News

'Slow Down 2012' Jazz Evening a success

 

A beautiful spring evening glittered with fairy lights, welcomed the 90 guests attending the ‘Slow Down 2012’ Jazz Evening, hosted by the iLembe Chamber of Commerce, Industry and Tourism at Collisheen Estate on Friday the 16th November.

Johnnie Walker Whisky was served on arrival, setting the tone for a smooth evening of entertainment by live Jazz Band ‘Beate-Route’, followed by Top Hat Dancers and guitarist Phil Moffett.

The atmosphere was relaxed and jovial as host companies entertained their clients, business colleagues, friends and family, enjoying good food, wine and great company.

Some of the VIP’s who attended the function included the Honourable Major Mthembu and his wife, Princess Nandi Zulu and Thulani Khuluse, speaker for KDM Municipality.

Thanks goes to the companies who hosted tables at the function including, Black Balance, Royal HaskoningDHV,  King Shaka International Airport (ACSA), SEC Electrical, Enterprise iLembe, Tongaat Hulett Developments and IThala.

The iLembe Chamber of Commerce would like to take the opportunity to wish all its members, businesses and organisations on the North Coast, a relaxing and peaceful festive season and continued success in 2013.

For pictures from this event and others, visit our facebook page

New Executive Committee Members elected at the Chamber AGM

The iLembe Chamber of Commerce, Industry and Tourism held it's 2nd AGM on Thursday 15th November at their office in Ballito.

 

President Mel Clark presented the 2012 annual report, which can be downloaded or viewed on the Chamber's website.  

The financial report for 2012 was presented by CEO, Trenley Tilbrook, which showed a positive balance of R245 000 at the closing of the 2011 financial period, and was signed off an accepted by the Executive Committee.

 

The Budget for 2013 was also presented by Trenley Tilbrook.  Included in the approved budget was an overall increase of 6% for operating costs, which is in line with the current inflation rate, with the exception of electricity for which a 16% increase was budgeted.  Membership fees for 2013 will also follow the 6% increase.

 

We congratulate the 10 members who will serve as the Executive Committee for 2013:

Mel Clark - Black Balance

Keith Palmer - Ithala

Grant Pringle - Hotel Izulu

Terence Delomoney - ACSA

Dayalan Chetty - Tongaat Hulett Developments

Andy Horton - iLembe District Municipality

Bruce Rencken - Ballito Lifestyle Centre

Jane Wiltshire - Valtrust

Paul Naidoo - BMW Ballito Autohaus 

Princess Nandi Zulu - Horse & Lionessence PR

 

Thanks and appreciation was extended to outgoing Executive Committee Members for all their valuable input during 2012.

 

In closing, Keith Palmer thanked Trenley Tilbrook for his incredible efforts during the past year, which certainly had its challenges due to the tough economic times, but despite that the ICCIT remains a young, dynamic and innovative Chamber with a strong future vision.

 

The Winners of the 2012 Entrepreneur Competition

 

The 11 finalists of the 2012 Entrepreneur Competition arrived looking nervous, but all handsomely presented and eager to give it their all and earn a place in the winners’ line-up.  The grand finale show took place at the Pumpkin Theatre in Ballito on Friday evening, the 1st of November.

 

The event attracted more than 100 guests, including some of last year’s competition winners, VIP guests, sponsors, local business owners,  the Chamber Mentors who have coached and trained the finalists over the last couple of months, members of the media and the supporters and fans of the finalists.  A group of six Grade 10 Business Studies learners from Ashton International College also attended with their teacher Shawn Moodley.  The class has been following the competition’s progress since its start in June 2012, and were keen to find out who the winners were.   The crew from 1KZN TV were also there to film the event.

 

Angus Herselman from African Bank, a joint sponsor of The Entrepreneur Competition, expressed delight at being involved in The Entrepreneur Competition, and also introduced some of the other CSI projects within the iLembe district which African Bank has initiated and to which they provide ongoing support and resources.

