Living Your Dream – Your Own Business at Last!

Everybody has a dream, a dream to own your own business perhaps? Like Sipho*. Sipho is a South African that grew up with his granny in a corrugated iron shack in Alexandria. Their shack was right next to the affluent city of Sandton. Now let’s learn more about Sipho’s childhood…

Sipho had a difficult childhood. He lost both his parents when he was only ten years old. For that reason his granny took care of him. Many nights Sipho had gone to bed hungry, because his granny’s social grant was too little…

The school that Sipho attended was not far from their shack. However, it was overcrowded and underfunded. He had to attend classes with about 50 learners in rooms fitted for only 30 pupils.  Also, there were not enough textbooks and the teachers were many times not there to teach them.

In spite of Sipho’s dire situation, he was not blind to the wealth and extravagant lifestyles of his neighbours on the other side of the fence. He was dreaming to live and prosper on the other side of the fence…

Sipho is dreaming of having his own business

We’ve heard many times that small and medium enterprises (SMEs) are the most important sector in most economies. In fact, SMEs are the principle providers of jobs in developed economies. Yet, in developing economies, like South Africa’s, the informal business sector contributes significantly to the GDP. According to South African Market Insights, the size of the informal economy is estimated between 7% and 13%.

Even more, South Africa’s informal sector is supporting 27% of all working people and it provides goods and services to millions of people on a daily basis, according to Natalie Greve in FIN24. In fact, Stats SA has found that almost 70% of people who start an informal business do so because they are unemployed and have no alternative source of income.

Image eBizplan

Getting into the formal business sector

Sipho will probably not enjoy the glitter and riches of the Sandton community by selling loose cigarettes, sweets and small packets of corn chips on busy street corners. He needs to enter the formal business sector which will give him access to venture capital and, if he is lucky, government support.

For Sipho, however, it won’t be easy to enter the formal business sector. Although there may be lots of opportunities in the sector, the costs of starting a business are high. And then there are things like rates and taxes, government’s ‘red tape’; labour issues, political uncertainty and fierce competition.

Sipho will need the all the help he can get, and lots of good fortune to start his own business and cross the fence to Sandton…


There are many people like Sipho in South Africa. They are poor, hungry and desperate. Maybe the answer for them is to join the digital economy. Government and private sector can facilitate access by means of free Wi-Fi at internet cafes near the homes. It is a place where they can get information about ‘starting a business’ and also to join a group on the social networks.

Read also: Home-based business – Important Startup Strategies

Main image: Pixnio


Making Difficult Decisions are Necessary to Keep a Business on Track

Managers making difficult decisions are mostly taken for granted. Someone has to make a decision, and that’s a manager’s job, say most of us. “When you consider why some leaders are successful and some are not, the difference between a successful and unsuccessful leader is often directly linked to the choices and decisions they make”, says Peter Barron Stark, President of Peter Barron Stark Companies.

However, decision making becomes difficult when uncertainty is high, as it is now in the digital era. Indeed, technical and market uncertainty make decision-making difficult and, because information is often complex, understanding a problem is a challenge and often impossible before the problem is solved 1.

Making difficult decisions in times of uncertainty

Uncertainty is the difference between the amount of knowledge necessary to perform a task and the amount of knowledge already available within the company 2. Therefore, uncertainty refers to a lack of information regarding potential outcomes. So, it seems that knowledge is a critical element that is needed to make sound decisions.

Not so, says Malcolm Gladwell, (Blink: The Power of Thinking Without Thinking):  “The key to good decision making is not knowledge. It is understanding. We are swimming in the former. We are desperately lacking in the latter.” Decisions that seem to be the most difficult are those that require a deeper level of thought.

Kescia D. Gray suggests in the Corporate Wellness Magazine the following five steps that will help you to make better decisions in times of uncertainty:

Step 1: Identify your goal. Identify the purpose of your decision by asking yourself what exactly is the problem that needs to be solved? And why does this problem need to be solved?

Step 2: Gather information for weighing your options. It will help you to better understand what needs to be done in solving the problem, and will also help to generate ideas for a possible solution.

Step 3: Consider the consequences. In this step, you will be asking yourself what is likely to be the results of your decision.   How will it affect you now?  And how will it affect your future?

Step 4: Make your decision. Now that you have identified your goal, gathered all necessary information, and weighed the consequences, it is time to make a choice and actually execute your final decision.

Step 5: Evaluate your decision. Once you have made your final decision and put it into action, it is necessary to evaluate the decision and the steps you have taken to ensure that it works.


