One of the qualities that make entrepreneurs distinctive is that they have the courage to start. Whether it is copying an existing business that they feel they can run just as well, or better or perhaps creating something new and unique. This is a fabulous and powerful characteristic.
However, a lot of the entrepreneurs I interact with in under-resourced areas often start or want to start a business either without doing enough research and planning, or doing no research at all. Frequently this can just be a setup up for failure.
Failing to plan, planning to fail
I learnt this lesson the hard way. When I was 19 years old, a friend asked me to partner him in a boerewors stand he wanted to set up. He explained to me how many students there where at the educational establishment he would be selling outside as well as the profits that we could make. I excitedly agreed to get involved and organised to rent another friend’s food trailer and bought the stock.
My profit from that venture? ZERO, in fact it cost me a few thousand Rand. The reason? In our excitement, we set up on the day after the term ended so there where no students and therefore no customers. Most of the stock went rotten before we could sell it elsewhere. I will remember this lesson forever.
It would of taken just 2 minutes to phone and find out when the terms started and ended but I never made a list of everything that we needed to be successful.
Do your research
I repeatedly find that planning, brainstorming and using analytical tools such as a SWOT analysis enhance my entrepreneurial drive rather than hindering it. Frequently my mentees and I discover better opportunities as we have more information available as well as a deeper insight.
A good example of this is a restaurant owner in Johannesburg that I mentor. After buying an existing restaurant and increasing the turnover by re-stocking and cleaning the establishment, we needed to find other ways to increase the spend per customer (keep them at the restaurant for longer). Julius spent time speaking to all the customers and finding out what they liked and what they wanted improved in the restaurant.
The outcome was simple. Most of the customers where Zimbabweans and the juke box only had a small selection of Zimbabwean music. This was rectified and the turnover increased 15%.
Knowledge is power
An inspiration for me was a man I was training in Bophelong. He wanted to become a wholesaler of sweets, chips and cool drinks as he was currently a hawker selling sweets and chips. I explained to him he needed to establish the size of his market (how many potential customers there where and how much they could purchase). He spent a week walking through the entire community, introducing himself to each and every hawker and enquiring if they would buy their stock from him. He wrote down their name, contact number and their address and then marked on a map where they where situated.
The outcome? The wholesale business would not be sustainable. However, we did work out that there was no real competition to him near his house and so the opportunity was to rather open a spaza shop and take away shop for which he has already applied for funding.
The old saying goes, knowledge is power and it is most definitely true.
About the author: Stephen Read is the founder and CEO of FIELD an incubator programme working in rural and under-resourced areas including Katlehong, Vosloorus and Thokoza. Stephen is also a life-long entrepreneur and now a teacher.