The judges panel included carefully chosen businessmen and women who have demonstrated their own entrepreneurial success in the local business arena.  They were; Bruce Rencken, owner of Lifestyle Superspar; Bongani Linda Chairman of  Enterprise iLembe, Jane Wiltshire, Executive Trustee at Valbridge and Paul Naidoo, owner of Ballito Autohaus.

 

The finalists all took to the stage and were allocated 5 minutes to pitch their business to the audience and judges panel, followed by on-the-spot questions from the judges.  Not an easy task for anyone to convincingly sell themselves and their business in just five minutes, but thanks to Chamber Mentor Chris Voysey, who kindly assisted the contestants to prepare for the daunting task, they all gave a moving, sincere and sometimes humorous performance.

 

“The quality of the presentations and the business plans was absolutely outstanding, which was a tribute to the months of hard work of the contestants and the dedication and expertise of the mentors.” Said judge Jane Wiltshire

 

“What a great choice of finalists. You all were amazing and I can see why you were chosen. I felt humbled to be in your presence. Well done to every single one of you”, said Kim Holt one of the semi-finalists who attended the event to cheer on her fellow competitors.

 

The judges had met and interviewed each one of the finalists in the week leading up to the final event, to get to know the contestants and explore their entrepreneurial qualities. “The jockey is just as important as the horse when it comes to a winning team”, said Trenley Tilbrook CEO of iLembe Chamber of Commerce, Industry & Tourism and added, “Even if the businesses plan itself is good, it can only be effectively implemented if the entrepreneur exhibits important qualities such as enthusiasm, self-confidence, passion, optimism and perseverance to ensure success.”

 

The Top 5 winners’ line- up included;

Cindy Gien, who won R50 000 investment into her company called Domestic UIF, who offers  a simple online registration service for Domestic Employers with the Unemployment Insurance fund.

Bhekie Buthelezi also won R50 000 investment into Buthelezi Enterprises who offer an Internet Cafe and printing service located in Etete.

The charming duo from Superwaste Recycling, Vusi Maduna and Xolani Sibiya receive R30 000 which will go towards the transport and logistics of their recyclable waste products. These two young men who started their waste recycling business four years ago – with two supermarket trollies and flattening tin cans by jumping on them!  They now have equipment worth R70,000 but have still never taken a salary.  However, when they sold their first batch of glass (30 tons broken with a 4lb hammer), they did take R100 to buy themselves one pizza!

Donald Manda, alias ‘Donald Trump’ of Donald Manda Properties receives R30 000 which will be used to employ and train 2 new staff members.

Toni Watson, aka ‘The Iron Lady’ (because she gave birth to her baby daughter during the final weeks of the competition), and owner of The Sarmie Shop receives R30 000 to expand her catering operation.

 

The runners up certainly did not go away empty handed, and all received R5000 for their efforts, as well as more unexpected additional prizes donated by local business, organisations and venture capitalists:

Ntombifuthi Mavundla owner of NTO’s Home Bakery was delighted with her donation of a new oven, sponsored by Ellerines, which will make her cup cake baking a whole lot easier and more efficient.  Until now, Ntombifuthi has had to get up at 2am when she gets a big order to bake her cup cakes (6 at a time in her mini oven) to ensure that she is able to deliver fresh product to her client.  Lifestyle Spar is also sponsoring her with R500 of ingredients.

Emritha Maharaj, nicknamed ‘The Banana Queen’ from Amy’s Fruit & Veg will be assisted with venture capital from the Kelleigh Trust.

Lungile Khuzwayo a dressmaker and designer was given a box full of designer evening wear garments donated by a locally based senior executive of African Bank, which she will hire out to her clients through her company Siyaqhakaza, and will also receive a new sewing machine and other equipment and fabric kindly sponsored by The Lions Club.  

Bonginhlanhla Mncube from Cherish Funeral Services, Tholakele Sibiya of Inqununu Fresh Daily Vegetables and Nonhle Dlamini owner of Designa Bedouin Tents & Events, made up the remainder of the eleven finalist positions, with Nonhle also being assisted further by financing of new tents by UTL Financial Services.

