Start a Small Business in South Africa with Little Capital

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STARTING A SMALL BUSINESS IN SOUTH AFRICA

Starting a small business in South Africa can be very scary, but it is definitely worth taking the leap of faith and just going for it.

Imagine having your own successful business that earns you 6 or 7 figures every month. Not only would you be able to afford a very comfortable and enjoyable life, but you would also have the time and freedom to enjoy it as you would be your own boss.

Unfortunately, many people get discouraged because of the fear of the unknown and give up prematurely, or in some cases never even try. Furthermore, capital is a big issue for many aspiring entrepreneurs.

This article highlights 6 steps on how to start your own small business in South Africa with little or no money.

HOW TO START A SMALL BUSINESS IN SOUTH AFRICA

STEP 1: DEFINE YOUR VISION

A vision is a dream or mental image of where you would like your organization to be in the future. It gives the business a sense of direction.

It is important to take the time to answer questions such as:

How would your business impact the community?
How would it improve the lives of those close to you?
How would you reward yourself if and when you achieve your goals?

Note down your vision and remind yourself of it whenever your motivation is running low. Here are some great examples of vision statements.

STEP 2: CONDUCT AN ELABORATE MARKET RESEARCH

It is important to conduct some careful research before investing too heavily in an idea. This will let you know how good your idea is. Sometimes we tend to think we have the perfect product only to be contradicted by the customers.

During the research phase, you will need to determine whether there is demand for your products or services.

You’ll also need to research other factors that are relevant to your business. For example, if you intend to open a restaurant, you’ll need to do some research on various recipes. You’ll need to research locations. You’ll need to research your competitors so you know exactly how to differentiate yourself.

Don’t make the mistake of overlooking small details as they may hurt you later if left unaddressed.

Once your research is complete, it should be clear whether you’re realistically on to something, or need to abandon ship and find another business idea. It is very costly, frustrating and time-wasting to invest in a poorly researched idea that ends up failing.

STEP 3: BOOTSTRAP YOUR EARLY GROWTH

Lacking financial capital is one of the biggest obstacles when it comes to starting a business in South Africa. However, many entrepreneurs have overcome this by bootstrapping during the early stages of their businesses.

Bootstrapping means to start and grow a business with only the resources available, while totally disregarding the lack capital. It may mean working from home instead of an office, personally performing tasks instead of hiring, advertising on social media rather than paying for ads, etc.

The fact that you’ll be relying only on available resources makes bootstrapping a great way to get started without going into debt. Additionally, you won’t have to sell shares or a stake of your company to raise funds from investors.

STEP 4: TEST THE MARKET WITH A SIMPLIFIED VERSION OF YOUR PRODUCT

The best way to know for sure whether you have a winning product is to test it out. You may need to produce a sample or prototype of the product, and then offer it to potential buyers to see how they react.

For example, if you’re planning to open a bakery, you can serve some of your products to your friends and relatives, taking note of the feedback you receive.

If you want to open a store that sells handbags, you can test the market by advertising some bags on social media and other free online platforms to get an idea of what people are interested in.

This step alleviates the risk of heavily investing time and resources in a business that is not profitable. Furthermore, testing the market will provide you with valuable insights and feedback that can help you achieve success, even with future business ventures.

STEP 5: START BUILDING YOUR BRAND

Building a recognizable brand is a huge step when growing a business. Not only does it create a strong bond with the consumers, but it also makes it easier to market your goods.

Some of the main steps to take when building your brand include registering the company, coming up with a logo, creating a website, social media pages, getting professional email addresses, etc. All of these, except company registration, can be achieved very inexpensively, if not for free.

Getting a Logo

You can either create a logo yourself using free online tools like Canva, or get one made by a professional graphic designer. Fiverr is a great place to find graphic design services starting from just $5. Use this link to get 20% off your first order.

Getting a website

Given the nature of today’s competitive marketplace, having website is absolutely paramount for many businesses. Not only does it create a sense of trust and credibility, but it also exposes your business to all the people you could never reach physically.

In fact, the internet is the first place many people go when searching for a product or service, or solution to a problem. In some cases, they may not even be searching for the product but end up buying after stumbling on to your website.

Just like getting a logo, you can build one yourself or hire a web designer. A great place to get your entire site built for free is Free Web Design. You will also get a free domain e.g. www.your-domain.com and 5 custom emails e.g. [email protected].

Registering your company

Here is a summary of the requirements for registering a company in South Africa:

Filled copies of the Notice of Incorporation
Filled copies of the Memorandum of Incorporation
Reservation of a company name
Registration with the South African Revenue Services (SARS)
Registration with the Companies and Intellectual Property Commission (CIPC)
Your Identification documents

Once you have registered the business, you have a website and social media pages, your products have been successfully market tested, it’s finally time to start spreading the news!

STEP 6: MARKETING

There are a number of marketing strategies and techniques that can be used to effectively market your products or services.

The term “growth hacking” means using any legal and ethical means necessary to grow your business rapidly. It entails using unorthodox means to achieve quick growth because that is all that matters in the early stages.

There are numerous ways to leverage the resources at our disposal to reach countless potential customers inexpensively. For example, you can advertise your business on social media and on classified websites without spending a dime.

Building a reputable brand in South Africa is not a one-time activity. It is a continuous process that goes on throughout the business’ existence. In fact, even successful companies like Coca Cola and Apple still spend huge amounts of money building their brands.

Remember, you are likely to experience setbacks during your endeavor. However, it is important not to give up if and when that happens. Just because one method doesn’t work doesn’t mean the business is destined to fail.

Focus more on growth than profitability during your first year of business. Focus on bootstrapping your early growth until you have enough money to hire and take care of any other financial needs.

Additionally, don’t spend all the income as it comes in, but rather, reinvest it into the business. Even though starting a business in South Africa isn’t easy, when done well, it is worth the challenge.