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Your inner entrepreneur wants to break out

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Five out of seven business start-ups in South Africa fail in their first year according to Rob Davies, Minister of Trade and Industry. Globally, one out of two start-ups fails during its first year.

HomeTimes wants you to succeed as an entrepreneur and to live in the home of your dreams. To enable you to do this we have secured the rights to serialise the book, How to Survive and Thrive as an Entrepreneur, by author, business owner and serial entrepreneur, Neville Berkowitz (63), who shares the secrets he has learned over the course of his 40 years as an entrepreneur. Kele Scheepers co-authored the book.

Thanks to Berkowitz’s website, PersonalEmpowerment.co.


1 Is entrepreneurship for you?

Running your own business offers many rewards, including the freedom of being your own boss, the personal satisfaction of building a prosperous business and the chance to earn an income that is limited only by your choices, skill and determination. Plus, you will also be the master (or mistress) of your own destiny. There are, however, many risks.

A new start-up will place heavy demands on your time, your family relationships and your finances. In addition, many small businesses fail within the first two years, and often require more time to return the entrepreneur’s original investment. But it does offer you financial and decision-making independence. If your business succeeds, you gain job security and the opportunity to provide employment to others.

Before starting your business, you have to ask yourself if your idea is a sound business proposition, and whether there is a market and demand for you to make sales and make a profit. Are you aiming for something innovative and niche or can you identify a unique selling point (USP) which will help you beat your competition?

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Running your own business is definitely not for everyone since it can be a highly stressful way to earn a living.

There are a few practical skills like accounting, administration, marketing, negotiations, selling, time management and organisational skills that will help you stay in business. That said, simply having the right frame of mind and a good idea will prove to be among your greatest assets.

The questions below will provide some insight into whether starting your own business is the right route for you to take. Here are a few characteristics you need to get a business up and running:

  • Passion: Do you believe in your business and are you prepared to stick with it through thick and thin?
  • Focus: Are you able to set clear goals and hone in on achieving them?
  • Creativity: Are you able to think of new ideas? Can you imagine new ways to solve problems?
  • Risk-tolerance: Do you avoid uncertainty in life at all costs? Do you enjoy the thrill of taking calculated risks? Are you willing to risk a steady weekly/monthly income, as well as your savings, to set up a business?
  • Drive: Do you thrive on challenges? Are you determined to give this business all you’ve got?
  • Expertise: Do you have expertise or experience in the industry which your business will be based on? Would you consider gaining qualifications which are relevant to the sector?
  • Vision: Do you have a clear idea of where you want to be? Do you have a rough idea of how you want to get there?
  • Independence: Do you like making decisions? Are you happy to hold yourself accountable for them? Can you handle rejection and build on success?
  • Objectivity: While you are confident in your strengths, are you able to acknowledge your weaknesses? Are you willing and able to learn from your mistakes?
  • Negotiation skills: Do you think you can secure deals for everything from leases to contract terms to rates?
  • Delegation: Can you delegate and trust your employees or are you a control freak who will end up only employing subservient staff?
  • Support: Do you have the support of your friends and family to start your business?

Your business ideainquisitive

Coming up with a business concept is fraught with challenges. An entrepreneur’s mind needs to overflow with ideas for new products or services. You will need to be watchful, inquisitive, perceptive and continuously seeking the next big thing. Finding the right business idea will increase the potential for success, provided you are catering to a viable market and you manage to organise the required resources to deliver a great customer experience.

The more unique your idea is, the more you are able to eliminate or significantly reduce competition, thus increasing your chances for success. Putting a spin on an existing product is usually not enough to base a business on, so be creative! Identify things that people need which no-one else currently provides or that is not available in your area. You will also have to be passionate with your idea because it will consume a significant amount of your time
and money.

There are many approaches to establishing a business idea. To start searching for an idea that is going to make the world sit up and take notice, take the following steps:

  • Look for solutions to problems that people are experiencing. This could be little things
    that bug you or issues that people in your social circle might be facing. Innovations are often  the  result  of “happy  accidents”  or  dissatisfaction  with  the  way  that something is done.
  • Tap into your networks. Talk to family members or learn from friends because this could prove to be invaluable training in the long run. Listen to what your buddies have to say and keep your antenna up at all times – you never know when you will stumble across a good idea.
  • Explore your interests. It is possible to base your business on a hobby in which you have gained noteworthy insights. Just ask anyone who owns a yoga or dance studio!
  • Build your knowledge base. Ideas tend to snowball from known facts, not from thin air. Entrepreneurs who come up with bold ideas have acquired knowledge through studies or experience. Your ability to mentally connect the relationship between two or more  different  but  related  facts  will  serve  you  well  during  the  process  of establishing your business.
  • Listen to your customers, suppliers and employees because they could tap into an existing problem which could offer the opportunity to be turned into a business These sources could inspire new concepts which might prove viable in the future.
  • Keep your eyes open. Engaging in new activities and travelling to new places can open your eyes to a plethora of potential business ideas. If you find something that piques your interest, focus on what intrigues you about it and consider zooming in on it to form a niche market. New ideas can often be found by looking to up-and-coming, underground or street trends that could be commercially viable. The truth is creativity rarely happens in meeting rooms, so going out and trying something new is more likely to reap rewards.
  • Look online. Browsing the internet could inspire potential business ideas. Most search engines have a “what’s hot” section which lists new trends. Visiting different sites could trigger an idea or concept that you have never thought of before. These will also ensure that you’re updated on the growing industries or sectors which are expecting to see revenue growth.
  • Think laterally. Look at things from a unique angle. This might mean taking someone else’s concept and tweaking it slightly. For example, it wasn’t long ago that garages only sold petrol, oil and water where the focus was on catering for cars instead of catering for customers. Just looking from a slightly broader perspective has allowed them to incorporate quick stop stores, fast food chains, toilets and rest areas into their offering.
  • Keep it simple. There’s no need to pressure yourself by searching out a revolutionary idea. Often the smallest tweak is a good starting point and may make a big difference to the market in the long run. Your concept is likely to evolve over time anyway.