 

Over and above the capital investments which were generously sponsored by African Bank and Enterprise iLembe, the Top 5 also receive a 12 month contract with Phezulu Business Management (Pty Ltd), who will provide the winning companies with an all-inclusive business service, including business planning, mentoring, marketing, bookkeeping, year-end financials, tax planning, BEE advisory and business administration.  All this is bound to give the winners leverage to further develop and grow their enterprise.

 

The finalists were further rewarded with a 12 month free Chamber membership, and will be closely monitored and assisted with the development of their businesses, with the help of the Mentors. During this time it will be decided which of the Top 5 will receive a further equity investment of R100 000, based on their continued performance.

 

Charles Alcock, one of the Chamber accredited mentors who coached the finalists on financial planning, wrote, “Last night was a fantastic evening, it was not only inspiring but felt very rewarding to be part of being able to create happiness and motivation for the winners.”

 

The Entrepreneur Competition was initiated by the iLembe Chamber of Commerce, Industry and Tourism in 2011. The ICCIT is committed to help grow and strengthen local business through a variety of networking, business support and training platforms. “The Entrepreneur Competition is just one of our ways to improve the economic future and quality of life for all”, said Tilbrook.

 

 It is aligned to the chamber’s objectives in that it promotes and supports new and established local enterprises, it identifies and creates employment opportunities and promotes best practice in business. The joint venture has also enhanced public/private relationships and has highlighted the potential to grow into a far reaching event which will attract the attention of government and corporate companies nationally who may be looking for opportunities to invest in small business and entrepreneurship.

 

Every one of these people have not only created employment for themselves, but also for other people which shows that small entrepreneurs are a big part of the answer to South Africa’s unemployment problems, said Wiltshire.

 

We look forward to following the progress of this year’s winners and an even bigger and better competition in 2013.

Invitation to participate in the 4th investment and trade initiative (ITI) to India

 

INVITATION TO PARTICIPATE IN THE 4TH INVESTMENT AND TRADE INITIATIVE (ITI) TO INDIA
 
The Department of Trade and Industry (the dti) invites you to apply to participate in the 4th Investment and Trade Initiative (ITI) to India. This ITI is part of the dti’s objective to create market penetration for South African value added products and services in India and to promote South Africa as a trade and investment destination. the dti has planned a programme of activities which will include trade and investment seminars, mini exhibitions, business-to-business meetings and site visits.
 
Dates: 25 February to 01 March 2013
Cities: New Delhi and Mumbai
 
The requirements to be part of the South African business delegation are as follows:
 Companies interested in the trade activities during the event need to be export ready, be competitive in the South African market, have been in business for at least 2-3 years and have a proven business and export track record. The target sectors: Agro processing, Beneficiated Metals & Mining technology, Automotive components and Electro-technical.
 Companies seeking to attract foreign direct investment and project owners/managers seeking joint venture partnerships in the following sectors: Pharmaceuticals, ICT, Energy, Manufacturing and Infrastructure.
 
the dti will provide:
 Hotel accommodation up to R2,000.00 per night
 Economy class return airfares to a maximum of R13,000.00
 Excess baggage to a maximum of R2,000.00 (display material/ samples)
 Business to business meetings for participants
 
Companies that apply to participate will be screened and selected in line with EMIA guidelines and market requirements. Interested companies are required to complete and submit the attached EMIA application form to:
Mapungubwe- the dti Group House,
Building A, Ground Floor, EMIA Division 77 Meintjies Street, Sunnyside
Pretoria, 0002
 
For the full invitation details CLICK HERE to download
 
For more information on the EXPORT MARKETING & INVESTMENT ASSISTANCE (EMIA), Group Outward Mission Guidelines  - DOWNLOAD HERE

 

 

The BR&E programme for Isithebe & Mandini wraps up

 

Following three weeks of intensive interviews with a total of 59 businesses the Business Retention & Expansion Visitation Programme (BR&E) for Mandeni & Isithebe came to a close on Wednesday 24 October 2012 at the Feedback Session.

 

The programme aimed to identify opportunities for local businesses and to address obstacles to expansion and growth in the region by way of a visitation survey that was undertaken by a trained task team made up of local volunteers.

