Even the mightiest and most ruthless African Lion started out as a lovely cuddlesome little cub. Every business starts small; the largest of co-operations started as an entrepreneurial Idea – AMAZING ISN’T IT!

Why do you want to go into business?

It’s important to be clear about the reasons you want to start your own business. This can bring forth success or disastrous failure based on why you need to go into business.

You need to examine these before you start.
Starting a business is a life changing challenge that might lead to serious regrets and losses if not carefully thought out. But if all goes well planned, you might be the next Richard Bronson.

Starting a business is not an immediate wealth creator or problem solver. With it comes challenging times of living below what you used to and the threat of losing your assets should the business not make money in time. Reality is, it’s not always easy to raise capital with an idea only, and even financial institutions at times need you to prove yourself before they fork out any cent. This is where your pocket feels the pinch.

Most successful business people built their businesses out of nothing (Bill Gates built Microsoft from a friend's garage before asking for money from Ventrure Capitalists and Google also, by two friends out of a university server room while doing a school project). That way, it was easier for the financing institutions to envisage what they needed the money for and it was also better for them (Google and Microsoft) to sell their ideas when it was alive.

You need to be ready and prepared for the roller coaster ride, it might not be that easy considering that our country is not the US where starting a business is not that difficult.

To solve the myth of not knowing how to do this, Moneybiz offers entrepreneurs guidelines like a competitive analysis and business starting templates for download which will give entrepreneurs help in terms of market research and feasibility study of the business idea before you even think of starting a business.

Though it sounds lucrative to be your own boss, it does not come easy; brace yourself for the long haul. This is where an attitude alignment and soul searching is required. Let’s ask ourselves the questions below.

Are you starting a business because you:

• Have a passion to provide a particular service or product, or meet a particular need;
• Have a special or unique talent, skill and/or interest in a particular field; and
• Have identified a gap in the market which you have the experience, support and the willingness to fill.

Or maybe these are the true reasons of your need to do it alone (not recommended to start).

• Greed and unrealistic expectations of becoming wealthy;
• Not being able to work with or for others; and
• Not wanting to be accountable to anyone – unrealistically wanting to be “The Big KAHUNA”; or
• Peer pressure or envy, sheer frustration of being employed by someone else therefore doing things hastily and without proper planning or resources.
  

A challenge to all the entrepreneurs is posed by getting into the right kind of business at the right time. If this is carefully evaluated, it can lead to successful business formation and great opportunities for the aspiring entrepreneur. Else tough times are waiting ahead.

Where do business ideas that are poised to succeed come from?

1. Socio-economic changes – when poverty levels drop, increase or stabilises and economic conditions change opening new market demands by those entering the main stream economy.
2. New segments in the market – different segments in the market create different needs to be filled. E.g. since 1994 in South Africa, there is a new segment of the market in South Africa known as the “black middle class” or “new elite black”  created by those who were once left outside the economic activities previously. This plus more people trying to open up their own businesses bring forth more market needs for either service delivery or good consumption.
3. Changes in technologies leading to new production and manufacturing processes requiring extra machinery, equipment, better ways of delivering services or resources which give way to new firms.  Since the 1990’s dotcom bubble or the entrance of the internet, new firms where created that are now online or internet based market leaders providing jobs to millions and making millions of Rands.
4. Requirements for new products for better lifestyles e.g. cell phones were not there in the early days but now are forces to be reckoned with. I am sure some of us cannot begin to imagine what life was without them.
5. Pure frustrations with the way things are presently – this brings about the need for a change which might just be a new business idea

The above is a guideline of many forms with which opportunities to start a business appear. It is therefore up to the aspiring entrepreneur to take charge of learning the tricks of identifying when and how these opportunities are going to present themselves and therefore start a business around it.

Reading Material: Finding Fertile Ground provides a terrifically engaging perspective on the mindset of the successful entrepreneur. Scott Shane's well-structured analysis and thought-provoking conclusions give would-be entrepreneurs a great set of tools to use in assessing opportunities and risks. I highly recommend this as a 'must-read' for anyone considering starting a new venture

Assess the market potential for products nobody's even imagined before. Beat the biggest players—from the smallest garage overcome your largest, most established competitors and create powerful barriers to entry and imitation. Keep your markets to yourself—no matter how big they grow.
© Copyright Pearson Education. All rights reserved.

Legal forms of businesses in South Africa

Sole proprietorship - essentially a one man show and not advised if you are not fully armed. It is hard to raise money and if the owner has limited skills, running the business becomes cumbersome.

Partnership – me, you and sometimes him/her: This is a collaboration of skills and can collectively raise funds and share ideas. Each partner is taxed individually and some good examples of partnerships are law firms, doctors and business or professional associations.

Close corporation – also known as CC has members with a percentage interest in the CC. It needs to be registered with CIPRO and with SARS as a Taxpayer, is restricted to only 10 members and has fewer legal requirements than a PTY.

Private company – also known as a (Pty) LTD, has shareholders with percentage shares. It needs to be registered with CIPRO and with SARS as a Taxpayer and is restricted to 50 shareholders. PTY(s) are ideal in cases where the company can grow to the point of listing at the Stock Exchange. It is easy to raise capital, can be effectively managed but has lots of legal requirements to get it going.

Company registration By law, businesses need to be registered with Company and Intellectual Property Registration Office (CIPRO). You can register a company or buy a company name off the shelf. For more information about company registration and type of company choice visit www.cipro.co.za The South African government has done a lot to provide financial support and tools to aspiring entrepreneurs. Click here for a list of financial and business tools providers with help to start your own business.

<<Back