Cater to a simple need. If anything, the fast food industry is evidence of one thing: people are lazy. Cater to them. Your average customer is willing to pay more if it means they are able to do less. As an example: Why buy ingredients and cook a pizza when you can go out and buy one? Why go to a restaurant to eat a pizza if you can have one delivered to you? Why call for pizza delivery when you can just type it online while you are sitting in front of the TV? For each question listed above, we’re pretty sure you can come up with at least one suggestion for a business that caters to each want.

A good strategy is to let your imagination run wild at first, then sift through and hone in on the ones that are possible winners. By listening to your customers and acting on their feedback, you’ll be able to find a formula that works for your business.

Buy or start a business?

All entrepreneurs will have to decide whether to start a business from scratch or to buy into an existing one. There are advantages and disadvantages to both approaches and it really depends on the sort of business you are looking to start, the skills you have developed thus far and how much money you have at your disposal for investment.

Let’s analyse the benefits and cons of buying a business or franchise:

You are able to buy into an existing brand which has the resources for advertising and marketing,  as  well  as  convenient  brand recognition. This means that you also have built-in credibility from the beginning.
Buying a business can be more expensive at the   beginning   than   starting   your   own, especially  since  a  franchise  business  will have built-in costs such as property, systems and equipment.
You can establish a business in spite of the market saturation of the industry, especially in the case of cut-throat sectors like food service and retail.
Using established systems may make life easier for you but they may not suit the way you work, or the way you see the business developing.
There is a lower failure rate among franchise owners than among those who decide to build a business from scratch.
There may be stringent requirements which result in less flexibility for you as a business owner. This means you will have less space for innovation.
Getting   financing   for   a   branch   of   an established company is likely to be easier because you will already have a track record at your disposal.
Finance institutions will still want to check your personal creditworthiness, so if yours is in bad shape, then you are likely to have trouble raising capital.
You  might  get  preferential  pricing  on the neccessary equipment and starting inventory.
It could be difficult to measure the life left in the equipment and the inventory might not sell as well as you may have thought.
You could gain access to on-going support over the tenure of the business, including structured periodic contracts and dedicated personnel.
As a franchisee, you will probably have a contractual commitment to pay royalties for the  right  to  use  branding  and  operating systems.
In all likelihood, relationships with suppliers and distributors will already be established, which  means  the  franchisee  could  have access to more contacts.
Because you have limited control over the brand name, if another franchisee gets bad publicity for providing below par service or products, it will also impact your business.
Some franchises require no prior experience in their business field.
You might have to tackle complicated legal negotiations in order to launch your branch.
You will have access to proven products and an established business format.
You might have limited control over pricing, product lines and suppliers.

Now, let’s look at the pros and cons of starting a business from the ground up:

Being your own boss allows you to adapt your business practices whenever you like. It also enables you flexible work hours.
You have to be disciplined and be able to work independently. You will have to figure out how to troubleshoot in every aspect of your business.
You gain a great sense of achievement as you reach your goals, knowing that you are working for yourself.
The hours can be gruelling since you don’t get paid when you are not working. This places you in a vulnerable position if you get sick or want to take a vacation.
You have the opportunity to learn and gain invaluable  experience  in  everything  from negotiating   with   suppliers   to   managing personnel,  putting  systems  in  place  and allocating cash flow.
You may not necessarily be working with your strengths. At the beginning, you are the marketing   team,   the   sales   team,   the receptionist and the finance team.
You  can  be  as creative  as  you  like  and remain flexible and open to new ideas. This allows you the freedom to work on ventures that you are passionate about rather than engaging in tasks that do not interest you.
At the beginning, your income will fluctuate considerably so you won’t have the stability of a constant salary to fall back on.
You have the authority to choose who you work with, including employees, clients and projects that you take on.
You may have to take on unpleasant tasks such as firing a family member or employee. Or   you   could   struggle   to   hire   qualified employees.
There  is  less  bureaucracy  and  red  tape, giving you the ability to get more done in less time.
Your great business idea could easily be overtaken   by   a   larger,   better-equipped competitor.
The more clients you have, the more job security you have, unlike employees whose job  security  completely  depends  on  their employer.
There is no guarantee that your business will succeed.
Some of your personal expenses may be tax-deductible.
You may incur more unexpected expenses.

Ultimately, you will have to make the difficult decision that suits you. There are benefits and disadvantages to both options and you will have to select the route that works with your strengths and allows you to minimise the effects of your weaknesses. Being informed about your options allows you to make a wise choice which will help you establish your business and thrive.


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