Here’s a dummy’s guide to starting a business in South Africa based on what has worked (and not worked) for me over the past 13 years:
1. Find an idea
There is no shortage of ideas out there. The trick is to find the one that plays to your strengths and that has the highest odds of not failing.
The first step is to collect as many ideas as you can, here’s how you do it:
1.1 Put yourself out there
Opportunity can’t come knocking if it can’t find your door. Tell people you want to start a business. Put yourself out there. People will bring you ideas.
For example, my first business, Cellfind, was the result of an approach from a businessman who heard that I was unemployed and looking for a challenge.
If I had been seemingly happily slaving away in a company then Cellfind would never have happened.
Of course, putting yourself out there ain’t easy. It can be embarrassing. When you find yourself faltering, remember Dr Seuss:
“Be who you are and say what you feel, because those who mind don’t matter, and those who matter don’t mind.”
Read books. Lots of them. Especially books about fields completely different from yours. Most of my ideas have come from intersections rather than deep-digging.
For example, I recently started a business in the telecoms industry after reading a book about the USA cable industry in the 70’s. The parallels with SA’s telecoms industry sparked a lightbulb in my head and boom! I had an idea for a business.
It’s useful interspersing non-fiction with fantasy. Fantasy novels are full of life lessons masquerading as dragons and orcs and I find it really frees my up mind to think big.
1.3 Travel as much as you can
There is simply no substitute for a change of scenery to spark inspiration. Travel is the magic elixir for ideas. Be tired, be uncomfortable, be hung-over, let your subconscious surface and you’ll soon be flooded with ideas.
Once you have ideas, start sharing them with everyone you know. Friend and foe. Don’t worry about the idea being stolen. If its steal-able its not a good idea.
The only good ideas are the ones that you alone can execute.
Listen to the Universe. Where are you getting traction? Which idea sparks the interest of most people? Where do you find the most people saying “Great idea but impossible”?
“If at the first the idea is not absurd, there is no hope for it.” Einstein
The greatest ideas are the ones that no one else wants to chase. As Peter Thiel says, the best business is a monopoly business. Competition erodes profits. You want to avoid competition!
Find something useful that no one else wants to do and you have a monopoly.
The idea you must chase is probably not the idea you want to chase
For example, at the beginning of 2013 I was at a loss as to what to do. Recently departed from Mxit & World of Avatar I’d toyed with the idea of working for a company until I realised I was unemployable.
So I started a side venture, a non-profit organisation called Project Isizwe that would help governments roll out Free WiFi in poor communities.
But that was a side project. I was still eagerly looking for money-making opportunities, trying to get back on track to buying a jet one day.
Luckily, after a few months, I opened my ears and eyes and listened to the Universe. Project Isizwe was taking off. After six months it had more traction than any venture I’d ever been involved in. So I parked the “Buy a jet” dream, and focused on the “Free WiFi for Africa” dream.
Sometimes you ignore the girl-of-your-dreams right in front of you because you’re too busy chasing the girl you think you want.
“If you come to a fork in the road, take it.” Berra
It’s easy to chase what you want to chase rather that what you should chase. But you’ll only find what you want if you follow the path that you should.
A word of caution: Just because you think its a good idea, doesn’t mean its a good idea. Peter Thiel provides a great checklist:
- The Engineering Question: can you create a breakthrough technology instead of incremental improvements?
- The Timing Question: is now the right time to start your particular business?
- The Monopoly Question: are you starting with a big share of a small market?
- The People Question: do you have the right team?
- The Distribution Question: do you have a way to not just create but deliver your product?
- The Durability Question: will your market position be defensible 10 and 20 years into the future?
- The Secret Question: have you identified a unique opportunity that others don’t see?
2. Find partners
Ok, you have an idea; you’re ready to fire the laser. Now what? You need a founding partner or team. Many a dream has gone awry due to bad marriages. Partnership is like marriage; you have to find the right person…
2.1 Ask family for references
My first recruit in my first business was a guy called Pierre Fourie.
After the first day of my new venture I flew to Stellenbosch for a weekend with the in-laws.
I landed 9pm on a Friday only to find my new laptop didn’t have MS Office. What use is a laptop without Word and Excel?
My wife suggested I call her brother, who in turn suggested I call his friend, a BSc Computer Science student at University of Stellenbosch who was the family’s go-to guy for all IT problems.
I called him. He arrived 11pm on a Friday and my laptop had a pirated copy of MS Office installed by midnight.
