Written by Werner van Rooyen
Starting your own business in South Africa presents numerous challenges. According to an annual survey conducted by The World Bank, South Africa ranks 88th in terms of ease of doing business. While this may be favorable for overseas investors with substantial capital, it can be a daunting endeavor for South Africans with limited financial resources.
Many individuals aspire to launch their own businesses, but a significant number ultimately fail. Startling statistics reveal that 80%-90% of new startups do not survive their first two years, and of the remaining 10%-20%, another 80% fail within the next three years. The small percentage of businesses that endure the first five years are likely to achieve lasting success.
It’s a common misconception that family-owned businesses are immune to failure. In reality, most family enterprises last only around twenty-five years.
Thus, starting a business is challenging, and keeping it afloat is even more demanding.
The pressing question is: why do so many businesses fail? The answer isn’t simple. Numerous studies have explored this issue, highlighting various factors contributing to business failures. However, our focus should be on strategies to ensure your business remains sustainable. Surviving the initial two years is crucial for establishing a reputation as a reliable and viable entity, enabling you to pursue substantial contracts that can lead to financial independence.
Returning to the topic of opening a business in South Africa, several important considerations must be addressed:
- Decide on the products or services you will offer.
- Choose the location for your shop, factory, or office. Securing a lease can be challenging, so ensure your credit record is in good standing to avoid difficulties. If you sell goods, selecting a prime location is essential for visibility and attracting customers.
- Register with the necessary authorities, including SARS, UIF, Workman’s Compensation, and your industry-specific regulatory body.
- Open a bank account, which can also pose challenges.
- Ensure sufficient funding. Most businesses require some capital investment to get started, and it’s wise to have access to funds to sustain operations during tough times. Always set aside a reserve for challenging periods.
- Find clients. While a high-traffic location can attract walk-in customers, securing clients for products sold to retailers nationwide can be more challenging. Many business owners opt for the Tender Route, believing that winning a tender will secure sufficient sales for sustainability.
There’s an old tale of a business owner who neglected advertising, only to find that his first ad was for the liquidation of his business. Therefore, it’s essential to promote your business as much as possible.
- Commitment is key. The primary motivation for starting your own business is independence. However, that freedom can lead to a lack of commitment. To succeed, you must be 110% dedicated, applying the same work ethic you would have if working for a boss.
- Be prepared to start small. Few businesses launch as multi-million-dollar enterprises; most begin as small ventures that grow over time. Start modestly and expand as your business develops.
By adhering to these guidelines, you can enhance your chances of success in your entrepreneurial journey.
Starting a business is undoubtedly tough, and maintaining its operation is even tougher. My advice is to prepare thoroughly. Ensure you possess adequate knowledge of your product or service; you don’t need to be the best, but you should be competitive.
To learn more about this and additional tender conditions, consider attending our “Become a Tender Expert” two-day workshops and webinars. You can register online at www.howtotender.co.za/workshops/. If you need further information, please contact us at info@howtotender.co.za.
Remember: We provide various manuals and guides to assist you in completing your tender documents