Time to start your business
Now that you already have a product, a potential manufacturer and a potential target market we will go into setting up your business. When starting your business there will be certain things you need to have in place to have a good start. In the following article I will give you a guideline of things that you need to do before launching your business.
Note: In this article I have provided links to other websites explaining specific concepts better; these must, however, only be seen as guidelines, as the law regarding some topics might change. Do thorough research on the specific topics to find the latest possible information on them.
The most important part is registering your business before registering your website domain (website URL), designing business cards, logo, etc. You could start with your designs, but do not finalise them until you have a confirmation from the CIPC (Companies and Intellectual Properties Commission) that your business is registered and you have a confirmed name. Having one set name throughout your business’s existence improves your branding recognition, making consumers more loyal because they know/recognise the name.
Registering your business
Registering a business you need to decide on the type of business you want to register. If you are not sure about the different types of businesses and which one would suite your company needs, you can read the following blog: Company types.
Businesses can be registered online or by manually filling out forms at the CIPC offices. Prior to submitting your registration papers, you should research and find four potential names, ones that are not obvious registered business names already. Submit these names with your application papers. The CIPC will check the availability of your priority name and if it is an already existing business they will use the same process for checking the next name provided until they find one of the four that is not taken already.
Note: a business can be registered without a name. By default the registration number will become the name of the business on the CIPC database.
Choosing a business name is not easy. If you would like to read up on how to choose a name, go to the following link: Choosing a business name.
Main colour: The most important part of your branding is your logo and the main colour/s that will represent your business. This main colour/s will determine the rest of your branding, such as your website colour, your business cards, invoices, etc.
This does not mean that you cannot use other colours. The colour/s you choose will be used as the main colour/s and through them consumers will recognise and identify your business. An example this is FNB that has a distinctive blue they use and this blue can be seen throughout their website, app, branches, emails, etc.
Once you have chosen the colours, you need to start thinking of your branding which includes your logo, slogan, business cards, website, social media, etc. Decide what your main focus will be, for example, if you are a software development company, you need to focus on one main software development service such as website development. Although you can also develop business systems, mobile apps and other software, you need to focus on one specialty to promote your company (still promoting your other services, but focusing on the one thing that will attract more consumers). This will be your focus point when creating the branding for your business. The product you choose will depend on your target market and its demand.
Logo and business cards: For a more professional look, it is worth getting a professional designer to design your logo and business cards as they represent your business. Most of the time, they are a consumer’s first impression of your business. A freelance designer can be hired at a reasonable price from the following websites: Freelance central and Safrea.
Website: To save you time and money in the long run, it is wiser to use a professional website developer from the start. Working with someone from the beginning of your business will help them get to know you and your business. Professionals will be able to give you advice on certain aspects as they have the experience already. They will be able to develop added features that you may need, such as pop-ups, updated payment options, expanding your website, sufficient regular updated security measures for data protection, etc.
When a professional develops the website from the beginning, they will be able to add new features and do updates on the website more easily. When hiring someone else at a later date to add or update functions, they will need extra time to evaluate what has been done and how to work with the site, costing you more because of the extra time spent.
Keep in mind that before you set up a website, you need content to place on the website. This includes articles (paragraphs) explaining what your business does, the payment methods, an overview of the product, in certain cases the product specs, relevant pictures of the products, your terms and conditions and your business details. Make sure that you have these ready (written in a professional manner, spell checked and corrected grammar) before meeting your website developer.
Once you obtain your business registration certificate, you can apply for a business bank account. I would recommend that you keep your personal and business account separate, as this will help you keep track of monthly business spending and payments received from consumers. This also makes it easier for an accountant to do the business’s accounting and for SARS to identify the total income and spending of the business to determine your total TAX owed.
Your selling prices must be decided upon before launching your product/service. These are the prices you must stick to (unless you find it is too expensive). It is unprofessional and bad for business to give one client a better price than another. To avoid these disputes with clients, have a set way of charging each customer (unless it is a promotion or an agreed discount because of quantity).
Before launching, decide on your discount policy and how low you are willing to drop your price. Do not go lower than what you decided. If a client is pushing you for a cheaper price than what you have decided upon beforehand, it is better not to sell to them, as this will become an expected discount each time and is not worth the sale (Keep in mind that you need to know your product price range and whether your asking price is a bit high).
If you have an hourly rate or a flat rate for services, make sure you have a signed document stating that you and your client have agreed on the deliverables. When a client adds extra deliverables, you need to re-quote and charge extra for the added deliverables. This is important, as clients can take advantage of these situations.
Note: these are guidelines and you should use your discretion when it comes to pricing. If you have a good client, you can give them some things for free, but always let them know that you are doing this. This prevents future misunderstandings when you do charge them. I would recommend not making it a habit to give a specific client discounts or freebees, as it eventually becomes expected.
There are a variety of payment options available such as EFT, online transactions, cash, card machine, etc. You need to decide what type of payment methods you are willing to accept before launching. Make sure that you research your payment options, their risk of possible fraud, costs involved, how convenient it will be for consumers and how to implement them for a business.
Determine your payment policy: will clients pay before receiving the product, when receiving the product or pay a deposit when placing their order and then make the final payment when receiving the product.
Decide what your returns policy will be: full refund when they are not happy with your product, a voucher or give a replacement product for them.
