Wednesday, March 25, 2009

SEDA small business support

SEDA, the governments small business support arm is as committed as ever to supporting small business in South Africa. Not only have SEDA supported numerous entrepreneurs from disadvantaged backgrounds over the last few years they have also put their money where their mouths are when it comes to Business Planning support and funding for new ventures.

In a recent interview, Hlonela Lupuwana, acting CEO of the department of trade and industry’s Small Enterprise Development Agency, spoke to ANNE HUTCHISON about Seda’s commitment to the Business LaunchPad

SEDA is a key partner in the Business LaunchPad competition, as its national network of branches and enterprise information centres help to ensure that entrepreneurs get to know about the competition.

Business planning, which is what the competition is about, is the core of Seda’s business,” says Hlonela Lupuwana, Seda’s acting CEO, commenting on the importance of its involvement in the FNB Enablis Business Plan Competition.

“At a more strategic level, Enablis brings public and private sector partners in the business of SMME development together to collaborate on this project, which is a good example of the kind of synergy we support,” she adds.

Seda began working with FNB in 2007 — to assist South African entrepreneurs gain the necessary skills to run a sustainable and competitive business — about the same time as the bank became involved with the Enablis LaunchPad. Since becoming an active partner, Seda’s role has extended beyond simply being a co-sponsor to being closely involved in distributing entry forms, assisting with the adjudication of entries and identifying how entrants can be assisted through other Seda programmes.

As a key driver of SMME development to reduce high levels of unemployment and poverty, Seda is mandated by the department of trade and industry to boost the sector through its Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises (ISPESE), aimed at identifying factors that contribute to the success of the small business sector.

Recognising the need for focused SMME support, the ISPESE provides a wide range of non-financial business development support services to entrepreneurs in the pre-start-up, start-up and growth phases, as well as to businesses in distress. Through its 43 branches countrywide, Seda’s services include business registrations and planning, co-operatives’ support, training and mentoring, and access to markets, finance and technology.

Lupuwana believes that the Business LaunchPad gives fresh impetus to the SMME cause.

“It identifies existing and aspiring entrepreneurs and encourages them to sharpen their business acumen, improve their business plan thinking and develop writing skills,” she states. “Showcasing the winning entrants as role models also encourages entrepreneurs.”

Lupuwana says she felt “incredibly inspired” when she attended the adjudication panels for the finalists. “These were people from all four corners of the country, whose business ideas and passion had been recognised, and you could sense that whether they won or not, they could continue with the added confidence of knowing their idea had been selected out of the thousands of entries.”

She says Seda aims to move informal enterprises or businesses in the seed stage to viable concerns that are registered and can grow by taking advantage of the available support services. “The ultimate goal is to transform ‘necessity’ entrepreneurs into ‘opportunity’ entrepreneurs, where entrepreneurial thinking is not just based on subsistence but on properly identifying and harnessing available business gaps.”

Seda offers a number of structured programmes. The Technology Programme, for example, uses the “incubator model” to fast-track the development of small businesses in a range of industries from platinum beneficiation to the manufacture of essential oils.

Businesses are provided with premises, manufacturing machinery, advice on marketing and general business management for an initial period, after which time they are expected to have acquired the necessary skills and market reach to go it alone.

“The aim is to give entrepreneurs time to get up and running in a protected environment by providing the necessary access to resources, intensive mentoring and support that will make their business viable in the shortest time possible,” says Lupuwana.

Seda’s Export Development Programme exposes SMMEs to the international business arena and global best practice through TradePoint, a global system which assists small enterprises to trade internationally and access information by using electronic commerce technologies.

Other key areas of assistance are Seda’s Franchise Support Programme and Co-operatives Programme. It also focuses on growth industries: for example, its Tourism and Cultural Industries Programme supports both direct and indirect tourism initiatives through networking and training.

Partnerships such as that with FNB and Enablis are crucial to achieving Seda’s goal of establishing a formal and sustainable small business network on a large scale, says Lupuwana.

Other local partners include business development support agencies and a range of development finance institutions, as well as dti-appointed finance entities such as Khula Enterprise Finance, the National Empowerment Fund (NEF), the South African Micro-finance Apex Finance Fund (SAMAF) and sector-specific finance bodies.

