You have done your homework – you are ready to start your own business. Unfortunately, too many people want to start their business on a very high level, opening a state-of-the-art bakery or guesthouse, whatever. The best appliances are bought and the most luxurious finishes are used to decorate the premises.
Ok, if you want to start a game lodge, somewhere in the bush, there can be a need for a luxury resort. On the other hand, some guys staying in the city are so used to their luxury lifestyle that they will long for a bush experience with just enough amenities to survive, while others would like to have extreme luxuries, the same kind that they are used to at home.
Point is, when you start a business, start on a small scale and expand as the business grows. Never ever start with something which you can’t really afford – I believe that you much actually grow into the business and the business must grow on you.
I started my business with one small self-catering apartment. It was not long before I had to show clients away. Within six months, after we originally started up, we decided to change one wing of our house into another luxury apartment – one with a fantastic view over the Cape Peninsula. We even made our en-suite guest room, which had a separate entrance, available. Today we own half of a complex with apartments, as well as a couple of townhouses, a total of 30 units.
When starting up, I did not have a lot of capital to start my business. I, therefore, had to be very careful to over spend. The first apartment was furnished with some extra furniture we had available, so I did not have major expenses. The second apartment was already furnished, we just had to furnish the kitchen, same with the guest room.
Do not make any unnecessary debt to start a business. You do not know if it is going to be a success. In the first couple of months, you will probably just cover your expenses, for example, stock to sell in your shop or linen and utensils for a guest house or parts for your workshop.
My suggestion is that you must first have some savings available to start up. Banks are also more willing to help with start-up capital if you have some savings available to add to the startup.
In the beginning, I even made my own bedding and curtains. For many years, after starting up, I kept on making my own curtains. Today, after 25 years in the industry, I’m honest to say that I hate it if one of the staff tells me that there are some alterations to be done to linen. I rather rent someone to do it for me, but in the beginning, I just had to do it myself to save on costs. Interior decorating can be very expensive, therefore I did not have an option. Fortunately, I am very talented in many different skills and could, therefore, save a lot of costs, regarding the above.
Do not overstock your business. In the beginning, rather buy in small quantities, until you have the necessary cash flow to afford bigger quantities. At that point, you will be able to buy bulk and save a lot of money. Even here, you will have to be careful.
I’m also involved in women’s ministry but have been involved with a children’s feeding scheme and creche in a small countryside village in the Eastern Cape. At one stage I went to visit the scheme and also bought some stock for the feeding scheme. The lady who was in charge of the project told me that we must go to an Asian shop in the nearest town, 50 km from where the project was located. She told me that she normally buy bulk at this shop and that it worked out cheaper. To her amazement, I pointed it out to her that if she buys a box full of tins at this shop and divides the cost through the number of tins, it cost her 20c per tin more than at the chain food store in town. Make sure that bulk buys are not expensive buys.
Something else to take note of is that you must be careful to be too cheap with your service. Experienced customers see the particular service as cheap quality if the price is too low. On the other hand, also be careful to be too expensive, missing potential clients. While doing your homework, get an idea of what your competition’s prices are and stay just below their markup. Alternatively, you can ask the same price than your opposition, but rather offer the client extra value for their money. Your opposition might sell their bread for the same price you’re selling yours for, but you can perhaps add two small rolls or something similar, just to get your foot into the market.
- start on a small scale and expand as the business grows;
- be very careful to overspend;
- Do not make any unnecessary debt to start a business.
- Do not overstock your business.
- Make sure that bulk buys are not expensive buys.
- be careful to be too cheap with your service.
- On the other hand, also be careful to be too expensive, missing potential clients.