1. Obtain a mentor
Many successful people have named mentors as being critical to an individual’s success. Mentors are crucial in helping individuals connect the dots between their abilities and their potential, their goals and their successes. When it comes to difficult decisions which small business owners might need to decide on such as accepting an investor, negotiating a large deal, cash flow issues or a business disagreement. The world of business can be a lonely place and mentor ensures accountability and provide the advice, confidence, and the network that allows individuals find their avenue of success.
2. Have a savings fund
This can be a lifeline for an entrepreneur experiencing a trying financial situation. People who’ve had large and unforeseen expenses arise can probably either tell you how happy they were that they had emergency funds, or how difficult it was to find the money to cover expenses for their businesses. As with most finance-related issues, pre-planning is a key factor in successfully weathering the storms that small business owners will definitely face along the journey to success.
3. Expect no salary
What should your small business owner salary be? Unfortunately, the answer isn’t “whatever you want it to be.” How much to pay yourself depends on your stage in business and your business’s profitability. Sometimes especially during the start up phase you can expect to go home without a payslip and this could go along for prolonged period unless there is an active discipline to fulfil a need in the market and timing of this product or service is on par.
4. Develop a solution to a need
Start off small, target a market that requires a specific need. In the period of solving the need and obtaining the first customers ensure the service levels are great and refine your product or servicing offering as you obtain client feedback. Constantly evaluate customer experiences so that when product is moved from start up phase so that the product and service is well designed for the market.
5. Become a networker
Networking is one of the most essential personal skills for business people and entrepreneurs. Communication and strong presence in the entrepreneurial ecosystem are productive approaches which will help you along your way to building strong relationships with other entrepreneurs from different age groups, nationality and fields of interest.
Business networking events organized around the world bring together extraordinary groups of highly-skilled and talented entrepreneurs who are united around the idea of communication, sharing, creating and developing ideas and last but not least meeting with potential partners whether customers , suppliers or investors.
Many large deals for SME’s have resulted from a connection for business breakfast or networking meeting which has been the initiation for the process of developing relationship with business partners. These events attract people from different experience levels and backgrounds. All these people are looking for connection, inspiration, advice, opportunities and mentors.
6. Plan and budget your cashflow
A cash budget is extremely important, especially for small businesses, because it allows a company to determine it’s working capital cycle. This is the dominant factor why small business in South Africa does not survive so the management of cash flow is fundamental and critical. Once your business is operational, it’s essential to plan and tightly manage its financial performance. Creating a budgeting process is the most effective way to keep your business – and its finances – on track
Begin by asking these questions:
- What are the projected sales for the budget period? Be realistic – if you overestimate, it will cause you problems in the future and financial institutions and investors will see through your forecast.
- What are the direct costs of sales – i.e. costs of materials, components or subcontractors to make the product or supply the service?
- What are the fixed costs or overheads?
- What is my expected net profit margin?
7. Work twice as hard
As an entrepreneur for every hour your colleagues or friends work, you will most likely have to work twice as hard. The reason for this is that as the founder of the business you run all aspects of the business such as finance, marketing and operations. A large amount of time will be dedicated to administrative duties that might not be aligned directly to revenue. This hard work does pay off but for initial start up period this work ethic must be an accepted reality.
8. Understand technology and market trends
Every startup and existing company needs to understand the revolutions undertaken in the form of technology. These technologies can help anyone to create their own value and further define their unique selling proposition. As the digital age is here remember the way we did business 50 years ago might not be the way business will be done in the next. The entrepreneur and the business should always s be evolving and examining the market and refining your product and service.