Sure, we can all learn from others and it is true that successful entrepreneurs are open to learning, but there is no magic formula here.
Having said that, I thought I would share some behaviours we at FNB Business have observed in successful entrepreneurs.
There is no such thing as a part-time entrepreneur
Being an entrepreneur is a 24/7 endeavour. You cannot run a business part-time if you want proper success. It is very rare that someone has a large day job as an employee of one company and at the same time, runs a rapidly growing entrepreneurial business. Unfortunately, when it comes to entrepreneurship, you cannot hedge your bets—you need to be all in.
Be a big thinker, but set goals
In our experience, successful entrepreneurs understand the importance of their business in the context of the environment/community in which they operate—they have vision. But most importantly, they understand that this vision needs to be executed—ideas must be turned into practical action and measured, and these measures must be more than just financial.
You need a business plan, and yes it must be written down, with financial projections and measurable goals.
This is where most entrepreneurs fall short. Remember that if you are launching a business, unless it is completely based on new technology or a novel way of doing something, you are merely displacing better-established businesses. In other words, you will always need differentiation—you must be able to articulate this, defend it and justify why this works.
A business plan also means sizing the opportunity and converting it into a realistic revenue and profit. You need to ask yourself whether this opportunity is realistically going to generate enough profit based on the capital and effort you are putting into the business. Secondly, work out how much money you need to make your idea reach scale and identify where you will get the money for funding from.
You must have realistic expectations of debt vs. equity funding. You also need to understand the difference between the two funding avenues. The simple explanation here is that debt means you borrow money to be paid back, potentially with interest. On the other hand, equity means raising money by selling a proportion of your enterprise.
Commercial banks do not fund early-stage start-ups. This is outside their mandates as this funding represents equity risk in most cases and commercial banks have senior debt mandates. There are many other sources of funding out there, such as the FNB’s Vumela Enterprise Development Fund, which has raised around R400 million in funding. As an entrepreneur, it is essential to do your homework on the funding landscape.
Properly understand your route to market
Key questions in this regard could include: Is this an app-based solution? How do customers want to interact with my business? Can I differentiate myself through a channel? What is the most cost-effective and customer-friendly way for me to offer this product or service?
Write down your merchandising plan, including pricing; route to market; how you are going to promote sales (the value offering) and where you are going to sell the product, essentially focusing on the key 4Ps of marketing, namely: product, price, promotion and place. If your business is app-based, you can’t effectively launch it via print media—get professional advice on a marketing plan. It will be money well spent.
Be aware of the impact of the digital age on your business
The growth of most organisations is constrained by its physical assets—plant and equipment; its footprint; or size of the workforce. Growing these physical assets requires significant capital and time, and could limit organisations to linear growth. Digital business models are investing in external networks, rather than having to source, acquire and manage all physical assets. These “networked companies” build relationships with people who are willing (for a share of the upside) to contribute to company value.
Businesses like Facebook, Airbnb and Uber quickly realised that it is easier to build relationships than it is to build assets—and cheaper. And these networks are able to scale at an incredible speed. It is the combination of networks and technology that really leads to exponential growth.
Get good advice
This will cost some money but it will be money well spent. Successful entrepreneurs tend to be open-minded and curious—they have an interest in learning from others and bettering themselves. Make sure you receive the best advice when drawing up purchase and sale agreements; employment contracts; lease agreements; supply agreements etc. Spending some money on this upfront will help you save hugely in the future. I cannot tell you how many times we hear, “If only we had prepared properly for this”.
Invest in the A-team
Your business plan will fail without the proper execution and this depends on you getting a motivated and skilled team that buys into the plan. You must attract and retain the best talent. Pay for results and let your team participate in the businesses success. Remember, it can be really difficult to rid your business of non-performers, so take your time when selecting your team—conduct proper interviews and assessments, and be part of the recruitment of all key staff.
Value diversity! Don’t surround yourself with people like yourself—you must be challenged by different thinkers. This will lead to better decision-making.
Create a differentiated culture
Creating a great work environment is priceless, and doesn’t need to cost a huge amount. A unique culture can be achieved by having regular team meetings; giving honest feedback on how the business is performing; celebrating goals achieved; and regularly discussing the vision of the business.
Run a small business like it is a big business
This is my last observation and probably the most important. Make sure you have proper governance (ethical conduct matters) in place, including a tightly monitored budget; monthly management accounts that allowing you to track your business case; regular team and management meetings; up-to-date tax affairs and other key regulatory returns. At the same time, have bold plans and keep challenging yourself and your team.
Good luck! I believe writing things down and checking your thinking is a great discipline—find the time to reflect on these points. I have a world of respect for all entrepreneurs—after all, you are the future of this amazing country of ours.
Mike Vacy-Lyle, CEO FNB Business
