Unemployment in South Africa is one of the big challenges facing young people today. There are just so many people applying for the same jobs, that the endless cycle of applying for work and being turned away can become discouraging. What’s more, many employers insist that you have experience before you even apply! Starting your own business might be the answer to the problem of unemployment and needing to gain experience. But, you’ll need a business plan and some money to get your plans off the ground. Here’s how to get started:

 

FROM BRIGHT IDEA TO HEALTHY BUSINESS
How to go about drawing up a business plan and applying for a business loan

Step 1: Identify a gap in the market

Find an opportunity no one else is yet exploiting. An example might be selling cups of chilled colddrink during the summer at various stations or taxi ranks and warm coffee or tea during winter. Many people would not spend money on a can or bottle of cool drink, but might spend money on a cheaper cup of colddrink.

Step 2: Identify the product and the target

Once you have an idea, you need to clearly identify the product and the target or consumer. In our example, the product would be colddrink sold by the cup and the target or consumer would be thirsty commuters.

Step 3: Demand survey

Next, you need to figure out whether there really is a demand for your product. Will commuters actually buy your cups of colddrink if they won’t buy cans? You’ll need to do a survey and use a questionnaire to ask people at the stations whether they’d be interested in buying colddrink by the cup, whether they currently buy from other vendors selling in cans or bottles, how much money they generally spend on refreshments while traveling, etc.

Step 4: Look at the numbers

Looking at the information you gather from your survey will tell you whether an opportunity exists. This information will also form part of a business plan you present to the bank if you’re going to apply for a business loan.

Step 5: The question of competition

Part of writing an application for a loan would also require you to list the reasons why you believe your plan would work. This would show the bank that you have also done your homework on who your competitors would be and how you would deliver a better product and service than they do. Here it would be important to show some short term and long term strategies on how you intend to enter the market, gain customers and keep them.

Step 6: How, who, where and when - Draw up the plan

entrepreneur is a French word which means creative, imaginative, energetic and resourceful business pioneer!

If the information gathered shows you have a good idea, the next step is to figure out the practical steps you need to take to realize your business goals. These might include:
• Finding out how to legally register a business under the country’s Company Act.
• Making a list of reliable suppliers who can supply you with the raw materials to make the product.
• Finding out where the product could be produced.
• Investigating the cost of the premises.
• Deciding how many people would be needed to produce the product.
• Figuring out what salaries you would pay your workers.
• Deciding how you would take orders and how these would be recorded and filed.
• Deciding what you would need to package the product (for example plastic cups with lids).
• Decide how the product would be delivered or distributed on time to the consumers
• Decide how you would price your product.
• Look at what assets and skills you have and what you would need to acquire. This is all part of what is called costing.

Step 7: Feedback strategy

Banks and other lending institutions would also be impressed to see that you have a regular system for getting feedback from your customers, suppliers and distributors about their level of satisfaction with your product and services. Development and maintenance of relationships is very much part of running a business well.

Step 8: Write the business proposal

At this point it would be good to bring all the information you have gathered together into a business proposal. (See Step 10 for how to get help doing this.) This proposal should cover:
• Who you are (directors, partners and employees).
• When you established and registered the company.
• A good description of your product.
• Who your consumers would be.
• Who your competitors would be.
• Results and description of your demand survey.
• What strategies you would put in place to keep ahead and ensure growth.
• Your suppliers.
• Your production costs.
• How you will distribute your product (distribution channels) and a projection of profit to be made over regular time periods (such as every 6 months – this is called a cash flow projection).

Step 9: Approach a bank or funding institution

When applying for a small business loan, most financial institutions will ask you to submit a business proposal as well as complete their loan application forms. It is helpful to make an appointment with the bank so that you can present your plan and answer any questions they may have about your unique product.

Step 10: Don’t panic - There are people who can help

There are a number of organizations dedicated to helping small to medium business (SME’s) get off the ground. They offer services like helping to put together business proposals, budgets, organizational planning and support as well as helping small businesses apply for funding. The department of Trade and Industry should be able to put you in touch with relevant organizations in your area.

Helpful Contacts

Department of Trade and Industry 0861 843 384
Usumbomvu Youth Line 0860 096 884 www.youthportal.org.za