When starting a business there is a lot to take into account, internal factors like your suitability for the business, external factors like the market. But there are some general mistakes that can be fatal for business Here are some things to watch out for:
There is no competition (for a reason)
Just because nobody else is doing it does not mean there will is a lucrative business opportunity with no competition. It might very well mean there is no market. South Africa has a very well established and advanced industry, you have competition that has decades of experience, market research and development. Be very suspicious if something obvious is not already catered for. What do I mean obvious? One of the most prominent is…
Cheaper than competition
There are a lot of industries out there where there are no low-cost players and you think to yourself well I can undercut all the big guys, you enter the market, notably cheaper and your business goes nowhere.
Just because something works overseas doesn’t mean it’s going to work here. A lot of the big US franchises have failed, they big in the US but they come here and their food is so bland (looking at you pizza guys). Starbucks is here limping along, we don’t want to spend R50 on a coffee. But there are some less obvious things. For example, peeled garlic is big in the US (some are even peeled by prisoners in China). Now you think no competition, I am going to start a peeled garlic business, buy the bulbs, peel it and package it, whether B2C to consumers or B2B to restaurants.
It takes 30 seconds to peel a bulb of garlic, is people going to pay a premium for it? Maybe Woolies can sell it. But it’s not like potatoes where a lot has to be peeled at a time.
Again if you start this business you must be mindful, here you can pivot, there might not be a market for peeled garlic, but if you process that peeled garlic further there is a market for crushed garlic. That is convenient, there is a market.
“I am very clever”
One of the biggest killers of business are owners that think they have all the answers and cannot be wrong. It is one thing to be clever but when you are more arrogant than clever it is a dangerous combination as it clouds your judgement. You see it a lot with politicians in South Africa, some are smart but they are more arrogant than what they are smart setting the stage for where we currently find ourselves.
Quick and easy money
Another trap that entrepreneurs fall into is the promise of quick and easy money particularly in the work from home or business package space. Be very wary of companies that sell equipment and materials as business opportunities and promise high returns. It is no problem to buy a business package but a business still has to be built, you need to learn to efficiently run that business and how you get clients through the door. There are many variables that lead to business success including the individual running the business and buying, for example, a printer and a heat press do not guarantee anything it is a long way from a successful business.
The same goes for investing if it’s too good to be true it usually is.