11 Tips for starting a small business

Many South Africans consider starting a small business because they need an alternative income stream in order to make ends meet. Unemployment reached 32.7% towards the end of 2022, and, in a weak economy, job security is never a given.

This article provides 11 tips for budding entrepreneurs, to optimise their chance of achieving small business success.

Tip: Saving or investing wisely can help you to maintain cash flow when you start a small business.

Why start a business?

Employment doesn’t always provide financial security. If you haven’t had a meaningful salary increase, and there aren’t many opportunities for growth at your company, starting your own business may be a viable option. 

“During a weak economy, there’s often a decrease in job opportunities, as companies reduce their staff numbers or even shut down altogether,” says Francinah Phalatsi, business development manager at FNB Commercial.

“Becoming an entrepreneur is an excellent way to gain control of your destiny and forge a path towards financial stability.”

You may have a business idea that can fill a gap in the market, or disrupt a particular industry, says Marica Quarsingh, founder of start-up Sea-Stematic, a cell-cultured seafood producer. Many large businesses began as small enterprises, Quarsingh notes, and for this reason, entrepreneurs should be bold in following their dreams.

From a personal growth perspective, running your own business can also allow you to realise your purpose and potential.

“If you’re an impact entrepreneur, you can positively affect many lives and be a catalyst in helping to solve some of the world’s biggest challenges equitably,” she says.

11 tips for entrepreneurs

It can be daunting to start a new business, especially as success isn’t guaranteed. Here’s what you need to know about starting a small company, and helping it to thrive.

1. Focus on your vision and mission. Quarsingh says you should be completely committed to your purpose. This can keep you going when times are tough. “Always act strategically and in alignment with your goals,” she advises.
2. Be clear about roles and responsibilities. Many people start a new initiative with family and friends to keep costs low and have ready access to expertise. In these instances particularly, you should establish roles and responsibilities at the outset to avoid potential conflict.
3. Address unmet needs. Finding a gap in the market can help you identify and address an unmet need. “This helps you to differentiate your business from those of your competitors and attract the desired target market,” Phalatse says.
4. Start small. It’s best to start small to test the market and minimise losses, especially if you have borrowed start-up funds.
5. Consider a loan. A business loan can mean the difference between staying small and growing - but make sure you can afford to repay it. “Do the maths with a financial adviser to ensure you’re making the right financial choices for your business,” Phalatse recommends.
6. Register your business. This step provides legal protection and reduces personal risk by separating your assets from those of the company. It also builds credibility, makes it easier to access funding if needed, and offers tax benefits.
7. Open a business bank account. Having a separate bank account will help you keep track of your finances, manage your cash flow more effectively, and file your taxes more efficiently.
8. Insure your business. Insuring your business against theft, accidents, and natural disasters is essential. This protects your property and assets and allows you to recover if unforeseen events occur.
9. Invest in technology. It pays to stay abreast of the rapid advances in technology. “More efficient payment solutions make it easier to receive money from customers, and accounting software helps you keep track of your finances,” Phalatse notes. “Inventory management software can help you manage stock levels, so you are never short. This can help you to avoid dipping into your cash flow, in order to stay afloat.”
10. Outsource where needed. Trying to do everything yourself can easily lead to burnout. If you have the funds, consider outsourcing some tasks, such as managing your social media accounts. A skilled social media expert can help to increase your customer base.
11. Be mindful of how you treat others. “It pays to be nice as you climb the ladder - and remember, people respect sincerity and authenticity, so don’t try to be someone you’re not,” Quarsingh advises.

Tip: Your credit score will, in part, determine whether you qualify to apply for a loan for your business. Discover yours today.