16 Dec Inside Knowledge for Successful Start-Ups
South African businesses are driven by innovation and creativity. While big corporations are vital to keep an economy’s cogs turning, the start-up industry presents myriads of opportunities for courageous entrepreneurs to fulfil dreams of being self-employed, empowering others and contributing positively to the country’s GDP. In our democracy, with rags to riches success stories, there’s a spirit of uncurbed enthusiasm to take risks and be part of the start-up working culture. However, budding entrepreneurs often have excellent ideas but lack the know-how and don’t realise that business are their most vulnerable during their initial years.
For entertainment and media mogul Lebo Gunguluza, best known as the business speaker and Dragon investor on SA’s Dragon TV Show, it’s a combination of passion and strict logic that contributes to success. Through bouncing back from debt, closing companies and starting new ones, he realised that in the long run, passion is what drives the spirit of a company and shrewd budgeting ensures sustainability. “Respect cash and spend it wisely” is one of his key mantras, and the title of a series of talks he regularly gives to new entrepreneurs. When a business operation expands, the calculations of margins and cash flow changes, resulting in a need and natural tendency to increase expenditure. Many start-ups fail not because their products aren’t marketable, but rather due to poor cash flow management once they start making a profit.
Equally as important as money management is that of time. For bespoke suit start-up Tailor Me, founded by entrepreneurs George Diab, Brad Marriott, Rick Da Matta and Dax Menday while they still had other jobs, managing time was one of the early onset challenges they faced. With limited capital, they couldn’t afford to pursue their new business full-time and in response, quickly decentralised the core responsibilities and ensured that all team players were working to their strengths. “Having the right team to carry out strategies was vital to make sure we were all on the right track”, they add. Now dressing Top Billing and 702 sports presenters, making custom suits for businessmen and grooms across the country, they attribute part of their success to effective delegation and ensuring that the individual responsibilities don’t overlap.
Coupled with effective managerial skills is the adaptability to changing markets. Pierre van der Hoven is the co-founder of Tuluntu, a mobile streaming app that according to Unilever Foundry 50 is one of the top 50 start-ups in the world. He embraced change and responded to the market in the early stages of his business. As one of the founding members of eTV, he knew that if he wanted his new enterprise to have far-reaching effects the dominating global medium wasn’t TV rather mobile content. Taking into consideration the technical challenges – like the need for low bandwidth on the continent – it made sense to develop an app that allowed people to view content on the device most immediate to them. In the media industry he explains, “there’s an overwhelming amount of information and a couple of years ago I saw the opportunity to put African content on mobile phones and create an easily accessible home for Africans to tell their own stories”. In Van der Hoven’s case, the core idea remained the same but his foresight to adapt to emerging markets lead to exponential growth he wouldn’t have achieved otherwise.
And yet, perhaps the most pragmatic advice for those with ambitious business dreams is to have patience and persist with the process. “Entrepreneurs often want to skip the process and I tell them that they need to start with what they’ve got,” says Vusi Thembekwayo, one of the youngest ever JSE directors in South Africa. “Slowly build a track record, because you have to prove you’re worthwhile to attract investors.” Big visions are important but you need to be able to assess and meet a business’ needs at the right level; this relates to cash flow and time management, understanding the market and knowing the right time to expand. Building reliable track records proves that you’re credible and provides gravitas for future funding – so don’t negate the small steps!
The first three years of any start-up is the most critical time where even though sound planning and implementing sustainable practices seem like common sense, it takes consistent focus to ensure long-lived success.