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What to know before you start a business in South Africa

Yoco - 19 July 2023

What tips do you have for someone to choose the best business to start in South Africa?

“Look at your strengths and weaknesses and consider what excites you and lies well with your passion. If you are not sure what you want, work out what you don’t want, and you will be left with options closer to your final desire. You can enter many different sectors, and you need to see this fit with your talents and aptitude. For instance, don’t open a butchery if you are a vegan. Nothing will make you more unsuccessful than doing something that does not hold your attention and interest, even if it’s the next big thing. Never discount passion - this is what all great leaders seek and follow. Starting out, keep overheads low and an eye on the goals. You are going to make mistakes. Accept this, make corrective plans, and try not to repeat these mistakes. The road to success is full of challenges - it is part of the process.”

What business is in high demand in South Africa?

“At the moment, everyone is talking about load shedding and the need for alternative power supplies for the home, office and work areas. There is a huge demand for renewable/green power, and solar technology is at the forefront of this process. We are seeing large growth in wholesalers, resellers, and installation companies. People are importing truckloads of products, and this reflects the demand. While the situation at our national power supplier ESKOM remains unstable, this trend will continue, possibly for the next 10 years, if not longer.”

What type of business is best for beginners?

“It is always a good idea to start with something you can do without much capital or resources. Contracting or having a small stall at a local flea market is a great way to start. You don’t need huge capital and as you increase your turnover, you can start looking at expanding the business. For example, buying and selling solar-powered lights would be good to take to the markets. If you are contracting, look at the solar installers and start with small systems. Get the client to buy the hardware and pay for your time and labour.”

What is the most profitable business in South Africa now?

“Any business that keeps its overheads low and its turnover high will be profitable. At the moment, the solar industry is a classic example. So many entrepreneurs make good profit which they reinvest into the business to render it even more profitable.”

What business could someone start with R1000 in South Africa?

“It is possible to start any business. Vending or contracting does not require big capital. A few tools or some lights, and you are well on your way to being successful.”

What business could someone start with R30 000 in South Africa?

“With more capital, you have more options, and you could get a good deal on buying stock. You sell this to clients who don’t have the time to purchase products they want you to install. It is possible to look at small franchises or a reseller in the solar industry.”

What is the fastest-growing type of business in South Africa?

“This is based on trends and seasons. In winter, everyone is looking for items that help with warmth and staying healthy, while in summer, we all want to be outside and enjoy the good weather. With the end of the lockdown, everyone wants to get out and travel and go to restaurants and holiday destinations. The leisure industry will be our next big business, and they want to keep the lights on. So, if you can sell them a solar system, this will be an excellent sector on which you can focus.”

What untapped business opportunities are there in South Africa at the moment?

“This is hard to answer. Put simply, it is always good to look for opportunities. Being able to adapt and change direction in your own organisation is key. Right now, we are all focused on electricity and solar power. I believe that the next great opportunity will be in the supply and storage of water.”

Keep reading to discover more tips for starting your own business.

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Ask for some help

If you’re stuck, don’t hesitate to call on successful business experts, friends or family to help.

Pursue bright ideas

Don’t be so cool and relaxed about the business that you stop innovating. As a small business entrepreneur, you compete against a fast-moving and ever-changing world. Don’t stress and say you can't be creative – you can do it if you put your mind to it. Think about new services and products and look out for new technologies and processes to improve your business’s overall efficiency.

If you fail to plan, you’ll plan to fail

Where is your business heading? How will you know when you have arrived at your goal? In other words, you need a vision and measure your progress. So put together and commit to short- and medium-term plans. 

You are not an island

Good relationships with businesspeople outside your firm are crucial to its success. It became clear from the survey that the most valued relationship was that with suppliers.

Don’t mismanage your money

The most common reason businesses fail is a lack of expertise in financial management. You need access to expert know-how and the correct tools.

Carefully study your market

The marketplace tells you a daily story - what’s happening, what has stopped working, and what is developing in the future. You need to adapt in time to changes, such as regarding client preferences. Your business will be heading for the rocks if you're not alert.

Be transparent

Don’t pretend you can make it on your own. So don’t get stuck with a problem. Instead, get hold of a successful business entrepreneur and be transparent about what’s wrong. People will admire your honesty and be willing to help. Bankers also find it reassuring to know where exactly they stand with you and your business.

What will you do in challenging times?

Contingency planning is for the ’in case’ situations. For example, how will you cope if you suddenly lose a key staff member? Or, what about the cost of repairing your business because of a fire? Don’t let these sudden unforeseen events catch you unawares.