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Thread: Starting a business

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    Starting a business

    I have decided it is time to move from hobby to business.

    Where do I start,

    SARS,

    how do you go about it and what do you have to register?

    There will be no employees for the first couple of months as i grow, but i will need to employ staff to do the dirty work in time in time, we will get to that part as this thread progresses.

    Books,

    We need a very simple set of books to manage the cash flow.

    One of the banks offer a package, I think it is FNB. Any suggestions

    I have to register:

    sole prop
    CC
    company PTY

    I would say a sole prop because it is so small at this point in time, but as it grows we can worry about other registrations.

    So how do you go about registering as a sole prop?

    Now this is where it starts getting tricky, a bank account with an affordable rate for what i need.

    For now,

    Deposits from customers,
    eft payments ( cost money) to suppliers for goods to manufacture the products, need to determine how many as we grow. What i am doing with my other little business is using a credit card for payment instead, much cheaper. One of the reasons why i think having a credit card instead of a cheque account might be a better option, money can be deposited from the customer directly into the credit card and payments to suppliers for mthe credit card saving lots of money. There will be no debit orders etc.

    as it grows so we will employ and the transaction will increase, but for now i am at a point were i want the cheapest rate (fees) and best interest rate, bottom line.

    Then we need to look into marketing etc, but i will get to that in time.

    I need to use this new venture to experiment and hopefully assist to pull the other company into line.

    Cheque, savings or credit card to start? I would think a credit card would be a good start, the reason i say this, it has a yearly fee and it cost me nothing to pay suppliers. I dont want to open accounts this must be a strictly cash in...payment structure. So if there is no money coming in then I dont anything, as soon as a deposit is made the product is manufactured and delivered.

    I need to make sure i am correct in saying as a sole prop you should be able to open any type of account because it is you as the individual who is liable for any losses etc.

    Please feel free to correct me or point me in the right direction. The idea of this thread is to help me learn how to do things right from the beginning. It will also help to show others who are sitting on the fence wanting to start something but are just not sure what to do or how to go about it.

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    Diamond Member wynn's Avatar
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    Start as a 'sole prop' don't register with anybody VAT ETC. open a 'Gold Cheque Account' with FNB (most services are free) and trade away until you get a bit of history under your wings, then start thinking about all the paperwork.
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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by ians View Post
    Then we need to look into marketing etc, but i will get to that in time.
    In my opinion, marketing comes first. Put together a sound marketing plan (i.e. research the market opportunity that you want to exploit, profile your ideal customer, craft your value proposition, identify best-fit marketing channels, etc.) Everything else can come afterwards.

    Your success (or failure) will hinge on your marketing, not on your choice of bank or whether you are trading as a sole prop or a CC.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Diamond Member Blurock's Avatar
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    Quote Originally Posted by Greig Whitton View Post
    In my opinion, marketing comes first. Put together a sound marketing plan (i.e. research the market opportunity that you want to exploit, profile your ideal customer, craft your value proposition, identify best-fit marketing channels, etc.) Everything else can come afterwards.

    Your success (or failure) will hinge on your marketing, not on your choice of bank or whether you are trading as a sole prop or a CC.
    I have to agree with Greig. Marketing is not selling. Marketing is gaining information; how big is the market, what is the slice of that market I am aiming for, who are the main players, what can I do to beat them (price or quality?), what is the pricing structure in the market, what are the supply and distribution channels?

    Obviously we can add a lot to the above, but once you have answered these questions, you should understand the potential demand for your product. No use manufacturing purple or psychedelic diapers if the market wants pink.

    The next step will be the where and the how. Finance required, systems to be put in place etc etc. I would think that the bank account would be the last consideration.
    Excellence is not a skill; its an attitude...

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    I am not too concerned about marketing at this point. I was the only person making one of the product since about 2008. Since then another person realised there was a market and has taken over the majority of the sales at this point and recently I noticed another company offering a similar product. I just need to set my mind to it and it will just take a little while and I am sure with all my new ideas will be the leader in the market. The other product I am the only person I know who is currently making this product, in fact all the products out there that I know are mine just being sold by people buy from me. This product also has potential for growth once I start applying myself and introduce new models.