The feedback session was well attended and represented by both the private businesses sector and local government representatives.

Some of the key issues raised as concerns in the survey included labour challenges, the need for business support services, current infrastructure conditions and lack of maintenance, lack of social infrastructure such housing and schools, skills shortages etc.

The task team applied the PASTA criteria when evaluating the findings of the survey; proposals had to be popular, affordable, Short Term in terms of implementation and achievable. The key recommendations in addressing some the challenges facing the business sector in Mandeni & Isithebe includes;

  1. Skills (shortage of techical skills)
  2. Labour (labour issues affecting productivity)
  3.  Quality of Life (lack of social infrastructure)
  4.  Image of the Area (poor image of the area does not attract new businesses)
  5.  Networking (need for networking between private and public sector, access to information)

The next step of this process will include participants from the business sector championing each of the recommendations to ensure quick and achievable results.

 

His Worship Mayor of Mandeni Municipality Cllr. S. Zulu once again expressed his committement to working with the businesses sector in addressing issues and challenges identified in the survey.  He also added that engagement with the business sector is a priority for the municipality and as such was pleased to see businesses working together in an organised and coherent manner.

 

Mr Trenley Tilbrook, CEO of iLembe Chamber expressed his gratitude to everyone invloved with BR&E Visitation programme; “the programme which usually takes two to three months to complete was done in a record seven weeks, and this is largely due to the committement shown by both business and private sector” he said.

 

The full results are available on the following websites:  

www.ilembechamber.co.za and www.enterpriseilembe.co.za   CLICK HERE TO DOWNLOAD THE REPORT

SACCI 2012 Annual Convention Report

The South African Chamber of Commerce and Industry (SACCI) hosted its 2012 Annual Convention on the 4th and 5th of October at the Gallagher Convention Centre. The convention was well intended and provided a valuable opportunity for guest speakers and delegates to discuss crucial issues of economic policy affecting the country. The South African Chamber of Commerce and Industry (SACCI) hosted its 2012 Annual Convention on the 4th and 5th of October at the Gallagher Convention Centre. The convention was well intended and provided a valuable opportunity for guest speakers and delegates to discuss crucial issues of economic policy affecting the country. 

 

 

H.E. President Jacob Zuma was the keynote speaker of the Gala. Here follows a synopsis of his speech:

Our role as government is to promote the creation of a better life for all our people. In doing so, we work closely with the social partners represented at NEDLAC including business. We cannot achieve these goals if each sector works alone.

SACCI has chosen a very important topic for the annual convention of the SA Chamber of Commerce and Industry. Job creation is one of the five priorities of government that we adopted in 2009. Others are education, health, creating decent work, the fight against crime as well as rural development and land reform. We chose the five because of our view that any achievement in those areas will greatly enhance the improvement of the quality of life.

It has been an eventful 18 years since the ushering in of democracy and freedom in our country. Work began then to reverse the legacy of apartheid and colonial oppression. Progress has been made in a number of areas although challenges still remain given the extent of the under-development of the black majority.

Politically, we have consolidated democracy. We have developed sound and functional democratic institutions. The executive, legislature and the judiciary as well as the chapter 9 institutions that protect and promote democracy work effectively.

We have made significant strides in addressing socio-economic imbalances. About three million houses have been built for the poor. Six million households have gained access to clean water since 1994. Electricity has been connected to nearly five million homes. The country’s extensive social grants system now reaches more than 15 million people, 10 million of whom are largely vulnerable children. This programme has played an important role in reducing poverty. To improve access to education, more than eight million children at primary and secondary schools benefit from school-feeding schemes. A similar number do not pay school fees. Financial support has been extended to students in higher education and further education and training colleges. Statistics show a decrease in most crimes, including armed robberies, housebreakings and contact crimes. In addition to meeting basic needs like water, electricity and housing, our infrastructure development programme is building and revitalising many clinics, hospitals and schools. On Tuesday we celebrated the replacement of 49 mud schools with modern schools in the Eastern Cape. More importantly, income levels have also been rising in the country since 1994. Over the period 1993 to 2008, average real incomes for Africans increased by 51 per cent compared to a 35 per cent rise for Whites.

