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CityPress - - Business -

hen start­ing your own busi­ness, you need to en­sure that you un­der­stand the en­vi­ron­ment you are work­ing in and how your busi­ness can thrive, not just sur­vive, in that en­vi­ron­ment.

The best way to achieve that is to sit down and do a SWOT anal­y­sis. Look at your strengths, weak­nesses, op­por­tu­ni­ties and threats. Randall Lewis, lec­turer at the Uni­ver­sity of Stel­len­bosch Busi­ness School’s Small Busi­ness Academy, says many small busi­ness own­ers have mis­taken be­liefs and a mis­un­der­stand­ing when it comes to their ar­eas of ex­per­tise.

“Small busi­ness own­ers are usu­ally com­pletely fo­cused on do­ing busi­ness and some­times ig­nore the im­pact of fac­tors like com­pe­ti­tion and changes in their mar­ket. It is also con­cern­ing that they of­ten do not un­der­stand their own busi­ness model and how the com­po­nents of their busi­ness re­late to and in­flu­ence each other,” says Lewis, who adds that once the busi­ness owner is shown how to an­a­lyse his or her busi­ness, he or she is able to do it suc­cess­fully. “They cer­tainly have the knowl­edge. I be­lieve the prob­lem is the lack of un­der­stand­ing on how to em­ploy this in­for­ma­tion, and the ef­fects of us­ing it.”

Mark Corke, CEO of SuiteGum, which spe­cialises in pre­par­ing busi­nesses for sale, says in his ex­pe­ri­ence the big­gest weak­ness for most busi­nesses is they have no plan B – they only fo­cus on their ex­ist­ing busi­ness struc­ture.

“The busi­ness tends to rely on a few big cus­tomers, has only one sup­plier of a par­tic­u­lar prod­uct or has only one per­son able to run a key ac­tiv­ity,” says Corke, who ex­plains this leaves the busi­ness vul­ner­a­ble should they lose a large cus­tomer, their sup­plier goes un­der or a key em­ployee falls ill.

“A busi­ness needs to find a re­dun­dancy – this means find­ing work­ing al­ter­na­tives to the pri­mary source of in­come, sup­ply or ac­tiv­ity. A lack of re­dun­dancy is the usual un­spo­ken weak­ness in oth­er­wise suc­cess­ful busi­nesses,” says Corke.

Af­ter do­ing a SWOT anal­y­sis, Faldee­lah Frantz, owner of Skele­ton Glass and Mir­ror and a par­tic­i­pant in the academy, found he had fo­cused too much on his ex­ist­ing client base with­out con­sid­er­ing how to grow it.

Frantz had been fo­cus­ing on the im­me­di­ate needs of cus­tomers, such as re­plac­ing a bro­ken win­dow, for ex­am­ple, but re­alised he could also cre­ate a mar­ket with other prod­ucts within the glass and mir­ror range. “I started fo­cus­ing on de­vel­op­ing that mar­ket and al­ready have three new clients on board,” says Frantz.

For Ter­cia Go­liath of Body DeVine Spa, also a par­tic­i­pant in the academy, a SWOT anal­y­sis re­vealed her big­gest strength was the abil­ity to de­liver a high-qual­ity ser­vice and she needed to fo­cus on build­ing a qual­ity brand for dis­cern­ing cus­tomers. “I am cur­rently work­ing on es­tab­lish­ing my brand, in­clud­ing branded Tshirts for my­self and my as­sis­tant. I have also iden­ti­fied my tar­get mar­ket and ways to steer that mar­ket to­wards my busi­ness.”

In terms of weak­nesses, academy par­tic­i­pant Phumlani Dlong­wana of Waste to Food dis­cov­ered in his SWOT anal­y­sis that his busi­ness did not have a re­al­is­tic pric­ing model. “I now know how to work out pric­ing, but in the past I didn’t know how my part­ners came about set­ting prices for the prod­ucts we sell.”

UN­DER­STAND YOUR BUSI­NESS

Any busi­ness anal­y­sis re­quires bru­tal hon­esty, with­out which an anal­y­sis is not at all pos­si­ble. You need to do a com­pre­hen­sive au­dit of the busi­ness. This in­cludes your part­ners’ or man­age­ment team’s ef­fi­ciency and strat­egy. Are they op­ti­mal in the roles they play and the skills they bring?

One of you may be bet­ter at han­dling the ad­min­is­tra­tion, while the other is good at sales. Part­ners’ or a man­age­ment team’s strengths and weak­nesses need to com­ple­ment each other.

You also need to an­a­lyse your staff, sup­pli­ers and in­vestors to un­der­stand the strengths and pos­si­ble weak­nesses they all bring. A sup­plier, for ex­am­ple, may be too er­ratic in its de­liv­ery of goods to you, which in turn af­fects your abil­ity to de­liver to your clients, af­fect­ing your rep­u­ta­tion. A poor sup­plier also lim­its your abil­ity to grow the busi­ness.

Lewis says that once you have iden­ti­fied what has worked well and what needs some at­ten­tion, fo­cus on what you are good at and build on that – it could be a great sales team, ex­cel­lent rep­u­ta­tion or cred­i­ble brand in your mar­ket.

Lewis says of­ten a weak­ness is sim­ply a fail­ure to mas­ter a spe­cific skill in the busi­ness. For ex­am­ple, many small busi­ness own­ers may be great at sales, but not good at the ad­min side of the busi­ness. If you are strug­gling to find the time to chase up on un­paid in­voices or get quotes out, you may need to con­sider bring­ing in that skill and fo­cus­ing on what you are good at, such as client en­gage­ment or get­ting the ac­tual job done.

Lewis says when it comes to op­por­tu­ni­ties or threats, th­ese are usu­ally due to the en­vi­ron­ment out­side the busi­ness. A clas­sic ex­am­ple of a threat would be load shed­ding and the need to look for al­ter­na­tive en­ergy sources for the busi­ness.

It could, how­ever, also be an ex­cel­lent op­por­tu­nity if, for ex­am­ple, you are in an en­ergy busi­ness, such as an elec­tri­cian. You could fo­cus on pro­vid­ing homes with bat­ter­ies that feed into their elec­tri­cal boards.

A poor sup­plier could be turned from a weak­ness into an op­por­tu­nity. If you are strug­gling to find a sup­plier of cer­tain goods or ser­vices, so will your com­peti­tors. This cre­ates an op­por­tu­nity for you to en­ter the sup­ply side of the in­dus­try.

In the cur­rent en­vi­ron­ment, any small busi­ness needs to take into con­sid­er­a­tion the ef­fect on their ac­tiv­i­ties of pos­si­ble in­ter­est rate hikes, short­ages of elec­tric­ity and a volatile rand, which would ef­fect im­porters and ex­porters.

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