All right, according to Psychology Today, in the real world, most of our choices only need to be good enough, not perfect. Nevertheless, to understand the decision that you must make, you need recent, reliable and relevant information. Also, try not to make the decision on your own. By involving your team, the decision that you make may be accepted and understood more. As result of this, making difficult decisions may become easier.

Read also: The Humanity of Decision-Making: A Business Perspective…


1 Sweere, R.A. 2009. Improve Understanding and Decision-making in Standardization and Technology Licensing Projects by Applying Soft Systems Methodology and Scenario Thinking to Wicked Problems, Dissertation: Master of Science in Innovation Management, Technology University of Eindhoven.

2Liu, R. and Hart, S. 2011. Does experience matter? — A study of knowledge processes and uncertainty reduction in solution innovation, Industrial Marketing Management, 40:691-698.




The Humanity of Decision-Making: A Business Perspective…

Even with Big Data, Artificial Intelligence and Decision Support Systems, humans mostly need to make the final decisions regarding which business strategies they will pursue. As result of this, we can’t escape the humanity of decision-making in business environments.

Nevertheless, because decisions are made by humans, they are influenced by human-like behaviour such as emotions (think about the primary emotions 1: love, joy, surprise, anger, sadness and fear). Since emotions affect our decision-making, without emotion decision-making becomes ineffective says Erik Larson in Forbes.

Indeed, every decision that we make has an outcome. The outcome can be good, bad or nothing…

The humanity of decision-making – success

We all strive to be successful in our businesses. Therefore, if we make the right decisions the financial rewards are great! Even better are accolades that go with decisions that had worked out well – promotion, invites to join the top management strategy workshops, overseas visits… Is that true? Hardly…

Mark Suster made the following remark in ‘Both Sides’: “Have you ever noticed how many leaders are afraid of offering promotions to individual superstars because they’re worried about the impact on the rest of her teammates?” So, if you made a decision to earn or save your company millions of dollars, don’t hold your breath to be rewarded or recognized – you may die suffocating

But what happens when your decision went wrong and is costing your company money?

The humanity of decision-making – failure

Decision-making is about things that will happen in the future. Because nobody can accurately predicts what will happen in the future, many decisions that we make go wrong. Also, there may be dire consequences for decision makers when the decisions they made go south. Somebody needs to be blamed…

One of the reasons that contribute to a series of decision failures is the perceived invincibility of the decision-makers. Praise from others and routinized “success patterns” contribute to managers’ beliefs that their decisions are unlikely to fail. As a result, they make decisions and then move on to the next initiative without considering the outcomes of the earlier decisions 2. A disaster waiting to happen…

And what if no decisions are taken? That’s even worse.

The humanity of not making decisions

“Inability to make decisions is one of the principal reasons executives fail. Deficiency in decision-making ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure.” John C Maxwell quoted in

So if you not able or if you’re afraid to make decisions in your business, you’re in anyway screwed. Good luck for you and your business should you stick around…


Decision-making is done by everyone in an organisation. The higher the position of the decision-maker, the bigger the consequences of his/her decisions. That’s way people sometimes behave differently when confronted with making a decision. This piece is an introduction on a series of post about decision-making to follow.

Further reading:    The Reasons Why Start-up Businesses Fail


1 Shaver, P., Schwartz, J., Kirson, D. and O’Connor, C. 2001. Emotional Knowledge: Further Exploration of a Prototype Approach, In G. Parrott (Eds.), Emotions in Social Psychology: Essential Readings, 26-56. Philadelphia, PA: Psychology Press.

2 Shimizu, K. and Hitt, M.A. 2004. Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions, The Academy of Management Executive, 18(4):44-59.




Home-based business – Important Startup Strategies

There are millions of entrepreneurs that do their business from their homes. In fact, according to, home-based business was done by at least 38 million Americans during 2017.

Although the idea of doing business from your home sounds informal and casual, entrepreneurs should do the following suggests Casey Kelly-Barton in the HostGator Blog.

Important strategies to consider when starting your home-based business

  1. Interview yourself. Not only will you be your own boss, you’ll be your own employee, so hire with care.
  2. Study the logistics of self-employment. Do you have space to work and to store any inventory, equipment, and raw materials?
  3. Make a simple and clear business plan. What do you plan to sell? Who will buy it? How will you reach them? How often will they buy from you, and how much will they spend?
  4. Put your legal and financial ducks in a row. Decide on your business type and get your city or county business permit in place. Then open a business banking account.
  5. Set up your website. Look for a web hosting service that offers mobile-optimized site templates and fast page-load times.
  6. Set up a professional email address. Not all web hosts offer email hosting. Streamline things for yourselves by choosing a web host (like HostGator) that offers free emails with your website.
  7. Listen to your prospective customers. The most successful home-based businesses go out of their way to meet the needs of their customers, and it’s especially important to listen well as you plan your first product or service.
  8. Develop your value proposition. What can you offer your audience that will provide value for them and require a not-ridiculous amount of risk (in terms of effort and expense) from you?
  9. Ramp up your marketing. Once you have a product to offer and a customer base, you can market to prospects like the customers you already have.
  10. Develop new products or services. Expand or iterate on your product line based on customer feedback.
  11. Review regularly. Ask yourself a few questions about your business in general.


