Starting a Business

How to start a business!

1) DECIDING WHAT YOU WANT TO DO;

The secret about deciding what you want to do is choosing something that you 'know' or 'love doing'

If fiddling with cars is your passion? start a small mechanical workshop, if it's baking cakes? start a bakery

It doesn't matter what you do choose but if you like or know what you are doing the chances for success are increased.

2) RESEARCH YOUR SUBJECT;

You had better not spend money starting something that won't work rather spend a bit of time researching the subject before you decide.

Find out if there are similar businesses in the area, find out how they are doing, it's pointless competing in a saturated market. If however there is no competition go to the next level.

Find out if there is a demand for your product or services and what sort of price people are prepared to pay, sometimes you can sell a good hamburger at a higher price because to get a cheaper one people will have to travel a fair distance to the competition and the burger may not be as good.

3) RESEARCH THE FIXED AND VARIABLE COSTS;

Fixed costs are items such as rent, wages, equipment leases, vehicle leases, etc. anything with a fixed monthly cost. Variable costs are items such as electricity, telephone, internet caps, materials used in production, travel, fuel, equipment and vehicle maintainance etc. anything with a price that varies from month to month.

4) CALCULATE YOUR 'NUT';

This is a combination of fixed and variable costs calculated on a monthly, weekly, daily and possibly hourly rate, this gives you the total profit you need to create with your turn over at your accepted markup to break even for the given period.

After you achieve your 'Nut' you are in profit for the period.

5) WHEN YOU ARE READY TO TAKE THE PLUNGE;

The next step is the exciting one, the one that creates the addictive butterflies in your stomach. when you have done your research and calculations and are ready to commit.

6) DECIDING ON THE BUSINESS VEHICLE, SOLE PROPRIETER VERSUS PTY Ltd;

If you are really starting on a shoestring trading as a sole proprieter is probably the way to go for at least the first three months. The reason is that you won't be able to register for VAT for at least that period but you can continue this way for longer or always, it is up to you. The drawback is that you are usually held personally liable for the debt incurred whild you trade.

Forming a company is the accepted means of seperating your business from your personal finances, it gives you a certain amount of protection from debts incurred by the company, provided you never signed any surities or traded recklessly, registering trusts will give you a further layer of protection, provided again you never signed any surities or traded recklessly.

7) GETTING A BANK ACCOUNT AND OR FINANCE;

The easiest thing to do is get an account, the hardest is to get finance, see what different institutions offer and most importantly what they charge for services, do they levy an internet banking fee? what is the cash deposit fee? what is the cost of transferring funds, EFT, draw cash or cheque?

If you get finance what is the interest rate, credit cards can be useful but if you don't zero them at the end of every month the interest is prohibative, an overdraft facility is something to be avoided as the interest is usually quite high, a loan at a reasonable rate paid monthly is probably the best option but remember the bank will only lend you what you can afford to repay.

8) WHO YOU MUST REGISTER WITH?

   CIPRO,

   SARS,

   DEPARTMENT OF LABOUR,

   HEALTH DEPARTMENT,