How do I start my own company?
I would like to open a water purification company. I have my own capital but need to know where to start. What are some of the obstacles most of you missed when opening your own company and only learned later on?
I see a lot of the posters who have tried to give good information missed the fact that you are in South Africa. When I noticed that it changed what I was going to say a lot as well. Opening a business in the USA can be very easy and inexpensive. The last start up I did was up and running in two days for peanuts as far as cost. It is actually pretty easy to go on your states web site and file to set up a corporation yourself. But with you being in South Africa that could be different,
I would say the biggest obstacles are that universally no matter how much research you do something will come up that you could never expect no matter how much research you do.
I am sure the news that it may take a few years for your business to be profitable and the failure rate on new businesses is very high.Even though you have the funding do everything you can to make your cash last and think hard and long about spending any money you don't need to.
Don't underestimate the time and effort it takes to start a business. If you plan to work a 40 hour week forget starting a business, When I started my current business I was very under-capitalized and compensated by working long hours and wearing many hats. My average work week in those days was well over 120 hours a week, Even today I work 80 hours a week.
Good luck with your endeavor.
I'd start with the U.S. Small Business Administration, It does more than delivering millions of loans and loan guarantees. It also offers counseling sessions and other forms of assistance to small businesses.
Starting a business involves planning, making key financial decisions and completing a series of legal activities. These 10 easy steps from the SBA can help you plan, prepare and manage your business: www.sba.gov/content/follow-these-steps-starting-business
I also reccommend Docstoc.com. Docstoc hosts some of the best quality and widest selection of professional documents (over 20 million) and resources including expert videos, articles and productivity tools to make every small business better. Pricing is just $3 month or $10 year. A real bargain given the quality.
Good luck. I don't know anyone who is sorry they started a business. I do know quite a few that have regrets for not starting one.
- The Pragmatic Web Designer
great advice below from Virginia and Jack...as they tackle the reality of starting a business versus the steps to take. Because my first question is -
Do you have existing products and/or services or do you need to develop/manufacturer them?
If no, then buying an existing business or manufacturer is an option.
I applaud you that you have start up capital, but do not underestimate the amount of money it will take to get to the point of selling your first product and then supporting the business until you are making profit. Do you have a business and/or marketing plan - or is that even one of the first steps you are asking about?
If you are pre-pre start up...then there are 3 things you should do immediately (before spending ANY money)...1. go through every inch of the SBA site and read up, make note and study the list of to do's and resources that are there.
2. engage a business broker (and even a franchise consultant) and discuss what businesses exist already and determine if that is an option. Don't overlook franchises...they could be in the segment you want to be in, and thus have infrastructure that could save you time and money ramping up
3. research your market, competitors and products, and go to Bplans.com and download a business plan template, and work through it on your own, engage others, etc. and determine if the business is what you want.
If you want an obstacle new (and even existing) business owners come up against - and often fail at...is taking the time to research, study, assess, and plan the business they are starting. Do you homework, learn to love research, studying and planning...and if you are good at doing that and even get excited about it - as it is fueling your business success...then you can move to the next step - seeking out how to get it started.
Skip these steps and you can count on burning through your money before ever getting to profit.
After reading all the technical advice offered here...let me weigh in with something different: get help. Don't try to do it all yourself. Either find partners, advisors, or industry insiders who will give you some helpful advice along the way.
Learning the ins and outs of the business + learning the business of business + dealing with the emotional challenges of leading a business = a lot to swallow. You can't consume it all at once so find help.
Consider an interim step such as: Find companies that produce the purification system and become a rep. Discover what it take to sell it at the consumer level. Based on your budget, plan a marketing campaign and test what draws and what doesn't.
Join the appropriate association for water purification. Meet people and learn from them.
Bottom line: find trustworthy help by hiring it, borrowing it, or engaging advisors in areas where you are weak.
Finally, gather regularly with other small business owners to learn from them. It will accelerate your learning and development.
I think it's great that you take on and make your endeavor a success. I lived in indola Africa working as the Creative Director for www.theQfund.org As a contractor from my company Wallman Design and the adverting and marketing specialist to obtain land, market their programs to investors and achieve substantial backup for the schools they built for underprivileged children.
