Five things you must consider when starting a business.

[Electrode]

In my experience, the acceptance and signing of a contract is no guarantee that it will happen. The deal is only concluded when the money is in the bank, especially if part of the terms and conditions includes investment up front.

I made this mistake by investing a huge amount of money in development upon signature of the contract, and when the project was almost complete, and I requested the deposit as per terms and conditions before work started, it never materialised. Fortunately I was able to survive, but it did hurt me financially for a few years where my nest egg was depleted and I had no spare capital to do other ventures.

Yes I could have gone the legal route, but it would have been spending good money after bad investment. Legal battles are not cheap or for the faint hearted.

In my experience I personally found the legal route to be a total and complete waste of time and money. The legal system is designed to absorb as much funds as possible and never conclude ever. Thus the whole legal system is utterly useless for the average person.

[AgriBusinessPlans]

Plan, Plan and Plan Again

This is a short post on what must be done and what must not be done, when it comes to starting a new business. I found myself in this situation time and again and realized why "some people" will keep on failing at business.

First and foremost do your own research on the product and determine if it is short term or long term. This is very important to calculate sustainability and future competition and or if the supplier is giving you a good deal or not. It will also communicate if you are able to do rebate, carry parts and stock and other responsibilities warrantee/guarantee to keep the consumer council of your back.

Second aspect is the financial burden, this connects to the first step in a strong way. Buying stock is but one aspect, storing and distribution will also carry cost and with it responsibility towards the product. All of us have seen a damage box sitting on the discount table right? That is a avoidable loss to begin with. Shelf-life is also a major aspect when buying the product, if it is short term especially, it would be worth noting how fast a product goes "if that is a constant or not" how long it will take to restock said product.

Thirdly, is getting the word out, simply having a product doesn't mean someone is going to magically find you. This is why systems like social media, internet, local radio and general advertisement is so important. It also locks into the second and first step. On your research it is important to know how you found your information and how easy or hard it was. It will also give you a good marketing strategy as to how to go about listing the product and it's information and how to draw the customer your way. It connects to the second step as well as you need to add the financial requirement for said advertisement.

Forth step is probably the most important step as this is the actual introduction between you and your supplier and the introduction between you and your customer. If you took the time to do step one properly you can show both interest in the product and knowledge of the product. The supplier agreement is an absolute must have and needs to accommodate your needs as well as their own. A strong agreement allows you to deliver to the customer, and handle returns from the customer and above all is able to minimize your cost in returns "where in if possible". Be strict on damage products and don't give your customer "something old" when they are paying you good money.

The biggest most important step is the fifth step! Don't involve people against their will like pushing your idea down on family/friends and expect them to pick up responsibility and become the primary driver of the business. A lot of new businesses have this and simply kills any chance it had. Identify responsibility and only reach out to someone if that someone is willing and able to accept responsibility. If you cannot accept responsibility it doesn't matter how much money is backing you, you will fail if not in the short them then in the long term because responsibility starts with YOU as the OWNER. Not the friend or family.

I have seen 41 businesses fail "to date" where the main responsible person FAILED to do these seemingly simple steps.

Yes there is much of that I have missed but I am sure each of us knows a few people that made these types of mistakes.

Please feel free to add to the list.

Money is not what crashes businesses, it is lack of planning. I work as an agricultural business consultant specialising in poultry. People approach for help in starting farms often with plans in hand and other collateral. Many of the project reports are shockingly generic, overly optimistic and making broad and sweeping generalisations. I understand that this is because of enthusiasm for their vision.I work to help them protect their bottom line and find a business model that is financially viable and realistic. I think that people need to account for all possibilities. These resources may be of interest / help and have takeaways for any business:

https://thebigbookproject.org/agri/poultry-farming/project/

https://thebigbookproject.org/agri/poultry-farming/profit-calculation/

[Nydaycien]

When starting a business, the most important thing is your business plan. Many business startups tend to fail because of poor planning. You must plan your resources and steps so that you do not lose your business focus and divert to non-essentials

[Blurock]

Starting a business is not easy. The posts below has valuable information for the budding entrepreneur. One of the most important elements are to have a passion for your business, but this can also be your downfall if not considering the facts and wanting to push through regardless what you believe in.
It also does not help to start a business and then keep it a secret. I have learnt this from the foremost marketing guru, Peter Drucker:
"Because the PURPOSE of a business is to create a customer, the business enterprise has two - and only two basic functions:
Marketing and Innovation.

Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

[Tshidi]

Good morning & thanks for accepting my request... I want to start my own business but I have fear of what if I won't manage it well, I have so many what ifs that are negative... & I have this other good ideas about my company, is it normal to feel that way? How can I overcome that fear...

[adrianh]

You overcome fear with PLANNING!

[ians]

Good morning & thanks for accepting my request... I want to start my own business but I have fear of what if I won't manage it well, I have so many what ifs that are negative... & I have this other good ideas about my company, is it normal to feel that way? How can I overcome that fear...