And if still wondering what home-based business to do, here are some guidelines 1:

  • Turn what you most enjoy into a home-based venture, such as a favorite hobby or interest.
  • Utilize existing skills from your salaried job.
  • Solve a problem that people are willing to pay someone else to do for them.
  • Use technology and resources you already have around the house, from your van to your computer.

Read also:  Every business needs a business plan


1 BizMove Management Training Institute, How to Start a Small Home Business A Step By Step Guide to Starting a Successful Home Based Business,



Borrowing Money from a Bank to Start your Business

Borrowing money from a bank to start your business is not an obvious option for prospective business owners. Unless you are well known, with a track record of starting and running successful businesses, no formal sources of capital are likely to invest in you in the early stages of your business 1.  Banks usually require an operating history to reduce their risk.

“Banks love collateral. They swoon over profits. And they get positively dizzy over long-term performance records. Because of this, it’s difficult to get a loan from a bank to start a new business, which doesn’t have any collateral, profits or long-term success to back up your loan application” according to Master R Stell writing in NFIB.

What do you need to know when borrowing money from a bank to start your business

Banks demand a lot of info from prospective business owners before they will consider approving a loan.

  1. Collateral – your business has to have hard assets it can pledge to back up a business loan. Banks look very carefully at these assets to make sure they reduce the risk.
  2. Business plan – must show the banks how and where you’re going to make your money.
  3. All your personal financial detail – details on assets and liabilities such as your home, vehicles, investment accounts, credit card accounts, auto loans and mortgages.
  4. Insurance – banks may insist that applicants take out insurance against the deaths of one or more of the founders. And the fine print can direct the payout on death to go to the bank first, to pay off the loan.


Although there may be a lot of “red tape” evident when prospective business owners apply with a bank for start-up money, banks are at least making an effort to get involved. For example, some banks specialize in lending to small or new businesses. To decide whether a bank loan is right for your business, research both traditional loans and alternative funding sources. It’s also important to know your business inside and out.

Read also:

  1. Getting Money for Your Business – Other Individual Investors
  2. Start your Business: Borrow Money from Friends and Relatives
  3. Using Personal Savings to Start Your Business


1  Vinturella, J.B. and Erickson, S.M., 2003. Raising entrepreneurial capital, Academic Press.




Getting Money for Your Business – Other Individual Investors

Prospective business owners may approach other individual investors to get money for starting their businesses. A large number of private individuals invest in others’ entrepreneurial ventures. They are primarily people with moderate to significant business experience but may also be affluent professionals, such as lawyers and physicians 1.

These other individual investors are collectively known as venture capitalists. A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion (Susan Ward, The Balance). Venture capitalists are sometimes flooded with business ideas and business opportunities from entrepreneurs that need investment in their ventures.

Let’s have a closer look at venture capitalists.

Other individual investors – venture capitalists

The majority of venture capital (VC) comes from professionally-managed public or private firms who seek a high rate of return. Therefore they (typically) invest in promising start-up or young businesses that have a high potential for growth but are also high risk (The Balance).

Venture Capitalists usually are heavily involved with the businesses that they have funded. Although money is important to VCs, they must also protect their investments. Therefore they engage in activities that help give each company its best chance to succeed 2. However, the over involvement of VCs may result in entrepreneurs losing their autonomy…

What make a ‘good’ venture capitalist?

As VCs usually chooses the most promising business ventures to finance, so should prospective business owners identify the best of them. listed the following characteristics that good venture capitalists have:

  1. Being a great net-worker. Having the right people to talk to during the diligence process and making the right introductions (to potential employees, customers and acquirers) is a major way that VCs can add value.
  2. Being a great listener/being able to read people. These are the key characteristics to becoming a great VC. The ability to truly understand where an entrepreneur is coming from helps in evaluating entrepreneurs.
  3. Ability to predict the future. Everyone has access to the same basic market research data but taking that data and interpreting it and turning it into actionable investment ideas is a good skill to have.
  4. Sales/persuasion ability. Being able to convince entrepreneurs to work with your firm versus another. Also, convincing a key employee to join a portfolio company and convincing a potential customer to work with a portfolio company. These are all examples when sales and persuasion skills come into play.
  5. Negotiation skills. To help negotiate a top-dollar acquisition for a start-up in your portfolio and being able to negotiate the lowest possible price when it comes to making an investment.
  6. Experience – there is definitely a learning curve and many lessons that can be gained with time.
  7. Luck – venture is an extremely hits based business. One great investment can make a whole fund successful. It is impossible to know if making an investment was luck or skill but there is definitely an element of both.