I offered him a job on the spot and he accepted. He dropped out of his Masters program and moved to Pretoria that weekend.
Pierre single-handedly coded our prototype and recruited our development team. A more solid man I have yet to find.
That’s how you find your initial team. Through personal reference from people that know you well.
2.2 Former colleagues
If you’ve already been in corporate then the obvious resource pool to tap is former co-workers. Just be careful if they were a few layers removed.
People are great actors, so you sometimes get the wrong impression. Ask direct-working colleagues of his whether they would hire him. “Maybe” is “no”.
2.3 Ask mentors for references
If you’re lucky enough to have mentors that care for you, ask them. They have more experience and probably know your weaknesses better than you do. They’ll know the type of person you can marry (or will divorce).
3. Find customers
Ok, idea and team in place, BOOM! Where to from here? Now you need a customer.
If you’re in the consumer space, then define your ideal 1,000 customers. (Read 1000 True Fans by Kevin Kelly.) If you’re in the B2B space then one customer is enough.
3.1 Who is your customer?
“Everyone” is not an answer. Finding your customer is a bit like finding your idea. It’s a process of elimination. Approach as many targets as you can and then pay attention to where you get traction.
When we started Project Isizwe we had to figure out who is our customer. Who will fund Free WiFi in low-income communities?
Rich people wanting to help poor people? Foreign aid agencies like USAID? Developmental finance institutions like the World Bank?
We tried all of them with no luck. We eventually had to ask ourselves, who wins in the short term by providing Free WiFi to the poor?
And the answer came: Government. Free WiFi = Happy Citizens.
So we started approaching municipalities, provincial administrations and national government departments. The first to bite was the City of Tshwane.
Today Tshwane has capacity for over two million people on Free WiFi networks in low-income communities.
3.2 Focus on your first customer
It’s easy to take your first customer for granted and shop around for new customers. Be careful. Whilst you’re looking for new love, your old love might feel neglected and find someone else.
Never forget your first customer (or first 1,000 customers).
4. Find money
Idea, tick. Partners, tick. Customer, tick.
Now for the million-dollar question (pardon the pun): How are you going to fund your business? My dad gave me the best advice on fund-raising:
“People don’t invest in business plans and excel spreadsheets. People invest in dreams.”
Ignore the spreadsheets, sell your dream. Instead of trying to shape your dream to the audience’s interests, tell your honest story and see who’s interested.
Be careful. Don’t go with the first suitor. Would you sleep with a girl or guy you’d known for five minutes? Beware eager investors, you may end up with an STD.
The best investors are just like the best spouses. Hard-to-get.
Start with your folks. Move to uncles & aunts. Maybe siblings.
After family comes friends. Hope you have some. It pays to hang out with successful people.
Angels are investors making highly risky bets because they like the idea or the jockey or both. Personal reference is how you end up in front of an angel. That’s why it’s best to avoid goats in the trajectory of your career.
Goat stories stick like glue.
“You can make a lot of money in life, but you can make only one name.” Varejes
In the B2B space you should be able to fund your startup with revenues from your first customer. If you can’t, then maybe your value proposition is not good enough.
Before you can do any of the above, you need a network.
The biggest challenge for any budding entrepreneur is his network. You need a network to find ideas, partners, customers and funding. Without a network you can’t get introductions, you can’t get trust, you can’t get ahead.
Your personal network limitations are particularly sharp if your parents come from a marginalised community.
Imagine you grew up in Mamelodi and your parents were domestic workers? Who do you turn to for an introducation to an angel investor? Or a partner? Or a customer?
For some great advice on building a network read this piece.
The gist of it is that you must find a company you like, and get into it in any way you can. Your first job is not important. Your first company is all-important. Identify a company of winners and get in the door.
Work your way up, make friends, build your network with the right people and you’ll find success.
Last but not least, my most important tip for starting a business: Get married young.
Why get married?
- You stay focused.
- You’re less hungover.
- You work longer hours (less going out at night).
- You have someone to split living costs with (more cash).
- You can have (legitimate) children that give you perspective.
- You have a partner to pick you up when you have a big setback.
- You have a partner to keep you grounded when things are going well.
So its simple. There are the 7 steps to starting a business.
- Get married
- Find an idea
- Find a partner
- Find a customer
- Find funding
- Start business
Now you need to have the guts to take the plunge.
“Sometimes you just have to take the leap, and build your wings on the way down.” Kobi Yamada
Also published on Medium.