Most of us, at some point in life, had an excellent plan to start a business but never went through with it. The excitement of starting a new business can soon be clouded by the uncertainty of what steps to take and the fear of the unknown. Consider the following steps to follow before you decide to take action to start your own business in South Africa.
Write a business plan
A business plan will provide you with a map of the strategies you will implement, lay out the financial aspects of the business, and help you establish the likelihood of its success. A good business plan will help you set goals to guide you through the setup process. This will also be the time to conduct market research to understand your competitors and possible clients and their requirements. By performing the necessary marketing research, you can establish if there is a gap in the market and a demand for your offering.
Decide on the type of company you need
Most entrepreneurs start as Sole Proprietors, running and operating their businesses as individuals. At some point, however, it may make sense to formally register your company with the Companies and Intellectual Property Commission (CIPC). This will also be when you need to decide on a business name. Registering your business has certain benefits such as being a perpetual business, limited liability to shareholders, tax benefits, flexibility, and intellectual property protection. (Read our article on the benefits of registering a company)
Funding your business
Running a business costs money, and sometimes a new business is not profitable for a while. You, however, need to ensure that the business reaches a point of profitability. You need to balance cash flow and have cash available to cover all business expenses during this time.
There are various options available to obtain the necessary funds if you don’t have cash available. You can utilise the credit you have access to, bank loans and venture capital, government loan schemes or private investors.
Choose a location for your business
The location of your business can significantly influence the success thereof. Whether you start your business from home, set up a brick-and-mortar business or launch an online store, the decision can affect your taxes, legal requirements, and income.
Follow the necessary tax and legal requirements
It is best to contact professionals in the field of accounting and law to ensure you have all necessary paperwork regarding taxes and registrations of the business entity or agreements between parties. A law practitioner can assist you if you require a specific business license or employment contract. Make sure that your business is registered with the relevant authorities and that you open a business bank account. Also, consider business or liability insurance if applicable.
Market and advertise your business
How you market your business can determine the success thereof. Marketing is a tool to create and maintain demand, relevance, reputation, competition and more. Without it, your business is likely to suffer financially. If you have a budget available, hiring a professional agency to promote your business is best. Creating a website for your company is an excellent way for your clients to get information on your business. Setting up your business on social media, such as Facebook, LinkedIn, and Twitter, are also a good idea. (In a previous article, you can read more on some tips to market your business)
The decisions you make early on can have long-term implications on the future of your business. We advise that you get professional help to get it right from the start. Feel free to contact us on 012 347 0561 or info@iqaccounting.co.za should you require any advice or have questions on starting a business.