Other individual investors will fund your business only if the potential rewards outnumber the risks by far. They want a return on their investment and, if they are shareholders, they will involve heavily with your business. Failure to receive funding from a venture capitalist, however, does not indicate that the business plan is not a good one. More often, the venture is simply not a good fit for the investor.

Read also:

  1. Start your Business: Borrow Money from Friends and Relatives;
  2. Using Personal Savings to Start Your Business


1 Longenecker, J.G., Moore, C.W., Petty, W. and Palich, L.E. 2005. Small business management: An entrepreneurial emphasis, South-Western College Publishing, A Division of International Thomson Publishing Inc.

2 Kressel, H., 2007. Competing for the future: How digital innovations are changing the world, Cambridge University Press.


Start your Business: Borrow Money from Friends and Relatives

If you don’t have enough funds for your start-up business, you may ask friends or relatives to borrow you the money. Interesting, however, although the majority of informal investors, family and friends, is often willing to supply funds at negative returns, most prospective business owners will only as a last resort consider borrowing money from them 1.

Nevertheless, to borrow money from friends and relatives is after bank loans the biggest source of small business financing in the UK 2. There is however a certain way to approach friends and relatives to borrow money from them.

How to borrow money from friends and relatives

Tony Armstrong suggests in Nerd Wallet the following do’s and don’ts when you want to borrow money from friends and relatives to start your business:

  1. Know what you’re asking for – Do you simply want a loan, or are you offering your family member a stake in your business for their investment?
  2. Provide a business plan – That means you should provide your family and friends with a thorough overview of your company in the form of a well-crafted business plan.
  3. Don’t hide the risks – When pitching your business idea, be open and honest about your venture. There’ll be risks involved for anyone extending you money, and it’s up to you to explain that to them without bias.
  4. Put it on paper – Even if you’ve come to an agreement with your parents, and regardless of the sum of money involved, be sure to put everything in writing.
  5. Don’t let relationships suffer – It’s up to you to make sure that your business partnerships don’t hurt your relationships with family and friends.


Involving friends and relatives with your business can be of huge advantage for you as prospective business owner. Not only may they be a source of start-up capital, but they may have business skills and knowledge or other entrepreneurial characteristics that you haven’t been aware of. For that reason it is important choose your friends and relatives wisely…

Read also: Using Personal Savings to Start Your Business


1 Lee, S. and Persson, P. 2016. Financing from family and friends, The Review of Financial Studies, 29(9):2341-2386.

2 Basu, A. and Parker, S.C. 2001. Family finance and new business start‐ups, Oxford Bulletin of economics and Statistics, 63(3):333-358.


Using Personal Savings to Start Your Business

You, the aspiring entrepreneur, frequently have three sources of getting money to start your business: (1) personal savings, (2) friends and relatives, and (3) other individual investors. Personal savings to start your business will now be discussed.

Personal savings to start your business

Using personal savings to start your business is most frequently used by prospective business owners. However, most of us probably don’t have enough savings to start our business properly. For that reason you need to do a thorough inventory of your assets. You are likely to uncover resources you didn’t even know you had.

Assets you may have can be savings accounts, equity in real estate, retirement accounts, vehicles, recreational equipment and collections. You may decide to sell some assets for cash or to use them as collateral for a loan.

There are a number of ways that you can consider to generate start-up cash to open your business (Entrepreneur Press):

  • Investments – low-interest-margin loans against stocks and securities can be arranged through your brokerage accounts;
  • Your home – consider getting a home equity loan on the part of the mortgage that you have already paid off. Depending on the value of your home, a home-equity loan could become a substantial line of credit;
  • Life insurance policies – you can use the value built up in a cash-value life insurance policy as a ready source of cash;
  • Your retirement plan – some retirement plans allow members to borrow up to 50% of your vested account balance. However, the loan has to be repaid in a short period of time;
  • Moonlighting (if you’re employed) – ensures you’ll have some steady funds rolling in until your business starts to soar.


