to help get me approval from a bank to institute debit orders? If not how do I get approval? And thanks again

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    Diamond Member Blurock's Avatar
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    They may be able to assist you based on the type of business and volume of debit orders.
    Excellence is not a skill; its an attitude...

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    Site Caretaker Dave A's Avatar
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    If you're planning to go the Netcash route, you won't have to deal with the banks and their excessively onerous requirements. The one of holding cash reserves to the monthly value of your debit orders is particularly tedious.

    However, Netcash does have their own conditions which will need to be met.
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    Wow you are so young it good to hear that you want to start your own business… I think you got reasonable advices above but I want to say something before starting you should mentally prepare yourself for ever situation. You have long way to go and it needs lot of struggle.
    Best of Luck Kid.

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    Gold Member Mark Atkinson's Avatar
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    Hi Tristan,

    Welcome to TFSA.

    I'm so glad to see yet another young entrepreneur join the forum. With all the old hands around here I think we might need some young blood! (If Dave's in a bad mood I might not live to tell the tale)

    First off, what line of business are you planning on going into? Is it absolutely necessary to have clients pay via debit order? It requires a whole lot of admin and, as Dave mentioned, certain requirements need to be met.

    The issue of trust, which you mentioned, is another thing. Many people are most reluctant to sign a debit order, particularly with an unknown business. Even in large, established businesses, there is almost always an alternative form of payment.

    Is there no way that while the business is still in its infancy you can invoice clients another way and have them pay you directly? If you're running an online business, there are a number of payment gateways that can facilitate all sorts of payments on the spot. Happy to chat to you about the ones we've found most useful thus far.

    Good luck! I'd love to hear more about your progress. Stick around.
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    There are very few instances where I will even consider a debit order. And its not just about the age or size of the organisation. For example I will not trust Telkom or the Municipality with a debit order. If they get it wrong, trying to get it corrected will be an absolute nightmare. A new organistaion who I haven't dealt with or heard about would be a definite no-no. Remember that a debit order is practically giving the supplier a cheque book full of blank, signed cheques, or the log in details to my internet banking so that they can make the payments themselves.

    I want as much control as possible over money leaving my company.

    As Mark said, you should definitely try and set up alternative payment mechanisms as well, even if thats not convenient for you.

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    Thanks everyone for your help... Well the business I'm planning on starting is basically an internet advertising business. Businesses will pay us to do a specific type of advertising for them. Debit orders were recommended as the method of payment to me. They said that getting people to pay is often very hard and that if I do it with debit orders it would be much easier. But it seems like it's maybe not the best way to go...

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by Tristan View Post
    Thanks everyone for your help... Well the business I'm planning on starting is basically an internet advertising business. Businesses will pay us to do a specific type of advertising for them. Debit orders were recommended as the method of payment to me. They said that getting people to pay is often very hard and that if I do it with debit orders it would be much easier. But it seems like it's maybe not the best way to go...
    How will your "internet advertising business" differ from the thousands of others on the net? Also, what's to stop your clients just bypassing you and using those types of advertising on their own steam? By advertising I assume you're talking about things like Adwords, Facebook advertising and utilizing other social media avenues to advertise? What proof can you give clients that you are actually a good choice to advertise their business for them?

    Who is your target market? Who does your service specifically target and why? What makes them the best bunch to market to? Experience has shown me that in a competitive field, you want to focus. Focus your service on a specific niche and make sure that your niche knows you're their go-to guy. We've made the mistake of being to general and have consequently learned from it and adapted. I'm not saying that you will necessarily make the same mistake - it might just be something you haven't thought of.

    How do you intend to measure results and charge clients? Would they pay you upfront? What if they think you haven't delivered adequate results?

    These are all questions that I've thought of off-hand. You should make sure you have a plan with your bases covered. You also need to focus on what makes your business unique. You need at least one thing that separates you from your competition, a Unique Selling Proposition (USP), which you use to your advantage. Either it's price, great quality, fantastic service, a unique product etc.

    Back on topic, as for payment, I've generally found that if people are happy with your service, they have no problems paying. Solution? Make sure your customers are happy! Seriously, though, work on having contracts if need be. Ask for payment of deposits/retainers up front so that you "insure" yourself to some extent.

    For example, when we design a website, we ask for a 50% deposit up front and 50% on completion. That has seemed to work for us thus far.
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