Economics | Key tips for entrepreneurs

By Pierre Heistein

This article originally appeared in the Business Report Opinion & Analysis pages on 3 November 2011. To interact with Pierre, visit www.facebook.com/understandingeconomics.

Last week’s article created a great response from readers who want to make a success of their new businesses and their entrepreneurial spirit.I would like to follow up by discussing some key points regarding successful entrepreneurship.

The first step is to get educated. New businesses are known to have a high failure rate, but this should come as no surprise if the entrepreneur has not sought training in how to run a business. If you were to apply for a job as an engineer without ever having studied engineering, for example, the chances are that you will be turned down at the first interview. This screening process saves the prospective engineer from failing in their job. Starting your own business does not have such a screening process and therefore it is up to the prospective entrepreneur to decide whether they are skilled enough to enter the market – and to seek education if they are not.

This does not imply university degrees or diplomas. Short courses in economics, management, bookkeeping and administration are a great start and many can be found online, so that you can study while working. Other resources include forums, blogs or NGO pages on entrepreneurship, YouTube channels dedicated to this education, and countless books published for this purpose.

Secondly, the entrepreneur needs to be able to read the market. If you have a brilliant idea but then find that someone else is already offering that product or service, it is a great sign – it indicates that there is already a demand. The challenge is to make your product or service slightly different to the status quo, or simply market it better than your competitors. If there is no competition in the market you want to enter, be careful; you may have just stumbled across the 21st-century equivalent of the paperclip and are destined for riches, but more likely there is an underlying reason why nobody is offering that product or service. Be sure to do thorough market research before investing too heavily into your idea.

Thirdly, make friends. Too many new business owners guard their idea with such force that they stifle its potential success. Success comes through networking: seek investors or partnerships with people or organisations that can compliment what you want to achieve. Sure, they might take half your profits – but if they quadruple your earnings while doing so, you will be twice as rich as you would have been.

Another important part of being an entrepreneur is being able to accept failure. Just like a job seeker, it is unlikely that the entrepreneurs’ first “application” will be successful. And just like the job seeker, entrepreneurs must pick themselves up, learn from the process, and get on with applying themselves to the next. Linked to this is the need for the entrepreneur to be adaptable with their idea. There are very few cases where a business became successful by sticking to the entrepreneur’s original idea and it is often in the growing and learning process that the really successful opportunity is found.
Lastly, the biggest challenge for entrepreneurship in South Africa is that we need to stop waiting for government. Never mind foreign recessions, our volatile exchange rate, or the high rates of unemployment – the greatest disease of the South African economy is an attitude that government must sort it out. If you can’t find employment, make employment. If government’s services aren’t good enough, offer them yourself.

Where there is a need, there is a business opportunity. To be a successful entrepreneur and grow the South African economy, seek these needs, empower yourself with the skills to turn them into business potential, and have the determination to follow through until success is found.

This article is published under the Creative Commons Attribution license.