Find a problem to solve and use tech to keep costs down, says Thandeka Xaba Fellow-in-Residence: Ventures & Capital, Allan Gray Orbis Foundation.
I would start an online concierge service for small businesses in South Africa which would include services like company registration, opening of bank accounts, tax consulting, bookkeeping, a virtual PA, social media management and drafting of minor contracts (e.g. SLAs).
The business would utilize technology to manage processes and facilitate faster communication through a chatbot and WhatsApp integration. Business owners would pay a tiered monthly subscription for access to its services ranging from basic to complex services.
South Africa continues to rank low on the ease of doing business index, and as an entrepreneur myself I have experienced this problem firsthand. To give an example, over the past two months I have made four visits to SARS to submit an application and spent a cumulative of 21 business hours sitting in line only to get to the front to be told I was missing a different document each time.
The difficulty in running a small business in South Africa is not only that it is inconvenient, but it also wastes business owners’ precious time, which directly impacts the financial success of a business.
I would build a low-cost website which would displays the various categories the concierge offers. The website would display the steps which need to be taken for each process (e.g. applying to be a VAT vendor) as well as the necessary documents required at each step. Business owners would then be able to submit the required documents online.
Lastly, businesses would appoint the company as its proxy and a company representative would stand in line to submit the necessary applications. The dashboard would also flag impending deadlines, outstanding documents and potentially beneficial services not being utilized (e.g. virtual assistant or social media account management). The rest of the money would be spent on operating expenses such as petrol, data and hiring an intern.
Tips I wish I knew before starting a business:
1. Keep it lean and real. When conceptualizing a business, we often have big dreams and aspirations about apps and all these fancy features but we can often forget to test the most basic assumptions that our business relies on. Too often I hear people say they are raising money for an app and when I ask them whether they’ve tested their business model on a small scale or if they have a few paying, repeat customer (even family or friends), the answer is no. As entrepreneurs, facing the music when it comes to the viability of our ideas can be a tough and personal process. We want to believe we have the best idea and that everyone will pay for it – but the sooner we face reality, the sooner we can avoid wasting money, time which gives us time to iterate.
2. Budget at least five to eight years of suffering. This sounds extreme, but if you are not mentally prepared to continuously suffer for days upon weeks upon years then there is a high chance you won’t make it. I haven’t been a full-time entrepreneur that long myself, but I have conditioned my mind to believe this so that everyday setbacks don’t discourage me. I’m lucky to know many entrepreneurs who I’ve seen struggle firsthand for years and ultimately built successful businesses.
3. Do not attach the success of your idea to your self-worth. If you think of the app Slack you’d think it was built seamlessly by a bunch of smart techies from the Valley. The founder of Slack initially built the app hoping to create a game, after failing a few times, he landed on Slack. Stories like these make me realise that a best thing an entrepreneur can do is to separate themselves from their idea. If your idea fails, it does not make you a failure it makes you someone who was willing to put themselves out there, someone who has battle scars and someone who can try again. The sad thing about South African startup culture is that we don’t embrace, let alone, celebrate failure. You often find that those sitting quietly in the bleachers are the biggest critics of failed startups.
4. Focus on results and not hype. Magazine articles, podcasts, competitions and conferences do not equate to a successful business. Be very intentional about how you divide your time between these and actually building your business. The one is fun and gratifying, and the other is often not. Hype can at times give entrepreneurs a false sense of success and it’s important to make this distinction from early on.