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Thread: Five things you must consider when starting a business.

  1. #11
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    Know and understand the stages of business cycle: .. Stage 3 is very critical and hard to accomplish because GOOD employees and NOT easy to get and you need them to get into stage 4... Expansion

    Stage 1: Seed And Development
    This is the very beginning of the business lifecycle, before your startup is even officially in existence. You’ve got your business idea and you are ready to take the plunge. But first you must assess just how viable your startup is likely to be.

    Stage 2: Startup
    Once you have thoroughly canvassed and tested your business idea and are satisfied that it is ready to go, it’s time to make it official and launch your startup.
    Many believe this is the riskiest stage of the entire lifecycle.

    Stage 3: Growth And Establishment
    If you’re at this stage, your business should now be generating a consistent source of income and regularly taking on new customers. Cash flow should start to improve as recurring revenues help to cover ongoing expenses, and you should be looking forward to seeing your profits improve slowly and steadily.
    The biggest challenge for entrepreneurs in this stage is dividing time between a whole new range of demands requiring your attention– managing increasing levels of revenue, attending to customers, dealing with the competition, accommodating an expanding workforce, etc.
    Hiring smart people with complementary skillsets is necessary to make the most of your company’s potential during this phase, and so any good founder will be spending a lot of time directly involved in the recruitment process.
    It is essential that you start to come into your role as head of the company in this stage.

    Stage 4: Expansion
    At this stage you might feel there is almost a routine-like feel to running your business. Staff is in place to handle the areas that you no longer have the time to manage (nor should you be managing), and your business has now firmly established its presence within the industry.

    Stage 5: Maturity And Possible Exit
    Having navigated the expansion stage of the business lifecycle successfully, your company should now be seeing stable profits year-on-year.

  2. #12
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    Some things I wish I had known from the start...

    1) It's much easier to supply a product to a great demand than to supply a great product where you have to create the demand. In other words, just because you have a great idea or great product, doesn't mean the market is ready for it. Companies spend millions convincing consumers of the 'next big thing', but most people resist change and as a small business focus on giving people what they want rather than on convincing people of what they want.

    So if you want to start a business, first find a demand to supply rather than first trying to supply a demand (I hope I'm making sense!)

    2) Marketing is 50% of the business. The best idea/product in the world won't make you money just by itself. And in fact, some really stupid/dodgy products can make money just from sheer marketing. It's better to have a smelly donkey cart hooked up to a stallion than to have a beautiful carriage hooked up to a two-legged mule. The donkey cart can at least go somewhere. Rather have a relatively dull business hooked up to a decent marketing campaign than have a brilliant business concept but no marketing.

    3) Keep overheads and costs low. You WILL make mistakes in business, but your mistakes are directly proportional to how much money you're spending. If you're spending a lot = big potential mistakes. You WILL lost money when starting out in business (mistakes cost money), but small costs = small potential mistakes. Also don't sign lease agreements, if possible, unless you have a proven moneymaking concept (by proof, preferably this means you have been paid for the service/product even before you signed the lease).

    4) Accept that failure is a necessary stepping stone to success. Very few business people are successful from the start. You have to be able to emotionally and financially be able to cope with failure.

    5) Almost every business needs to 'pivot', that is, it needs to change what it does to remain profitable. So don't fall too much in love with what you business does in the beginning, you have to change it after all.
    This guy on YouTube explains this point better than me: https://www.youtube.com/watch?v=-2m6JkJvv4w

  3. #13
    Diamond Member Blurock's Avatar
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    One of the biggest risks in a startup is to run out of money.
    If your budget shows you need R1 million, you will actually need 10! This may not apply to buy and sell, "me too" businesses, but in manufacturing that is definitely the case.
    Excellence is not a skill; its an attitude...

  4. #14
    Full Member Electrode's Avatar
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    Considering that I lost my business due to non-payment from my 'business partners'. All I can say is make sure you know who you are dealing with. Because if they are corrupt or untrustworthy in any way you will end up exactly like me. I lost my business, lost my livelihood and above all lost my physical stock. Even if there is a rumour of your partners being unethical in any way or form you should take note and base your actions on that rumour. I ignored the rumours. Lastly allays use a legal aid.
    DISCLAIMER - The above does not constitute to legal advice or formal advice in any manner or form

  5. #15
    Diamond Member Justloadit's Avatar
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    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.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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  6. #16
    Full Member Electrode's Avatar
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    Quote Originally Posted by Justloadit View Post
    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.
    DISCLAIMER - The above does not constitute to legal advice or formal advice in any manner or form

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