We were able to help get over three hundred children overcome substantial obstacles and grow a self supporting environment in a very complicated area with major politics in this part of Africa. Water was one of the most important values and will be for years to come.
I have read answers to your question below and some elements are very valuable while others are vague and don’t support your first and most important needs which include your branding and marketing initiatives to obtain investment and awareness reaching a targeted market and other outreach groups to help, or what you can afford to do on this level initially.
It’s a wonderful thing you are trying to do and you really need to do research on the competition, and potentially companies in the industry that might want you to join forces.
I'd start by researching the crap out of water purification and that whole industry. I would also start attending networking events and conferences that deal with that topic. Educate yourself in that vertical with the help of those that are in the trenches and you will develop the ability to start asking the hard questions you need to to actually determine if there's an opportunity here and if you have the chops to take it on.
The first step is in knowing your goals and the purpose of the business. is there a market for your product or service? It usually takes around two years for a business to get off the groiunbd so befor you undertake any onerrous paperwork for a busienss that may or may not be successful, I would go with what Virginia below has to say.. The three most important activities with a new business are:
2. promote and
Just get your product out and known and getting people to reach for it and want it. If it takes off like a rocket, then you can hire someone to do the boring paperwork.
I didn't have a business plan initially. I also didn't know who my clients were or how to explain the benefits of what I do. I've figured it out since then.
I also didn't define the core values of the business: Why am I doing? Why is it important to me?
Create an entity early. Follow good basic accounting early. Learn to pay yourself a paycheck early.
Oh, and learn how to balance your life. Owning your own company means there's no clear separation between work and personal time. You have to learn to balance the needs of the different parts of Carike, to keep your life balanced and aligned with your values.
Get a good business-oriented coach, mentor, or consultant to help you out. You will want an experienced mind to bounce ideas off of, and to help you vet some of your own decisions.
I have the same question as Daniel. I worked 6 years for a consumer water purification company Kinetico as the manufacturing engineering manager. So are you doing commercial or residential?
I am not sure of the legalities in South Africa (and many of the answers relate to the USA) but these are worth checking out before going too far. Some countries in Europe insist you deposit substantial guarantees (actual cash) to cover against you going bust and leaving debts. Even a local tax office should be able to advise or send you to the local body that can help.
To create the business (as others have said) it is best to have a plan in your mind, then try to put it down in writing. This helps show the parts you haven't fully thought through.
The level of detail depends on if you need to convince anyone about your business (bank for loans etc). If not, it is just your directional guide.
Make sure you fully cost out your offer/product/service including getting it to your customers.
Before investing too much, test and understand your market, competition and opportunity. Whar is your USP (Unique Selling Proposition) i.e. why someone should buy from you rather than a competitor. If it is just price, larger competitors can probably match you for a while (and survive) just to keep you down/out.
Also as mentioned in a post, if you can get an agreed deal to supply (profitably) right at the start this may cover your overheads while you get going.
Hope this is of help and good luck.
Hi Carike! Here's the link to a resource that just came in that might be helpful to answering your question: http://www.mosaichub.com/resources/resource/15-articles-you-should-read-before-pitching-startu
Avoid these common start up mistakes and start getting noticed earlier on in the growth stage. Hope this helps & good luck!
I'm going to be a "contrarian" and warn you that starting a business is no easy feat. Seventy-five percent of US businesses are sole proprietorships because you can get tired setting up the business and doing all the legal due diligence before you sell your first widget.
So, before you start filling out useless forms that only lawyers like me are going to say you need (because you don't necessarily need to register your business until you're truly in a position to be concerned about real, tangible liability issues), talk to a marketing person and see what it's going to cost to advertise your product and get real visibility--and THAT is what you need to spend your money on. If you intend to open a business have an idea in advance of what it's going to take to advertise and distribute your project. Opening a "store" is a great concept, but you need to know your market.
Whatever money you think can be made will be dependent upon your advertising and marketing plan. Now, of course, someone is going to say, hire someone and "get a business plan." Well, you can do that, too, but you will spend upwards of $5000 just getting your "legal" business off the ground and developing a plan.