“We also benefit from the experience of global partners who provide technical and, to a limited extent, financial support.”

A major partnership is with Finland, following the signing of an agreement to support Seda with core funding of around R45-million and technical assistance of about R7-million over four years. Another is the Tri-Nations partnership between representative groups of Seda, the Brazilian Micro and Small Business Support Service (SEBRAE) and India’s National Small Industries Corporation Limited (NSIC).

An annual Tri-Nations Summit on Small Business is part of the initiative between India, Brazil and South Africa to promote co-operation and exchange.

“Small business success is the cornerstone of economic growth in South Africa, and Seda initiatives and partnerships are pivotal,” says Lupuwana, emphasising that collaboration is a key component of the ISPESE strategy.

We acknowledge The Times newspater for their contribution to the article

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Better Business Climate Not Far Off

A better climate for business is not far of according to Jean Temkin, author of More Charting for Profit and business writer for the Business Day news paper. With the current economic slowdown evident when ever you open your favourite newspaper or news bulletin, its great to hear some optimism from the Business Day journalist. With the recent rate cuts and further cuts being predicted in April, life for small business owners is about to get easier albeit slowly but surely.

The article by Temkin added for your convenience below:

BUSINESSES that are hanging on by their toes as they contemplate shutting up shop ask how long our economic plight will last. If it is a matter of months, their toes may be able to take the strain, but if it is longer they may as well cut their losses now.

Bearing in mind that the current crisis is the worst for many decades, I’ve dug into history books, read what the pundits are saying and analysed many charts. My conclusion is that the end is far too indistinct to even guess at. But barring further financial upheavals and providing kismet rewards our belt-tightening efforts, it’s possible we may already have seen the worst. As for toe-holding businesses, if possible they should hang on a little longer.

It is only my shorter term charts that look more positive than of late. Longer term charts are indecisive. The JSE overall index has put on 16% since its November low which has already led to some pundits speculating that we have seen the market’s bottom. Finance Minister Trevor Manuel has confirmed that, unlike the banks of our trading partners, South African banks are sound. This being so, we perhaps have a better chance of an earlier recovery.

I have chosen a 20-year chart to show that while the Dow does have some influence on the Overall, they are not necessarily joined at the hip. The Overall is looking reasonably positive while the Dow does not.

Going back as far as my data allows, I have added to the percentage fall to each significant downward correction. Using figures that represent working days, the first figure shows how long it took to reach the bottom of a dip, and the second figure how may days it took to regain its previous high. As it is an arithmetic chart, earlier corrections appear less significant than later corrections but in percentage terms are often more significant. We are now 263 days into the current dip and the loss from the May high to the market bottom on November 20 was 196 days.

The Dow’s crash began eight months before the start of the Overall’s crash. From October 2007, the Dow’s most recent high, until November 2008 the Dow lost 46%. The Overall’s most recent high was on May 23 last year and by November it had lost 43%. Both did an up-flip in November. The Overall rose, retreated slightly and then rose again. The Dow rose, fell back and continued falling. Since the up-flip the Dow has lost 6% against our 16% rise.

While the monthly 20-year chart shows the Dow Jones still heading down, its daily charts show it trawling along the bottom and still in oversold territory on its overbought/oversold chart. The Dow’s moving average convergence divergence (MACD) plotting is nudging down through its moving average. The monthly chart shows the Overall nudging better, and its daily charts show it at the zero level on its overbought/oversold chart and nudging upwards through its MACD.

Paging back 78-years to the 1929 Wall Street crash, I see that the Dow lost 90% in total, reaching its low two years and three months later, in July 1932. Eight months after that, on March 15 1933, the Dow experienced its largest percentage gain in one day with a leap of 15,34%. The world was still deep in the Great Depression but the Dow was signaling that the worst was over. It continued upwards but working with inflation adjusted figures the 1929 high was not surpassed until 1954.

•Temkin is the author of More Charting for Profit, a textbook on technical analysis.

