By Thandisizwe Mgudlwa
A study of how to overcome Entrepreneurial challenges is looking deeper into possible solutions.
And a recently released document states that Entrepreneurship is increasingly generating more awareness in South Africa and while the industry should be a desirable employment option for most South Africans, there are various challenges that entrepreneurs entering the market should bear in mind when starting their new venture.
According to Christo Botes, Executive Director at Cape Town-based Business Partners Ltd and spokesman for the Sanlam / Business Partners Entrepreneur of the Year competition, many think that becoming an entrepreneur will equate to decreased levels of stress and leaving the constant rat race of the corporate world behind, when in fact newly established entrepreneurs often find themselves in a different kind of race, with a different set of challenges.
Botes further remarks that the first three to five years is a real test of survival for new businesses as there are various challenges that entrepreneurs are likely to face when starting their own business. “Common external challenges can include competitors and financial institutions that refuse to fund your business, while internal challenges are brought about by factors within a business, such as cash flow, management skills and industry knowledge.”
An entrepreneur who has experienced some of these challenges and ultimately overcame them is Warren Graver, founder and director of Envirodeck, and winner of the 2012 Small Business Entrepreneur of the Year® title, who says that Envirodeck, an industry leader in environmentally conscious and sustainable decking products, has not always been a successful business and that he had to overcome a significant number of challenges in the early years of the business.
“I could not have made worse business decisions than in the first two years of opening the business, which was doomed by me not focusing sufficiently on market, product or supplier research.
“The first challenge that I faced was that although I noticed a considerable gap in the market, I was unsure on how to present the product to an existing market that I had no experience in. It was also a market that was very reluctant to change to new products, as timber was traditionally the only way that decking had ever been done, and it proved extremely tough to penetrate a market when no one had ever seen or heard of such innovative products.”
Botes says that a business challenge for some entrepreneurs can be the ability to forge their idea and opportunity into a business idea. “Entrepreneurs usually identify a problem or gap in the market where they are able to offer an alternate solution, but struggle to integrate their solution into a business plan that ultimately promotes the company effectively and efficiently to the correct market. It is therefore vital that entrepreneurs seek guidance and advice when in the initial stages of the planning process.”
While Graver adds that another challenge he encountered was establishing a supplier network. “I did not do sufficient supplier research and subsequently after landing the first shipment, the supplier closed its doors. This error in judgment on my behalf meant that the initial start-up capital was quickly absorbed into obsolete inventory that would never be sold even at discounted rates.”
He also touches on the importance of managing cash flow. “The most critical element of a start-up business is managing cash flow versus inventory management, a concept that I failed to understand and subsequently a year later I had no start-up capital left.”
Botes says that most entrepreneurs face capital challenges a few months into operation as many hope to secure more capital once the business starts to grow. He adds that entrepreneurs should not be discouraged by these challenges. “Overcoming these challenges doesn’t have to be complicated. If problems are solved as they come up, rather than letting them escalate to a point of no return, an entrepreneur will be able to grow and move his or her business forward.”
In the case of Envirodeck, Graver says the business was saved through continual focus on the gap in the market. “Through intense global product sourcing, supplier canvassing and a life-saving loan, I managed to slowly recover and turn the business around so that by 2009 it had broken even.”
MEANWHILE, Another call for Entrepreneurs to Learn The Business of Business, is made by a expert.
And Catherine Wijnberg, a business expert shares her thoughts on what needs to be done to run a successful business.
“Despite the enormous focus placed on encouraging entrepreneurial activities in South Africa, thousands of dreams continue to be shattered as SMEs falter and fail. The main reason for this, suggests Wijnberg, is because entrepreneurs tend to follow their passion but often never stop to learn the actual nitty-gritty of running a successful business.
Wijnberg, a self-made entrepreneur and head of Cape Town-based Fetola, one of SA’s leading enterprise development companies, which is currently accepting applications for its sponsored Legends business development programme for 2013, is passionate about seeing others succeed.
Also noted is that in the past five years, the Legends programme has helped hundreds of participating businesses – many of which went on to win awards for performance – become financially viable, grow, create jobs and increase profits.
Wijnberg says, while a good business idea, and a passion for and knowledge of the sector in which one operates are extremely important to ensure the success of Small Medium Enterprises (SME), chances of survival are slim if it is not built on sound business fundamentals.
She adds, “These fundamentals are pretty consistent across industries, and easily learnt with some commitment on the part of the business leader.
“You may be the best ‘techie’ in the world, but if you are clueless about marketing, proper systems and human resources considerations, you are going to struggle to accomplish business viability. In any business, it is imperative that those steering the ship have a solid understanding of strategic planning, basic financial management, costing and pricing, marketing and sales, and people management,” advices Wijnberg.
She further remarks that it is also very useful for young and growing businesses to become part of a community – like Legends which has been successfully operating for over five years – to get mutual support and access to opportunities. Through Legends, for example, participating businesses that qualify can get access to lucrative corporate supply chains who are increasingly seeking to engage with emerging businesses.
“Our mentors and coaches are all experts in their fields, and they know how to give emerging businesses the support they need to get to the next level, because they have done so successfully themselves,” says Wijnberg.
“It can be very lonely trying to make a small business work, when you don’t have others with whom you can share ideas. Often people know where they should be headed, but they just need someone knowledgeable on their side as a ‘sounding board’ to test their ideas and get input from.”
Wijnberg also encourages all SMEs and non-profits to apply for the 2013 Legends programme, which is sponsored by Old Mutual and other funders, as soon as possible, as space for participation is limited.
Applicants go through a selection process and those successful could have a suite of resources and mentors at hand to help them do better business in 2013.
And despite the enormous focus placed on encouraging entrepreneurial activities in SA, thousands of dreams continue to be shattered as SMEs falter and fail. The main reason for this, says business expert Catherine Wijnberg, is because entrepreneurs tend to follow their passion but often never stop to learn the actual nitty-gritty of running a successful business.
In the past five years, the Legends programme has helped hundreds of participating businesses – many of which went on to win awards for performance – become financially viable, grow, create jobs and increase profits.
Apply for the 2013 Legends programme, which is sponsored by Old Mutual and other funders, as soon as possible, as space for participation is limited. Applicants go through a selection process and those successful could have a suite of resources and mentors at hand to help them do better business in 2013.
To apply you can visit http://www.fetola.co.za/projects/apply-for-legends-2013/