    Hence the reason I am going this route. I want to get all the admin sorted first, it will also help me to improve my admin in my current business.

    Something else to consider is no matter if the product I am current going to target works or not at least the ground work is done. Everything is in order.

    Which brings me to another topic, the name. I am thinking maybe I should use a name which can be used for other things. If these products fail the name, bank account etc just stay the same and I try something else, if that fails well we just keep trying until it works.

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    Please don't take responses as that is how it is, I want this to be an open discussion and welcome any input. The response could assist me or help me redirect my train of thought. As I mentioned in another thread, sometimes all it takes is one sentence, to realise what I have always thought as correct could be the reason I am still a poor man 😜

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    Wynn I like the way you think. Saturday I have an appointment with FNB to discuss a proposal to reduce my service fees and moving from standard bank to FNB. I am also not going to move all my eggs from one basket to the other. This new venture is going to be a good test. If I like then I move. They are going to have to impress, something which concerns me is ATMs, one thing about standard bank man they have a lot of ATMs. We all know what happens if you draw cash from a different ATM fees fees and more fees.

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    If I need cash I can get it at Pick and Pay using my debit card and I don't think it costs anything but I'll have to check.
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    Diamond Member adrianh's Avatar
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    A couple of things. I started out exactly the same way as you want to.

    1. FNB is ultra ultra $h1t. Their online banking the THE worst, most complicated arse about face system I have ever come across. Their ATMs are even worse, the machines work arse about face compared to other machines and I absolutely despise them. I can give you a list of things if you like why I think their IT systems are totally crap. I have business account with ABSA and I also wanted to change to FNB. It was such a traumatic experience that I eventually gave up and just canned the entire FNB idea.
    2. Get a grip on the math that goes into running the business. Nothing complicated, work out what your product costs to make, work out your selling price and work out your profit. Most of all figure out how your cashflow works and how you should set it up so that your cash flow timing doesn't throttle you. You also need to remember that cash flow is the thing that keeps the business running.
    3. You could project how you need to grow as your sales increase. To do this you need to know a number of things, again, how much does it cost, how much can you sell it for, what is your cash flow timing, how long does it take to make a product. Using this information you are able to work out how many products you are able to make per month given all those constraints, maybe you don't have a lot of time, may you don't have enough cash, maybe the cash flow is a bugger up.
    4. DON'T work with pie in the sky and wishful thinking, be brutally honest with yourself. If you know that you will only work for 2 hours a week then don't build projections on 5hours a week.
    5. DON'T work on best case scenarios, you are far better off working on worst case. What will you do if the cash doesn't come in, if your labour gives you a hard time or whatever. Rather factor in the fact that $h1t happens and that things don't work out as you plan rather than bull$h!tting yourself by making out as if it is all perfect.
    6. DON'T get into it if the math doesn't make sense. DON'T wish that you will make lots of cash one day so it is ok to take a fat knock now...pie in the sky WILL bite you hard.
    7. Once you have a good grip on the math then work on a little admin system. How will you log your expenditure, your time, your sales, your outstanding work, your progress, deadlines etc. Forget about all the fancy systems right now, just work in a simple way so that you are able to clearly understand your admin method. I'm lucky, I give everything to the wife and she runs it in Pastel so I am able to concentrate on technical matters. If you do not have a person that is competent then you just need to put a method in place to record everything and do the math every couple of days or whenever you buy and sell.
    8. As far as I am concerned one should stay away from marketing unless you are absolutely sure you are able to deliver. We marketed our products and I got 10 times as many orders as I could handle - it is not as wonderful as you might think because you look like a d00$ when you are unable to supply. Rather grow slowly making sure that you are able to deliver on your promises. We totally stopped marketing an entire product range because the demand simply outstrips our ability to supply.
    9. DON'T take cash in advance especially for big orders unless you are able to supply within a reasonable timeline. If you do take cash in advance DON'T spend it on other stuff because it is going to bite you. Take the cash and buy whatever supplies you need to complete the job.
    10. Be very careful with giving discounts to get business. Remember that the time it takes and the amount of money that you need to make the products doesn't change and you screw yourself in the long term.
    11. Don't lick a customers butt, "The customer is always right" is BULLCRAP. People will take advantage of you and screw you over big time if you let them. Stand your ground and stick to your price structure if you feel it makes sense.
    12. My motto is this "We manufacture high quality products for high quality people". Don't trade with the rats and the mice. Rather position yourself to supply a product that is excellent rather than cheap. It you were a mass manufacturer spitting out hundreds of products each day into a saturated market it is a different story, but as a little guy making a small number of products you can only sell on quality and service.
    13. DON'T think that any business is good business. I am quite happy to turn customers away if I feel that they are going to give me $h!t. I select my customers carefully because I've been bitten so many times by abusers.
    14. If you don't know how to do something, ask somebody, no matter how small the issue is or how it might affect your ego. It is far better to get a straight answer that sitting with your finger up your butt not knowing what to do.
    15. All them books about making millions are not particularly useful when you are one guy trying to build a tiny little business.
    16. Be very very careful about whose opinions you follow. There are lots of people who stand around the braai who are quite adept at shooting you down and talking rubbish. opinions are simply worthless unless they come from decent people who have your interest at heart. Most people waffle on about all sorts of pie in the sky without having been involved in any form o small business. All those wonderful corporate ideas simply don't work when you are the one guy who has to work through the night because the customer is $h1tting himself.
    17. Most of all, DON'T do it unless you love what you do and you are willing to keep on at it. By this I don't mean that you should mindlessly bash your head against a brick wall, what I mean is that you should be able to adapt and evolve all the time. If one way of doing things doesn't work then try another and another until you find a way that does.
    18. There is no such things as failure or mistakes. There are only lessons learned. Yes I've messed up many jobs and I've p1$$ed a lot of people off in the process but at the end of it all those things have made me better at dealing with it all.
    19. Learn to be a smooth talker and keep your secrets to yourself. You'll be surprised how the grapevine works.
    20. Treat your suppliers with great respect. Electromechanica and Mantech Electronics have been very good to me over the years because I've made it very clear that I am a little guy with a little money but with lots of ambition.