Sunday, March 15, 2009

Marketing Ideas for South African Business

Effective marketing ideas for new business is such a crucial part of achieving success with your start-up and I'm continuously surprised at how little energy and focus is spend on this issue. Irrelevant of how innovative your service or product is, if your potential clients do not know that it exists, your business will struggle to get of the ground. Having spoken to just to many entrepreneurs who see this as the last thing they think about I find the tragic statistic on business failure rates not surprising at all.

Lets think of the reality of this. Do a search for your product or service on Google or your favorite search engine or have a browse through your local yellow pages if you're still of the rare bread that dint like the Internet much and you will soon find out that more often than not, your product offering is not unique. And if it so happens that your service or product is unique, then even more so the reason why you should be pro-active in marketing, promoting and selling your service or product.

For entrepreneurs starting a new service, the author C J Hayden is one of my favorite writers when it comes to ideas for marketing your service. In her article below she looks at a few innovative ideas for you to explore:


Boost Your Marketing with the Buddy System –C J Hayden

Remember back in grade school when the teacher asked you to
hold hands with a friend on field trips? The idea behind the
buddy system is that it's much harder to get lost if there
are two of you traveling together. When you get into
trouble, your buddy can help you out, or find someone else
who can.

Maybe you could use a buddy in your marketing. The constant
challenges you encounter while promoting yourself and your
services make sales and marketing a difficult road to travel
all alone, and it's easy to get lost. Working with a
marketing buddy can give you:

o Perspective - A different point of view on your progress
or challenges. Just hearing your problem restated by another
person can give you new insight that will help you find a

o New Ideas - A partner for brainstorming and an extra pair
of eyes and ears to spot opportunities. You can double the
amount of knowledge and experience at your fingertips.

o Accountability - Someone other than yourself to whom you
are accountable -- who will ask you once a week what you
have done so far, and what's next.

o Support - Space to complain or celebrate out loud, with
someone who cares about your progress. If you're facing a
roadblock, grousing about it for a few minutes may be all
you need to get back into action. And having someone to
share your success with can make it much sweeter.

While you could use your spouse, best friend, or business
partner to provide this extra help, the individuals closest
to you may not be the best choice. The people in your
personal life will not always be thrilled with how much time
you spend on marketing, and your business associates may
tend to sidetrack you with day-to-day management issues. You
may find it more helpful to find a buddy with more
detachment, who understands the importance you place on

You and your buddy can assist each other in reaching your
goals by setting up a regular check- in, where each of you
reports on progress, announces successes, and states
challenges. The buddy's job is to listen, celebrate,
commiserate, and be a brainstorming partner. Here's how to
make the buddy system work for you in marketing:

1. Set a fixed time to talk. Whether you meet by phone or in
person, set a start and end time for your conversation. Half
an hour is enough; an hour is plenty.

2. Check in about goals and action steps. Make a brief
report about where you are with your current goals and what
steps you have taken since your last meeting. Keep your
check-in brief and to the point, e.g. "I got one new client
this week, and set up three appointments to give
presentations. I interviewed a designer about doing my new
brochure, and reserved a domain name for my web site."
Acknowledge your buddy's progress and celebrate his or her

3. Help each other solve problems. Ask your buddy to first
just listen while you tell him or her what's going on and
clear your emotional reaction to it. Your buddy can say
things like, "Gee, that's tough," or "How awful!" but should
not offer any advice until you are through. Talk about not
only what is happening, but how it makes you feel. If it
sounds like complaining, that probably means you're doing it

You might say something like this: "I've been trying for two
weeks to draft my brochure, and there's just been one
emergency after another, and now my mother wants me to help
sell her car, and I'm so frustrated! All the words I write
down just come out wrong, and I don't think it'll ever come
together, and I needed it yesterday, and I'm so worried
that..." You get the idea.

Set a time limit of 5 minutes for reporting and clearing. At
the end of that time, ask your buddy to summarize for you:
"I hear how frustrated and worried you are. You seem to have
two problems that need to be solved -- finding the time to
work on the brochure, and getting the words to come out
right. Are you ready to look at some solutions?"