If you havent even started yet and you feel like that ... i would hate to be in your shoes when the shyte hits the fan and go terribly wrong ... like the kinda day i am having today ... and i have been doing this for 29 years.

You should be feeling confident ...excited and ready to conguer the world ... otherwise you are in for a rude awakening.

From someone who has been doing this for a long time ... been dropped in projects ... without a clue ... had to work out the details and make it happen ... I have managed to complete every project within the time frame ...but not the budget ... i am a sucker for quality and commitment.

I've seen many a company start and fail ... put your big boy pants on a take a chance ... you will never know unless you try ... you might surprise yourself and do really well.

Just dont make the mistake of thinking bussiness is a way to make tons of cash ... i dont know ratio but i do know more people fail than succeed.

You need to be a real sucker for punishment ...but at the end of the time ... the most valuable asset you will ever own ...is your time ... do with it what makes you happy ... if you fail the first time ... as Adrian says .. plan a little better and try again ... you will fail ... just dont take personally ... its just bussiness.

Trust your gut feel ... network ...learn from your mistakes ... make a lot of friends but dont trust anyone ... dont let shyte get you down.

By the way dont forget the bussiness plan ... i am thinking about putting one together next year ... I hear you need one to start a bussiness.

[Dave A]

You overcome fear with PLANNING!

Planning certainly helps. Not just in one's mind, but WRITING IT DOWN. There is something magic about putting pen to paper.
(Or perhaps nowadays - start typing, or using a mind map etc.).

But critically, when it comes to defeating fear, one can't linger too long in the planning stage.
Paralysis of analysis is REAL.
Once you have a plan, you need to take ACTION.
Get started.
Get going.
Start moving.

[adrianh]

Planning certainly helps. Not just in one's mind, but WRITING IT DOWN. There is something magic about putting pen to paper.
(Or perhaps nowadays - start typing, or using a mind map etc.).

But critically, when it comes to defeating fear, one can't linger too long in the planning stage.
Paralysis of analysis is REAL.
Once you have a plan, you need to take ACTION.
Get started.
Get going.
Start moving.

I agree with everything you say. There is no point in having a detailed blueprint and then doing nothing (Or having a detailed blueprint that is fundamentally incorrect). You really just need to get your thoughts on paper and at the same time think about the ways in which you can minimize your risk. I am one of those people who believe in organic growth and organic change. Everything evolves over time.....

I can't develop a perfect plan and then follow it to the letter. The best one can do is to lay a plan, try it and adapt quickly to changing information and circumstance.

As long as we learn as we go its all good!

[Blurock]

Agreed, planning and calculating the risks and benefits is essential. So many business people laugh at the idea of drawing up a business plan, but how will you run your business if you do not understand your supply chain, your markup, profit margin, target market and competitors? Just to name a few factors. One does not need an elaborate business plan such as drawn up by business consultants, but at least do a swot analysis and a cost/profit and risk analysis.

I was once approached by a person who took a "golden handshake" to start his own little cafe business. He had no clue as to where he would buy his supplies, or how he would compete with the guy 200 m further down the street. When asked whether he had a business plan, his eyes lit up and he gave me a plan of the premises he intended to lease!

[adrianh]

I think that when one starts out with your own little business you have to look at things from a totally different perspective. You need to start with the amount of money that you want to put in your pocket at the end of each month. Lets say you want to put R10k in your pocket then you need to extrapolate from that basis. when one looks at business top down your personal income gets lost somewhere at the bottom.

So, if you want to make R10k for yourself per month then what will it take:
1. If you are selling stuff then consider the difference between the price you buy vs the price you sell at. Also consider other costs (transport, taxes etc) This tells you how many items you need to sell. Are you able to sell enough?
2. If you are providing services then consider your hourly income vs your hourly expenses - this will show how many hours you will have to work (and also the minimum rate you should charge) - do you have enough hours at your rate?

YOU HAVE TO BE ABLE TO ANSWER the above questions before you start. This is the most basic business plan. You have to remember that a small business is not a charity - you have to at the very least pay your own salary. (I am not saying that you cannot be flexible about what you plan to earn - I am saying that your own pocket is THE most important thing in your small business when you start)

[Justloadit]

Many years ago I wrote a book titled, "Starting and Running a Small Business", which was targeted at my then customers who were vending prepaid airtime. Their success would lead to my success. So the last part of the book does refer to the prepaid vending model. Never the less the contents are educational.

If anyone is interested, you can download it.
If you wish to print it and distribute it, please get my permission, as it took many hours to put it together, and there is a lot of personal experience shared in the information and solutions.

[Blurock]

Their success would lead to my success.

This is an important principle that that very few people or corporations consider.
1. Your supplier is a very important link in your business. By supporting and paying on time, the supplier may expand and add new products or services which may add value to your business.
2. Your customer is very important as repeat business requires less advertising as you become a trusted supplier who gets the first call.
As your customer grows, they may buy more of your product/service creating a win/win situation.