    Anyhow, these are some of the lessons that I've learned over the years. They may not be right for you or anybody else but they do make sense to me. The hardest lesson was to understand the math and not to think in terms of pie in the sky but rather cold hard facts...as nasty as those facts might be. If your math is wrong or you don't understand the math, you are f*cked from the outset. That is the reason why 99.99% of small businesses don't get funding and why they fail! (as far as I am concerned anyway)
    How easily someone is offended is directly proportional to how stupid they are.
    ~GS Elevator

  10. Thank given for this post:

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    Diamond Member AndyD's Avatar
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    Quote Originally Posted by adrianh View Post
    A couple of things. I started out exactly the same way as you want to.

    1. FNB is ultra ultra $h1t. Their online banking the THE worst, most complicated arse about face system I have ever come across. Their ATMs are even worse, the machines work arse about face compared to other machines and I absolutely despise them. I can give you a list of things if you like why I think their IT systems are totally crap. I have business account with ABSA and I also wanted to change to FNB. It was such a traumatic experience that I eventually gave up and just canned the entire FNB idea.
    2. Get a grip on the math that goes into running the business. Nothing complicated, work out what your product costs to make, work out your selling price and work out your profit. Most of all figure out how your cashflow works and how you should set it up so that your cash flow timing doesn't throttle you. You also need to remember that cash flow is the thing that keeps the business running.
    3. You could project how you need to grow as your sales increase. To do this you need to know a number of things, again, how much does it cost, how much can you sell it for, what is your cash flow timing, how long does it take to make a product. Using this information you are able to work out how many products you are able to make per month given all those constraints, maybe you don't have a lot of time, may you don't have enough cash, maybe the cash flow is a bugger up.
    4. DON'T work with pie in the sky and wishful thinking, be brutally honest with yourself. If you know that you will only work for 2 hours a week then don't build projections on 5hours a week.
    5. DON'T work on best case scenarios, you are far better off working on worst case. What will you do if the cash doesn't come in, if your labour gives you a hard time or whatever. Rather factor in the fact that $h1t happens and that things don't work out as you plan rather than bull$h!tting yourself by making out as if it is all perfect.
    6. DON'T get into it if the math doesn't make sense. DON'T wish that you will make lots of cash one day so it is ok to take a fat knock now...pie in the sky WILL bite you hard.
    7. Once you have a good grip on the math then work on a little admin system. How will you log your expenditure, your time, your sales, your outstanding work, your progress, deadlines etc. Forget about all the fancy systems right now, just work in a simple way so that you are able to clearly understand your admin method. I'm lucky, I give everything to the wife and she runs it in Pastel so I am able to concentrate on technical matters. If you do not have a person that is competent then you just need to put a method in place to record everything and do the math every couple of days or whenever you buy and sell.
    8. As far as I am concerned one should stay away from marketing unless you are absolutely sure you are able to deliver. We marketed our products and I got 10 times as many orders as I could handle - it is not as wonderful as you might think because you look like a d00$ when you are unable to supply. Rather grow slowly making sure that you are able to deliver on your promises. We totally stopped marketing an entire product range because the demand simply outstrips our ability to supply.
    9. DON'T take cash in advance especially for big orders unless you are able to supply within a reasonable timeline. If you do take cash in advance DON'T spend it on other stuff because it is going to bite you. Take the cash and buy whatever supplies you need to complete the job.