4. Brainstorm possible solutions. Your buddy's job is not
necessarily to hand you the right answer -- his or her more
important role is to help you expand your thinking to come
up with some new ideas. Take your problems one at time, and
together with your buddy, make a list of possible solutions.
Don't edit the list as you are brainstorming; include
anything and everything that comes up. You are not allowed
to say, "That won't work," or "I already tried that."

Here are the potential results of a brainstorm on getting
the right words for a brochure:
o hire a copywriter
o plagiarize my competitors' literature
o use the thesaurus
o ask my cousin the writer to help
o do a brochure with only pictures
o don't use a brochure at all
o look at the Yellow Pages
o take a class in marketing communications
o use what I have and stop worrying
o have some colleagues review it

5. Decide on your next steps. If none of the brainstormed
ideas seem right, look at each one to see if there's
something useful in it. Maybe you can't afford a copywriter,
but you know one you could ask for free advice. Perhaps a
class would take too long, but you could check out a
textbook from the library. Find just one thing you can do
that will get you moving toward a solution.

Regardless of any problems you try to solve during your
session, always end by naming what steps you will take
toward achieving your goals before your next meeting. Write
these steps down -- both yours and your buddy's -- so you
can check in about them next time.

6. Keep the relationship reciprocal. Make sure each of you
gets an equal amount of time at your meetings. If you end up
spending the whole session on one person's problem, devote
the next session to the other buddy. Keep your buddy in mind
as you make new discoveries and meet new people, and share
any opportunities you uncover. The buddy system works best
when you do for your buddy what you would like your buddy to
do for you.


Thanks for reading my Blog and ... happy marketing,


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Wednesday, March 11, 2009

Buying a Business in South Africa

Buying a business can often be a much easier alternative when looking to become a business owner. When faced with the question of whether to start a business of your own or buy an existing business, the second option, providing that you follow the correct process and do your homework, can be a much less risky option. Chances are though that the reason the current owner is selling the business in the first place is that it may not be growing as fast as anticipated. Lets have a look at a few of the advantages and disadvantages that you need to consider:

The main reason to buy an existing business is the drastic reduction in start-up costs of time, money, and energy. In addition, cash flow may start immediately thanks to existing inventory and receivables. Other benefits include pre-existing customer goodwill and easier financing opportunities, if the business has a positive track record.

The biggest block to buying a small business outright is the initial purchasing cost.
Because the business concept, customer base, brands, and other fundamental work has
already been done, the financial costs of acquiring an existing business is usually greater then starting one from nothing. Other possible disadvantages include hidden problems associated with the business and receivables that are valued at the time of purchase, but later turn out to be non-collectible. Good research is the key to avoiding these problems.

What else do you need to consider at this point. Depending of course on the type of business you are buying, the following 8 points can serve as a guideline:

1. Do a detailed review of the financial statements?
2. What are the monthly payables and receivables?
3. Who are the employees?
4. What is the customer demographic?
5. Is it in the right location
6. What are the appearance and condition of facilities?
7. Who are the competitors?
8. Is the registration, licenses up to date?

Financial Statements
Review the financial statements and tax returns for at least the past three years. These should be audited from a CA. Never settle for financial statements that are reviewed or compiled. These are based solely financial information supplied by the company and have not been audited by a certified public accountant professional.

Payables and Receivables
Is the business paying its bills. Net 30 is standard. If bills are being paid 90 days or more past due, there may be cash flow problems. Are there any liens against the business?

How critical are the employees to your success? What are their work habits? Are these
people that you can work with? How long have they been with the company? Will they
stay? What incentives do they have? Can they be easily replaced? What are their
relationships with customers? Will customers follow employees that leave? Are there any employees who can take over if necessary?

Customers are the most important asset are buying. Do they have a special relationship with the current owner the holds them to the business? How long has each customer been in place? What percentage of total income are they? Will they stay or leave? Are there contracts in place?

Is the location critical to the success of the business? How good is it? Is parking an issue?
Does the business rely on walk-in traffic? What the future for the area?
Appearance of facilities How well is the business maintained? Is maintenance required?


What is the competition like? How competitive is the industry? Exactly who are the
competitors? Are price wars a factor? Has the competition changed recently? Have any
gone out of business? Why?