Unfortunately ladies and gentlemen, despite these achievements, the gap between rich and poor still remain. In that case, income inequality is still extremely high in South Africa. Unemployment also remains a huge challenge. The situation at the bottom levels of income distribution is of great concern as 80 per cent of households have no employed people at all. It has therefore proven difficult and is taking longer to re-engineer the economy to provide opportunities for those who were pushed into impoverished and remote rural areas under apartheid.

We have to continue searching for opportunities for economic growth. But unfortunately, the global economic climate remains negative. Our traditional lifeguards, the United States of America and the European Union, are both facing serious economic challenges. The oil controlling Middle East and North Africa are also having a share of their own difficulties. The major link in various global supply chains, Japan, is still recuperating after their natural disasters. The rising global food and oil prices are placing pressure on China’s inflation rate. These affected countries comprise more than two thirds of South Africa’s export market. The economic slowdown in the United States and Europe is not bound to clear up soon due to the severity of their structural debt. We must remember that these countries are the main importers of South Africa’s manufactured goods. It can therefore be expected that exports of manufactured goods will be adversely affected.

We need to work together to ensure a robust response that minimises the impact on growth overall and especially on the poor. We have initiated important programmes to address these economic and social challenges. Our New Growth Path framework encapsulates the spirit of promoting a labour absorbing economic growth and development. The New Growth Path focuses on six areas in which we are working to promote growth and jobs more intensively. These are infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism. Our core response this year has been the adoption of the National Infrastructure Plan, within the New Growth Path framework. Our infrastructure drive is about providing housing, sanitation, public transport and running water in the urban areas for millions of South Africans who are urban residents. It is about connecting rural communities to economic opportunities through building dams and irrigation systems, connecting farms and villages to the energy grid and building schools and clinics. The National Infrastructure Plan opens a host of new opportunities for businesses, both as suppliers of inputs and construction services.

Beyond infrastructure, we are also advancing work in other areas which are critical in the creation of jobs for the South African economy. In this regard specific resources have been allocated to industrialisation, the strengthening of SMEs and other policy measures. The emphasis on SMEs is on incubation, training, mentoring and symbiotic cooperation between small and big business. We are confident that our infrastructure build and also our programmes of industrialization, preferential procurement and localization will bring new opportunities and partnerships for business.

We also need a dramatic improvement in education and training. This will help us respond to the extensive skills shortages in the economy. We welcome the National Skills Accord signed by government, labour, business and the community sector as it will help us improve the employability of the jobless and foster greater labour demand. You would have performed priceless national service as corporate citizens if you absorbed as many of these jobless graduates and new artisans as possible.

Let me use this opportunity to remind business and labour of the need to ensure shop floor peace and stability in the country, in order for us to continue the collective responsibility of promoting economic growth and development. We have gone through a difficult period in our country in the past few weeks with wild cat strikes, one of which tragically claimed the lives of 46 people in Marikana. We should not seek to portray ourselves as a nation that is perpetually fighting. We must create a climate of constructive social dialogue, which South Africans are known for.

The Constitution guarantees the rights of both workers and employers and the country’s labour legislation outlines how these rights should be enjoyed by all parties. We wish the parties well as they negotiate to solve both the mining and truck driver strikes.

Having spoken about the difficult global climate, the question to ask is what then should we do? With the difficulties in the developed North, we have no doubt in our minds that the new Global order will be led by the developing south, by countries such as China and India. It estimated that the market size of the developing world will be larger than the developed world by 2020. It is therefore important that the developing nations trade amongst each other, in addition to doing business with the developed world. We are promoting South-South economic relations effectively through forums such as India-Brazil-South Africa as well as BRICS. We should also look more within the continent where profound change is taking place. Trade between Africa and the rest of the world has increased by two hundred per cent since the year 2000. Africa is posting an average growth rate of 5.5% and remains robust. It is impressive that over the past five years, seven African countries were among the 10 fastest growing economies in the world. Therefore, the mood among the Africans is better than at any time since the independence era in the 1960s and provides many opportunities for South African businesses.