Note: when you decide to only receive money on delivery, make sure you have a method in place to avoid non-payments, such as having consumers pay before handing over the product.
When it comes to office space, you need to evaluate what will meet your business’s needs. Some start-up businesses could be home based, but this will depend on the requirements of the business, such as:
Will I be making my own products?
What equipment do I need to run my business?
How much space is needed for my equipment and products?
Do I need storage for my products?
How will I sell my products: in a shop or will I be shipping them?
Will I be seeing clients in my office space?
Where will it be best to situate the business?
Does the area have any zoning restrictions? (I.e. are businesses allowed in the area?)
Tip: The following things are a must-have in any office space.
Phone- this could be a cellphone or a landline consumers can contact you on.
Computer – either a PC or laptop with the right software e.g. basic programs such as MS Word, Excel, Outlook and Power Point.
Internet access – preferably an uncapped ADSL or fibre line.
Desk – helps productivity.
Computer desk chair – for health reasons it would be best to have a quality chair to sit on when working, as you will spend most of your time on it running your business.
Printer with a scanner – It is best to have one handy, although there are places such as Postnet that will print or scan documents for you.
Stationary – you need to have the basic stationary such as pens, pencils, paper, stapler, etc.
Files – you need to keep hardcopies as well as softcopies of all your business documents. Create a filing system from the start to avoid losing documents or spending hours sorting through files that you might need later on.
External hard drive – although you can store everything on a cloud nowadays, it is good practice to keep a backup of documents on an external hard drive as well.
Refreshments –These include a kettle, tea, coffee, cups, water, milk, etc.
Security – how secure will your office be? Can you lock your valuable stock and office supplies away safely when you are not there?
When finding a potential place, check the cost, deposit and what is included. Work out the monthly cost. If you decide to work from home, work out a reasonable rental amount and the necessary cost to obtain equipment needed for you to run your business from home (this includes business rights on the premises), as this is TAX deductible.
Before setting up an office or storage space, make sure that you enquire about insurance that will cover any sort of loss before moving into the premises. Enquire about insurance for any liability or injury on your premises that might be caused by your product or its packaging to avoid expensive law suites.
One of the best things when working for oneself is that you can manage your own time, though when starting off a business, you will need to put in extra time. When you are used to going into an office every day at a specific time, this freedom could be taken for granted by either putting in too much time or too little time. Both could be damaging to your business.
It is best to work out a time schedule and stick to it. Force yourself to put in a certain amount of hours everyday by working out a flexible schedule that suits your business and your life style. This schedule should be based on your business goals and include needed rest (leisure time). Finding a balance between work and leisure time will keep your health up and help you focus better when you’re actually working.
Now that you have an idea of the possible start-up costs, start putting them into a spreadsheet under the different categories. Calculate the initial start-up cost with an extra sheet that calculates your monthly expenses. Add at least about six months’ expenses to the initial start-up cost to determine the total start-up cost.
If needed, you can apply for funding with your business plan or start planning how to save the money needed to start your business.
Now that you have an idea of your monthly costs (the monthly amount you need to cover your expenses), you need to work out a system on how you will be managing the business’s money every month. This includes what will you be able to withdraw, monthly expenses put aside, how much you need to put away to grow the business, marketing expenses, etc.
Create an invoice template with your company’s branding and a system that will help you keep track of payments and non-payments. Working out a record-keeping system for your finances from the beginning will help you to save time when you need to find the documents or proof of payments/non-payments at a later stage.
Write terms and conditions for the use of your website and its content including your purchasing policies. Make sure you have the legal authority to sell your products and that your online purchasing procedures comply with the law of the countries you distribute your products to.
When you need to sign a contract with a client, make sure that you have the right contract ready before conducting business with them. This contract needs to state the agreed deliverables and different aspects of the business between you and your client. If you need import or export permits, make sure you know the law and that you obtain the correct permits.
When starting out make sure you are registered for the relevant tax obligations and that you understand the procedures and payment obligations. This includes the tax obligations of deducting an employee’s tax and UIF. You can read more on business tax in these articles: Legislation or Tax basics
Writing your business plan
Now that you have a good overview of your business and what you need, you must write down a business plan. Writing a business plan is a crucial part of setting up a business. It not only helps you when you need funding, but it helps you to evaluate your business and set planned goals. This outlined plan motivates you and helps you to work towards a set goal.
To start off with your business plan, find a suitable template for your type of business. You don’t have to write it perfectly from the start. You can adjust each section as you write the plan. Start with roughly writing down what you would like to say in each section, including potential costs.
Another benefit of creating a business plan is that it will help you establish what you already have and will determine what you still need. If you don’t have a unique product, you need to state in your business plan what will make your company unique. State what added service you will provide to stand out from your competition and turn consumers into regular clients.
If you have left sections blank or incomplete, make sure you go back to them and evaluate what research you need to do to complete these sections. Once you have an outline, start re-writing each section professionally and check your grammar and correct your spelling mistakes. Have other people read it and give honest feedback.
An important part of your business plan is to identify potential risks. There are always risks involved in any business and the best way to handle risks is to identify them and already set up a solution to solve or prevent them before they arise.
It is always easier to learn from other peoples mistakes. In our last blog of this series I will discuss typical start-up mistakes that business owners make and give some advice on how to avoid them.