Registration and licenses
All business legal documents must be transferred. Don't do this without an lawyer!
Lastly never consider buying a business without getting professional help. A business
broker, a CA and an lawyer are critical investments in your buying a business success. To even consider buying a business without them is very foolish.

In addition to the above, you may find that where the business has got a stable or successful track record, the bank, although still needing a business plan from you, may be much more willing to support you with funding for the business as the risk factor is easier to predict.

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Thursday, March 05, 2009

Bringing a Business Idea to Life

How many "million dollar" ideas have you come up with in your life? By now perhaps you may have found that the idea is the easy part - the hard part is finding ideas that will make money based on your skills, experiences and interests. Is the idea really an opportunity? Ideas do not have any value until the idea is put into a workable form and shows that it will sell at a price the consumer or end-user is willing to pay. Hopefully this information will help you to recognize the importance of market research and how this information is crucial for your idea or venture to succeed.

Lets have a look at a quick overview of issues to concidder when establishing whether your idea is an opportunity. Marketing is the most critical aspect of your business...if no one buys your product or service, there is no business.

What is Market Research?
Market research is a simple process of gathering information. It allows the individual to forecast what level of sales their new product will generate, at what profit and how best to optimize the sales. If the individual did not do any research, they would not know whether they were developing a product that was already on the market, whether there was a demand for their product or if the product could be profitable. On the other hand, if research indicated that a product met a certain need and could be produced and sold for profit, there could be a potential demand for your product idea.>Some questions to determine how much of the product you could hope to sell at a profit and the best way to sell it are provided below: What do you plan to sell - a product or service? What need does the product or service meet? How does it meet that need? Who needs this product or service? How many people will buy this product or service? What advantage does this product have over other similar products? What price will customers pay for the product or service and how often will they buy it? Can it be produced at a profit? These questions should be reasonably answered in order to assist you with attaining your goals. Answering these questions objectively will help you to determine a potential market for your product and build a marketing plan. On the other hand, if your research is not favourable, you may wish to reconsider before proceeding further, and drop the idea.

Marketing Facts
The famous four P's of marketing are... Product - what organizations offer their perspective customers (a helicopter or a haircut). Consists of the core product plus packaging, brand name, warranties, etc. Price - each product offers some utility - utility has a value - the value is stated as the product's price, normally expressed in dollars and cents. Place - (distribution) where, when, in what condition, through what intermediaries, and what route the products made available for exchange. Involves two main decisions: channels of distribution and logistics (physical aspects of distribution). Promotion - systematic communication of aspects concerning the product, price and distribution. May aim to inform, to persuade or to remind. There is no "one best way" to mix the four "Ps". Like a chef cooking a meal, the marketing manager must decide the best mix to meet the tastes of their consumers.

Market Projections
Marketing is selling or advertising and a management process. Understanding your consumer and their needs and habits is critical.Some interesting marketing projections for the 1990's: 75 million baby boomers will enter middle age. People over seventy-five or older will move to Florida, Nevada, or Arizona. They will be a lucrative market. There will be a growth spurt in frequent-buyer clubs, modelled after frequent-flier programs. VCRs will become so widespread that video brochures will be recognized as high-powered weapons, proving their effectiveness to all type of businesses.

Know Your Product
Ask yourself the following questions: What is "unique" about the product? Does it provide better durability, not like another in nature, quality or form? Is it unique by its appearance and/or design? Does its appearance convey desirable qualities? What features do your customers want? What are they prepared to pay? How does the product compare with the competition? Can the product be recognizable and prove useful and be price competitive? Service - will it require less servicing or less costly servicing than existing products? Most entrepreneurs feel their product is unique because "they haven't seen anything like it in the stores". Most people respond to a market that has too many choices by buying the best known brand, whether shopping for a toaster, a hair dryer, a shaver, etc. A customer may buy the brand they know best, the brand that's the cheapest, or in some cases, the brand that's most expensive. An entrepreneur faces tremendous resistance when introducing a product into a crowded market. It is also important to be aware that many markets are dominated by large companies, therefore, even more important for an entrepreneur to find a way to put a product onto the market to find a niche.