There are many ways in which as business you can contribute to building a prosperous South Africa. You can take the lead with innovative investments that will build the capacity of the economy and create employment. That requires taking risks and thinking ahead of the curve, rather than just retreating into established industries and kinds of production. You can do as much as possible to support new and smaller enterprises, through mentoring, local procurement and by paying invoices on time. We are running a campaign within government to promote the payments of SMMEs within 30 days by government departments. If we all do the same, we will contribute a lot to promoting the growth of SMMEs and employment creation. You can also find ways to broaden ownership, through employee ownership schemes, community trusts and so on.

 

Some may become pessimistic when the international climate is as bleak as it seems, or when tragic incidents such as Marikana take place in our free and democratic country. There is no reason to be despondent. We have the capacity to overcome difficulties when we work together as South Africans. 

 

For the full report read more

Management structures are all about responsibility and accountability

 

To run a successful business you need to be able to effectively and efficiently manage all functions within your business.  The aspects most common to businesses are; marketing, sales, administration, planning, finance, logistics and information technology (IT).

These business functions all require a diverse array of skills and responsibilities, so how confident do you feel in your ability to manage all of these areas?
 

Most small businesses who have only one or two directors or partners, often find it challenging to manage all areas of their business, not only because the physical time constraints but also because  they may not have the necessary experience or specialized skills for the various aspects of the business.

However, for a business to grow it is vital to identify these possible weaknesses and delegate, where necessary, these activities to employees or perhaps even outsource a particular function or service.  But remember, management structures are all about responsibility and accountability.  You can delegate responsibility, but you can't delegate accountability to anyone.  You can delegate the job to someone else, but you as the manager are still accountable for delivering business results.

Putting together an operational and management plan, whether it be for the company’s own guidelines or to attract possible investors, it’s all about creating confidence and comfort in your ability to manage the business.  The plan needs to show that the business owners have given careful thought to their operational strategy and have acknowledged shortcomings and weaknesses which may hinder business performance.  At the same time it needs to clearly outline a plan to employ the right people to do the job, ensuring that you are not only able to deliver on the goals and objectives set out by the company, but also will sustain your competitive advantage.

An effective manager is able to manage the business and manage the people in it.  So, how will you measure and evaluate performance?

Enthusiastic employees outperform employees who are not motivated to perform. Setting goals are critical to business and employee performance – and these expectations should include employee  attitudes and behaviors which will enable your business not just to succeed, but to excel.  Implement specific practices such as incentives, team-building and training activities, to deliver the greatest positive performance impact.

 

A proven way of measuring employee and management performance is using a balanced scorecard approach, incorporating key performance areas with key performance indicators along with relevant statistics and reports.

Introduce internal controls such as written policies and procedures for each business area as well as administrative controls such as recording of attendance, payroll, employee benefits, skills development levies etc.

Lastly, it’s important to put together a contingency and succession plan for the continuation of the business in the event of an owner’s death  or incapacity.  Determine what the risks associated with the business and how will these risks be mitigated? You will also need to identify the key employees within the business - what temporary arrangements will be implemented to cover the job responsibilities of these employees should the need arise?
 

In closing, remember that true business management success involves more that realizing a high profit margin, but also requires a well-planned business strategy that includes responsible business ethics, making use of every available resource, motivating employees, cultivating skills with emphasis on teamwork, increased responsibility and a high regard for duty and loyalty, the ability to delegate responsibility and the monitoring and evaluation of all areas of the business to ensure peak performance and productivity.
 

 This article was based on a workshop  presented by Cobus Oelofse,  iLembe Chamber of Commerce Mentor on Saturday, 29 September  2012.  For more info and guidance from Cobus on business organisation and management, go to the resources page on our website.

First in South Africa - Develop a World Class Memory - Workshop 8 October

 

Yes it’s a first in South Africa, Africa!

 

The first 5 hour workshop with the 8 x World Memory Champion. It will be a privilege for you to be a part of this historic event with Dominic O’Brien and Daren Denholm [6 X consecutive southern hemisphere champion].

