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Your Small Business Nightmare
and How to Wake Up
Bertie du Plessis
Tafelberg
Is this book for you?
Is this book for you? Here is a quick way to find out: when asked to fill in your occupation on a form for a bank loan, you write ‘self-employed’.
In your own mind you are an entrepreneur. After all, don’t you have a business? And what’s more, you can call yourself a survivor. You survived the dreaded first year when, according to whom you believe (figures differ widely), at least 25% of new businesses fail. And you are now on the brink or beyond the nemesis of year three in business. By now some 50% of those who took the big step with you back then have failed.
You probably started your own business because you lost your job or hated your job. It became unbearable and you simply couldn’t go on. As Michael Gerber, author of The E-Myth, so vividly describes it: by far the majority of entrepreneurial stories begin with one man or one woman hunched over a table, pounding it with both fists and groaning, ‘My God, I can’t go on like this!’
Or you may be one of a tiny minority who had a secure position but wanted to ‘do your own thing’. Someone who said ‘I can’t work for someone else’ and wanted to be your own boss. You might since have discovered that clients and customers are more demanding than any boss could ever be ...
Whatever the case, you are now one of some 5.6 million business owners in South Africa with a business that employs 200 people or fewer. You work on average 63 hours a week (compared to the average working week for employees, which is just 40 hours). About 35% of you confess that you would go back to fulltime employment if you could find any.
In 2011, 21% of the almost six million small businesses in South Africa were service providers while the remaining 79% sold products. Alarmingly, by far the majority of those selling products did so without adding any value to the products the sold (according to FinScope 2010 a survey sponsored by FinMark Trust, reported in SakeBeeld, 11 September 2010). This book is not aimed at those businesses selling products without adding any value. (If you are perhaps one of those and you are reading this, let me warn you that you may shortly fail unless you find a way to add value. But read on, you may see the light.)
No, this book is for entrepreneurs and small business owners who are in what is called the service industry. This includes all kinds of fast-food franchises, coffee shops, guest houses, restaurants, graphic design studios, cleaning services, car washes, accountant practices, engineering services, workshops, maintenance services, financial services, and consultants of different shapes and sizes.
We – I include myself among those – are entrepreneurs of the second order. We are not (or perhaps not yet) among the first-class entrepreneurs who start organisations that eventually become public companies, those who are the real creators of jobs and the true engines of the economy. Maybe you are on your way there, but there are only about 3 000 of them in South Africa, according to economist Mike Schüssler. Most of the six million small businesses in South Africa will remain small. They will provide for the owners and their families, and help sustain an ecosystem of other small business owners. They may also render indispensable services to large corporations or the public.
I have been in business for eighteen years now and every agony I write about, I have suffered myself. What follows is not advice from the ivory tower, but from the blood and gore in the business trenches.
I never studied for a business degree and I was about as unprepared for running a business as you could imagine. I studied literature, philosophy and theology and was also a professional artist. I showed no interest in business until the age of 40. And when I began my business I had zero capital, no golden handshake or ‘package’. I had a car that belonged to the bank and maxed out the bond on my house. I couldn’t pour all incoming cash back into the business. I opened my doors in the same month that my daughter started studying medicine at the University of Pretoria. From the very first month I had to reach my targets, month after month. SakeBeeld profiled me in April 2005 as an entrepreneurial success story precisely because I had no margin of error right from day one.
What I write about here are the survival skills I have learnt in the University of Life. I sincerely hope they will help you to survive and prosper.
That is not to say that this book will be of no use to those still contemplating setting up their own business. But it will be most valuable to those who have started to experience the brute slap in the face that the real world dishes out to small businesses. Of course, if you are considering starting a business and willing to believe what I share in this book, it will save you a lot of anguish.
The reasons for the nightmare
You are living a nightmare and you have nobody to talk to. With this book I am saying to you: ‘You have been heard. Somebody understands your anguish. I’ve been there.’ I will offer you the wisdom that came out of my own blood, sweat and toil over almost two decades as a small business owner, as well as those of numerous owners of small enterprises who have come to me for advice over the years.
The most common and often most distressing aspect of the nightmare is that you work yourself to death but you still don’t make enough money.
There are many reasons why this could happen:
• You are in a tough industry and profit margins are thin.
• The business environment has changed and your business no longer fits the environment; you are flogging a dead horse.
• You are in the wrong business; this specific business does not suit your talents and your personality.
• The clients you have don’t pay enough because you don’t price your service or products profitably.
• You simply don’t know how much time you spend without invoicing or charging for it.
• You work inefficiently and waste time.
• You work inefficiently and waste money.
• You have too few clients or customers.
• You have the wrong clients.
• You pay too little attention to promotion.
• You don’t pay enough attention to building your brand.
• You try to compete on price.
• You try to compete on service.
• You try to compete on quality.
Let’s group these causes into four ‘baskets’:
• What’s with you and the kind of business you’re in? (reasons 1 to 3)
• You don’t keep proper score (reasons 4 to 7)
• Your marketing sucks (reasons 8 to 11)
• Your positioning sucks (reasons 12 to 14)
In the following sections we’ll look at each of these baskets in more depth.
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