Planning on becoming a successful Startup Business? More people, in recent years, have considered entrepreneurship as a career. The recent COVID-19 pandemic showed how quickly a person could get your startup business online. In fact, a lot of people were forced to open a startup business, whether because of the hard lockdown, retrenchment, or just a change of scenery. However, research shows that a startup business typically doesn’t last more than its first year of being up and running.
But, to establish a startup business, you must be passionate about the solution you want to bring to the market. Starting a business is serious and will require hard work. Setting up a startup business is easy. Determining whether your new idea will sell is another story. Before you hit the floor running, try and validate your product or service idea to a reputable network or even small-scale testing with strangers. Test the waters on how things may be when you eventually bring your idea or product to the market. Ensure the concept is specific to your target audience, well-defined and even focused on a narrow and concentrated niche can make all the difference.
South Africa continues to be as economically fragile as it was two decades ago, with up to 70% of emerging small businesses failing within their first two years of operation. Knowing that SMEs are the future of our country’s economic growth, they must be given the tools they need to succeed.
When you set up a startup business, you will have to create a business plan, especially if you need funding or, just want to get all that marvellous ideas in your head down on paper. Writing a business plan will force you to get specific about your concept. For example, how you structure the business, plan to operate, what resources you’ll need, and how much you need to invest to carry the business in the next year are all some of the most important questions a business plan will force you to face. Most individuals can write a biased business plan about their business; this may not be helpful because you may not see faults and potential risks only ‘outsiders’ may see. Requesting a third-party provider to write your business plan will be money well spent. It is often a very well-structured document that professionals formulate that is underpinned by detailed analysis, fact-finding, critical thinking, and sound experience.
Policymakers and scholars universally accept and recognise the influence of startups and established SMEs on stimulating economic growth and job creation. South Africa has the challenge of a high unemployment rate, particularly among the youth, coupled with high inequality levels and stagnant economic growth over the recent years. These challenges have made the role of SMEs even more important in South Africa. However, despite the known importance of the influence of SMEs on the economy and the government initiatives to grow SMEs, they continue to face challenges of access to finance and high failure rates in their startup phases. Nevertheless, South Africa’s SMEs have a considerable role in bridging the exacerbated unemployment gap. The National Development Plan (NDP) estimates that of the 11 million jobs to be created by 2030, 90% will come from new or expanding SMEs.
In addition, the Presidency estimates that SMEs account for 42% of the GDP and employ 47% (7.3 million) of the South African workforce.
Thinking of establishing a Startup Business in 2022?
Let us leave you with 5 tips that will get you going:
- Think short, medium and long term: It’s a good idea to develop separate one-year, three-year and five-year strategies for your startup business. The one-year strategy should be the most fleshed out, with specific goals – for example, increases in revenue or profitability, development of people and culture, the introduction of new products and services, and so on. Your strategy should define your business goals clearly, according to SMART (specific, measurable, achievable, realistic and time-bound) objectives.
- Conduct research: Good strategy is informed by research. What are your competitors doing better than your startup business? What areas of your startup business should you hone, change or grow? Are there ideas for new products and services you could easily develop? Are some of your services and products ageing and losing their relevance, which might give you insight into how to allocate resources in the future? What are clients asking for that you aren’t giving them?
- Consider your positioning: It’s a common business assumption that you can’t be the best and the cheapest – you need to decide whether you position your business on price or on quality. There are also other aspects to positioning – if you are delivering services, what are you especially good at? The way you position your products or services in relation to one another is also important. I recently wanted to order canvas prints of some photographs and followed a link to a page where it looked like the company excelled in supplying these. But when I clicked through to the rest of its website, the company had many other unrelated printing services, which made me doubt if they were really specialists in canvas prints. I ended up choosing another supplier.
- Identify strengths and weaknesses, opportunities and threats: It’s never a waste of time to do a SWOT (strengths, weaknesses, opportunities and threats) analysis of your business, business unit, product or service. Strengths and weaknesses are internal (for example, an experienced team would be a strength, while poor leadership in a particular area would be a weakness); opportunities and threats are external (an opportunity would be a change in tax law that allows you to export a product more cheaply to a neighbouring country, while a threat might be a poor national or international economy).
- Define the channels you will use to reach your target audiences: Different products and services will perform better on different channels, and different channels – or a combination of different channels – will reach different audiences better than others. TikTok, for example, is a good platform to interact with a young audience when promoting something light-hearted, while the fastest-growing audience on Facebook now is older people. Direct marketing will work for some things, while influencer marketing might work for others. Channels are constantly changing and developing, and may even be counter-intuitive.
Establishing your startup business may not be easy. But, surround yourself with mentors, experts and the magnitude of information freely available. Always be open to learning. And most importantly: enjoy the startup journey!
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