 

Details are:

Date : Monday 8th  October 2012 at Ashton International college, Albertina way, Ballito,

Time: 17h00 to 22h00

Cost:  R500 pp or buy 2 or more for R350.00 each.

 

For more information on the speakers and full invitation CLICK HERE

 

Any queries for bookings and payments please contact or email me.

If you know someone who would be interested on this workshop, please pass this email to them.

For bookings contact Rosa Botha

Mobile: 072 601 1475 | Tel: +27 (0)31 583 8032 | Fax: +27 (0)31 583 8033 | rosa@powerstudying.comwww.powerstudying.com

 

 
 
 

First in South Africa - Develop a World Class Memory - Workshop 8 October

 

Yes it’s a first in South Africa, Africa!

 

The first 5 hour workshop with the 8 x World Memory Champion. It will be a privilege for you to be a part of this historic event with Dominic O’Brien and Daren Denholm [6 X consecutive southern hemisphere champion].

 

Details are:

Date : Monday 8th  October 2012 at Ashton International college, Albertina way, Ballito,

Time: 17h00 to 22h00

Cost:  R500 pp or buy 2 or more for R350.00 each.

 

For more information on the speakers and full invitation CLICK HERE

 

Any queries for bookings and payments please contact or email me.

If you know someone who would be interested on this workshop, please pass this email to them.

For bookings contact Rosa Botha

Mobile: 072 601 1475 | Tel: +27 (0)31 583 8032 | Fax: +27 (0)31 583 8033 | rosa@powerstudying.comwww.powerstudying.com

 

 
 
 

Why do most start up businesses fail in the first 2 years of operation?

 

It’s well known that most start-ups fail.  What is not well known is that over 90% of the remaining successful companies that ultimately became successful had to abandon their original founding strategy – because their original plan was not viable.  In other words, successful companies became successful not because they had the right strategy in the beginning, but rather that they were flexible enough to re-align their strategy when they discovered it was not working and more importantly, there was still enough money left over to pivot and try another approach.  The unsuccessful start- ups however, fail because they gamble their all on their original “no brainer” strategy, which turns out to be flawed.  By the time they finally accept their error they are out of cash.

For a company to become successful, it needs to find a viable strategy as fast as possible while using as little investment as possible.  Only once a company has found a profitable strategy, the focus then changes to investing for growth.  Clearly any initial strategy that seeks growth ahead of profitability has a high chance of failure.  One only has to cast our mind back to all the dot com craze of the 1990’s “get big fast and worry about profits later” was then the in strategy – very few are still around (less than 1%).

A crucial part of any business plan is the cash flow projections; it’s a financial summary of the start-ups business strategy.  The problem is that in most cases these projections are nothing more than honest guesses based upon a number of (researched?) assumptions, and because these projections are to be used to find investors or funding, they need to look very attractive.  At this stage, no one really knows how the customer is going to respond to the product or service, nor what the real costs are going to be.

It is only once the business gets going, they realise that the assumptions they made were wrong.  In many cases it’s then too late to salvage as emotional commitment to make it work ensures all the invested capital is exhausted before the investor or entrepreneur finally throws in the towel.

Thus, most start-ups are funded on a basis of incorrect guesses and not upon which projects are most likely to succeed.

To ensure a more successful approach to analysing the financial projections, firstly one must understand that they are really rough estimates and can be manipulated to attract investors or funding.   Then list all the assumptions used in the financial projection and answer the question; which of these assumptions need to be proved true for these projections to materialise.   These assumptions must be ranked by importance and by certainty.  This can be done on a position map as set out below.

 

                                                            

The focus is on obtaining answers for the most critically important and most uncertain assumptions. By getting answers and testing the most critical assumptions, investors and entrepreneurs will get a better and more cost efficient understanding of the chances of the business strategy delivering on its projections.  Avoiding the risk of getting emotionally caught up in the wrong strategy and if necessary, ensuring that the start up has enough cash reserves to fight another day.

Written by Charles Alcock, ICCIT Business Mentor. For further guidelines from Charles on financial planning, click here

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