Lastly, before investing all your savings and collateral in a new business, you need to know that the business has the potential to survive and grow. Therefore you need a business- and marketing plan to give you direction and to get customers to your business.

Read also: Why do you want to start your own business?


Bootstrapping – Starting a New Business with Your Own Money

One of the first and most important questions that most of us ask when considering to start our own business is where the money would come from? The answer for more than 80% of start-up businesses is bootstrapping. Indeed, according to Lahm Jr and Little Jr (2005), the overwhelming majority of entrepreneurial companies are financed through this highly creative process.

Bootstrapping typically involves the use personal savings, credit-card debt, loans from friends and family and other non-traditional forms of capital.

The risks and advantages of bootstrapping

The biggest advantage of bootstrapping is that you are the boss. For this reason, self-funding your business means you only answer to yourself. You are free to do as you wish with the direction of your start-up.

Some advantages of bootstrapping that are mentioned by Schinck and Sarkar, (2012):

  1. Easy way to obtain financing – you have full use of your money;
  2. It’s convenient – you can start your business whenever you are ready;
  3. Bootstrapping is associated with minimum requirements – no need to report quarterly financial results to investors or financiers;
  4. It doesn’t require the preparation and presentation of a business plan or collateral.

Disadvantages of bootstrapping:

  1. Bootstrapping may constrain revenues – because as the business starts to grow, more capital is needed;
  2. Personal risk – the financial risks to bootstrapping are huge, so owners must have a plan for moving forward advises Lloyd Martin (Escalon);
  3. Lack of networking – you may miss out on valuable networking connections;
  4. You will likely not be earning any money for quite a while.


Lastly, the advent of the internet and e-commerce has given thousands of people the opportunity to start an online business from home with little capital or financing needed. However, since about anyone can start an online business, the competition for visits and clicks are immense. Therefore you need a well written business- and digital marketing plan to get your business on the way…

Read also: Every Business Needs a Business Plan


Lahm Jr, R.J. and Little Jr, H.T. 2005. Bootstrapping business start-ups: Entrepreneurship literature, textbooks, and teaching practices versus current business practices? In: Allied Academies International Conference. Academy of Entrepreneurship, Proceedings 11(2): 15. Jordan Whitney Enterprises, Inc.

Schinck, A. and Sarkar, S. 2012. Financial Bootstrapping: a critical entrepreneurship skill, Centro de Estudos e Formação Avançada em Gestão e Economia da Universidade de Aveiro, 20:1-24.



Every Business Needs A Business Plan

Many small businesses start without a business plan. There is no vision (where do they want to be?); or mission (how will they get there?). Nor do they have any goals or strategies.

Maybe the owner or manager is waiting for customers to stream into the store – and then blaming them for ignorance when they don’t. Soon the retailers will have lots of merchandise, but no cash. However, at the end of the month, the rent and salaries needed to be paid, and – maybe other types and styles of merchandise must be purchased to see if that will sell… And then cash runs out, and the store closes its doors. Every business needs a business plan.

Some suggests that a business plan is not needed. Randy Duermyer writing in ‘the balance’ that a business plan is not always needed qualifies his statement by commenting: “I’m not saying that it’s not important to plan before you start a business- it is critical.”

You might as well do a business plan.

What is a Business Plan?

‘A business plan is a workable written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture’. It organizes all the information gathered by the entrepreneur and is therefore the first formal planning instrument.

A business plan has two basic objectives:

  • It identifies the nature and context of the business opportunity. (Why does the opportunity exist?); and
  • It explains how the entrepreneur will develop this opportunity.

The business plan is a detailed action plan or road map outlining every conceivable aspect of the proposed venture. The plan describes what, how, when, where and why with regard to the new venture. It is thus a structured guideline for achieving your business goals. The business plan must indicate the following:

  • What activities the enterprise will be engaged in?
  • What the mission, objectives and goals of the enterprise are?
  • What strategy must be followed to attain these goals? And
  • What control measures will be used if goals are not attained?


There are many templates available for small business owners to write their own business plans. That is a great start and maybe by doing it, you’ll recognize where the gaps are that needed to be filled before opening your business. Making use of a management consultant to help you with your business plan is a productive investment. Failing to plan is planning to fail…

Read also: Questions about your business that you should answer before starting your own business.


Cronje de J, G.J., Breebaart, H., De Klerk, A., Old, S., Swanepoel, E. and Van der Merwe, M.A. 2001. Introduction to Entrepreneurship and Small Business Management, Only study guide for MNE202-V, Department of Business Management, UNIVERSITY OF SOUTH AFRICA, PRETORIA.