Know Your Market
Determine the total size of your target market. Demographic information such as population age, gender, income levels, race, occupations, disposable income and buying practices are essential to know when marketing the product. Geographic area is important to consider in choosing a location for your business, knowing where your potential customers are located, and other types of industries in that geographic area. Once you have defined who your target customer is, you must determine how many potential customers exist if your product idea is commercially viable. It is important to note that the market may already be well served by other acceptable products to your own.If your product is an improvement on an existing product, your market size could be determined by the total number of similar products currently being sold in the geographic market you have defined. If you have a new product which is an "add-on" to another product currently on the market, knowing the number or product sold annually in your geographic market would help determine the market size for your new product. It is also important to know whether the market of your product is growing or shrinking, if it is a new product or a mature product. Economic, political, environmental and demographic trends will have some effect on the success of your product.

Know Your Customers
Who or what do you plan to sell your product to? How do customers perceive themselves? How do you plan to acquire customers? What distribution methods will you need? What form of advertising and promotion will be effective to produce sales and sell the product? What will promotion and advertising cost? Where is your target customer most likely to buy your product? How important is price to a customer? How important are product or service quality and convenience to your customer? Focus on customers' needs. Listen to your customer. Not all products are sold to individuals although they are sold through individuals. Your customer could be schools, small businesses, restaurants, suppliers, manufacturers, etc. Psychological considerations as to whether your target customers are fashion-conscious, status-conscious, health conscious or safety conscious should be considered when defining your target customers.Knowing who your customers are is important but servicing the customers to ensure that they are happy and satisfied with your product is paramount. It has been acknowledged by many marketing gurus that customer service will be the key to survival of business over the next several years. Excellent customer service ensures an ongoing relationship between you and your customers. Entrepreneurs have to take into consideration that large retail stores, as well as distributors and manufacturers' agents may not be interested in carrying their product because the entrepreneur has not established sales records.So in order to establish this, the entrepreneur could promote the product through advertising in magazines or mail-order catalogues. They should also attend trade fairs where valuable contacts can be made as well, they can receive input about the product and learn who the major purchasers are, and whether the price is suitable to the customer. You start with the idea that there might be a need for a particular new product, but to fully understand your new business opportunity, you need to add the customers' perspective. Knowing your customers' needs, values and wants will build a strong competitive advantage into your new product.

Know Your Competition
Know who your competitors are and their company history. Know what your competitor's products are - its features, costs and prices. Know your competitor's strengths and weaknesses. >What are the advantages and disadvantages of your product? How valuable is your new product to the marketplace? Will your product make its entry difficult and costly? Will you face new competition in the marketplace from other innovations that may be expected to threaten the market share? Studying and researching the competition is a very critical market research step. It may uncover a similar product already on the market; help you evaluate the potential share of the market you can expect to obtain; and provide you with a list of companies to license or distribute your new product. If your product is similar to products already on the market, familiarity may be an advantage. If your product is completely new on the market scene, it may be a disadvantage.It is important to note that with new product introductions, customers may be slow to catch on. Failure to recognize your competition at an early stage of your marketing research, could lead to difficult problems later on.

Know Your Market Price
What price will customers pay? Does your product have a price advantage over the competitors? What does it cost you to get your product to market? Are there trends in price increases or decreases and how much in your target market area? Is your initial price low enough to find a market and yet high enough to make a profit? Price and value to your customer are the most important variables in this area. You must be able to introduce a new product at a lower cost or you will not be in business long enough to recoup your investment. If you can produce a same product like your competitors for less and sell it for less, then you can take business away from your competitors. Never assume that your product is so great and wonderful that customers will pay anything for it! Researching what your target customers will pay for your product and what your customer's needs are will have an effect on the market price.

Success Factors
Some factors which can contribute to business success are:
A well-thought out business plan is "worth its weight in gold"
Build commitment
Review your mission statement and strategic objectives
Perform market research
Evaluate data
Formulate marketing objectives
Assess the cost Create one-year tactical plans
Establish a formal review process Set up a market infrastructure
Identify a niche
Be flexible in modifying your niche as the marketplace
changes Attend trade shows
Stay in touch and in tune with your customers
Listen to the voice of the market

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