    10. Be very careful with giving discounts to get business. Remember that the time it takes and the amount of money that you need to make the products doesn't change and you screw yourself in the long term.
    11. Don't lick a customers butt, "The customer is always right" is BULLCRAP. People will take advantage of you and screw you over big time if you let them. Stand your ground and stick to your price structure if you feel it makes sense.
    12. My motto is this "We manufacture high quality products for high quality people". Don't trade with the rats and the mice. Rather position yourself to supply a product that is excellent rather than cheap. It you were a mass manufacturer spitting out hundreds of products each day into a saturated market it is a different story, but as a little guy making a small number of products you can only sell on quality and service.
    13. DON'T think that any business is good business. I am quite happy to turn customers away if I feel that they are going to give me $h!t. I select my customers carefully because I've been bitten so many times by abusers.
    14. If you don't know how to do something, ask somebody, no matter how small the issue is or how it might affect your ego. It is far better to get a straight answer that sitting with your finger up your butt not knowing what to do.
    15. All them books about making millions are not particularly useful when you are one guy trying to build a tiny little business.
    16. Be very very careful about whose opinions you follow. There are lots of people who stand around the braai who are quite adept at shooting you down and talking rubbish. opinions are simply worthless unless they come from decent people who have your interest at heart. Most people waffle on about all sorts of pie in the sky without having been involved in any form o small business. All those wonderful corporate ideas simply don't work when you are the one guy who has to work through the night because the customer is $h1tting himself.
    17. Most of all, DON'T do it unless you love what you do and you are willing to keep on at it. By this I don't mean that you should mindlessly bash your head against a brick wall, what I mean is that you should be able to adapt and evolve all the time. If one way of doing things doesn't work then try another and another until you find a way that does.
    18. There is no such things as failure or mistakes. There are only lessons learned. Yes I've messed up many jobs and I've p1$$ed a lot of people off in the process but at the end of it all those things have made me better at dealing with it all.
    19. Learn to be a smooth talker and keep your secrets to yourself. You'll be surprised how the grapevine works.
    20. Treat your suppliers with great respect. Electromechanica and Mantech Electronics have been very good to me over the years because I've made it very clear that I am a little guy with a little money but with lots of ambition.

    Anyhow, these are some of the lessons that I've learned over the years. They may not be right for you or anybody else but they do make sense to me. The hardest lesson was to understand the math and not to think in terms of pie in the sky but rather cold hard facts...as nasty as those facts might be. If your math is wrong or you don't understand the math, you are f*cked from the outset. That is the reason why 99.99% of small businesses don't get funding and why they fail! (as far as I am concerned anyway)
    Sounds like you've been there and got the tee shirt but you'll need it in 4XL to get all that post on it.

    I think the thing with the math is you've got to truely understand your expenses and truely understand what constitutes salary and what constitutes profit. Your point about kidding yourself is very valid as well, there's many small business owners that are constantly in a state of denial and don't see the elephant in the room because they simply don't want to.
    _______________________________________________
    I am special and so is Vanash.
    _______________________________________________

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