The SBA is a good start for information, but you're a start up and the likelihood of them paying attention to you is up for debate. I know they have made it easier for new businesses to get loans, but, trust me, you will end up getting tired very quickly, and feeling defeated quickly, too, as all these legal requirements will be thrust upon you before you even figure out the logo for your company. Oh, did I mention you'll need to trademark your logo, too, which might cost another $1000. So you've spent about $6000, all towards your goal of starting your business. I used to write business plans until I realized it wasn't even cost effective for the people for whom I was writing them. Unless you develop a relationship with the lender, or you have an interested donor, you're likely going to be wasting too much time on the peripherals of the business instead of the real business.
That $6000 should go toward perfecting your product, developing a guerrilla advertising or marketing plan for your product, entering into partnerships and working out your business model before you do all the "other" stuff. Find out what it's going to take to advertise -- to make a dent of any sort you'll likely spend upwards of $1000 per month on Google Adwords and/or Super Yellow Pages and the like.
I think it's important to look at business in a worst-case scenario. This is YOUR or someone else's money, and trust me, everyone out there wants it.
Now, if I haven't scared you off, good luck.
You should file to create a Delaware C corporation if you want investment or an S corporation if you are making money or expect to make money shortly and want pass-thru tax treatment. You should create non-disclosure agreements, non-compete agreements, non-solicitation agreements, and assignment of proprietary rights agreements and develop an Intellectual Property, IP, strategy including trade secrets, copyrights, trade dress, trademarks, design patents, and utility patents. You should make sure all IP is assigned to your company. You should set up vesting for all shareholders and make 83(b) elections. You should establish a Board of Advisors and a Board of Directors, including outside directors. You should pay minimum wage to all employees and not improperly characterize employees as contractors. Call me at 617-459-2797 for more information.
What are you selling; machines, the service or finished product? Does any government entity have to license, inspect and approve your facility and product? Who else can certify your end product (for creditability)? How do plan on differentiating yourself from the competition? Can you be price competitive?
Carike, I would start by researching existing water purification companies in areas where you would enjoy living and consider buying an existing business that is for sale. To jumpstart your search you could reach out to business brokers. Easier to buy and take over a business that already has customers and revenues and grow that business than to start from scratch. Just make sure you do your due diligence before making any commitments.
All good advice from everyone here.
The old advice you generally get from banks to build a big business plan is out dated. The process to write one is the valueble part, the document you produce, no so much...I would start with reading The Lean Entrepreneur. This book will do a much better job at answering all you questions for starting your own company. http://leanentrepreneur.co
One thing I will add is that owning a business is a non-stop endeavor. To succeed you need to always be hustling and making things happen. At least in the first 2-4 years.
Also, It can be lonely at the top so find some good mentors or fellow entrepreneurs to help when challenges arise. And they will.
Keep going, don't give up, pivot, fail, learn, repeat.
The biggest problem that start-up's have is the lack of a business plan, or even a rudimentary break-even analysis for the first year of operations. Without thinking through all the aspects of starting and running a business that developing a business plan requires anyone is bound to get into trouble. There is an old business maxim: nobody plans to fail...they just fail to plan.
Hi Carike, The best way to start is to have a business plan. Your plan may be obsolete after the first six months of business, but without a plan, your business could be in trouble because you haven't done enough research. Your business plan is the result of asking yourself essential business questions. Here is a link to our blog on business planning. You might find it useful. It doesn't matter where you are in the world, the business plan essentials are the same. Good luck with your venture and if I can help, do not hesitate to private message me.
The SBA does not offer business loans. They do have many programs that offer loan guarantees to the bank. The bank wants at least 30% of what your seeking for funding and a very strong business plan.
The SBA offers help if you are looking to get into government contracting.
Check SBA.gov for more info.
If you have a spouse and they are in the military or returning to civilian life then you may want to check out the Boots 2 Business program at Boots2Business.org
Also check your Local SBDC (Small Business Development Center) for assistance.
If you are not looking to get into selling to the government they may advise you to seek help at your local SCORE office. Score.org
Get solid advise about where to form your corporation from a local attorney which you can find in your city via the bar association for referrals. And the same for a CPA (there is a difference between a bookkeeper and a accountant.) Get the pros and cons of what It means to your bottom line and implications filing as a foreign entity.
NEVER use your own capital if possible which is why you need a business plan to offer banks and potential investors.
You have alot to do. Get good solid advise. The SBA, SCORE & your SBDC can assist you in your startup for FREE!
Hope this helped.