Things you need to know about starting a business in SA| The Step By Step Guide

  • High unemployment rates are driving new start-ups in South Africa.
  • But starting a new business can be a nightmare if you don’t know the rules of engagement.
  • These are the questions you should be asking if you want to start your own business.

South Africa is alive and buzzing with entrepreneurs, possibly because the country’s high unemployment rate is spurring individuals on to start their own businesses.

When starting a business, it helps to follow a list of steps, to ensure that you are heading in the right direction and ticking all of the right boxes. One missed step could be detrimental to the success of your new venture and result in plenty of frustration and disappointment. We want you to avoid that at all costs!

Getting Started – Idea Generation and Validation
Step 1 will get you thinking – and is the foundation of your business. Many entrepreneurs in South Africa make the mistake of thinking that all they need is a passion to get started but it is the planning and hard work thereafter that is the difference between success and failure. Successful entrepreneurs have many common characteristics and traits, but none is more important than the ability to solve a problem. Solving a common problem is the foundation for a great business, and if common enough, it’s likely that people will be willing to pay for your solution.

Whilst some entrepreneurs stumble on their ideas by chance, others have to work long and hard for their breakthrough. There are many ways to come up with a great idea. 1) Ideas based on your personal knowledge and experience – what frustrates you or affects someone you know. 2) Generate an idea from existing models – what has worked in another country or a different context that could be applied to your market? 3) Combining multiple existing solutions in the marketplace. Idea generation is a tough exercise, but it’s very doable.

Once you’ve come up with a solid idea, you need to validate (or test its viability). This means you need to ask for honest feedback from as many people as you know and measure their responses. There are many ways to do this, like surveys, focus groups, interviews, or online forums – but most importantly – this feedback has to be unbiased (so your mom, best friend, or close business associate are not adequate). Try and get feedback from your future potential users. If they say the idea is a good one, and provide insight as to the likely use of your solution, then you’re on to something!

Set up a Business Strategy in South Africa
Step 2 is about putting your idea into action – it’s not about thinking anymore – it’s time for planning the way forward. Writing a business plan can be intimidating, time-consuming, and more complicated than it necessarily needs to be when you don’t have the right information and resources.

A good business strategy in South Africa incorporates a list of features: such as your mission/vision, the amount of capital you will require, the skills you will need to tap into, the products or services you will be providing, understanding your competition, understanding your route to market, building a customer profile and importantly – identifying your USP (what makes your business unique?). As you set up your plan, make sure that you have fully researched your market as well as your industry, and as such, you know who you are targeting. Your business plan will be somewhat pointless if you don’t do this research as you will end up focusing on the wrong customers!


Step 3 is all about pricing your ideas. A big hurdle for many new large and small businesses in South Africa is figuring out how to set the price for products and/or services. Factoring in things like time, effort, the raw materials – makes pricing a science. And with cash flow being one of the primary killers of SMMEs in South Africa, a mistake with your pricing could end up cutting your profit by more than you can handle. Understand your Cost of Sales (a term describing what it costs your company to deliver a product/service) and what margin to apply to your products. Then, understand your value, competitive positioning, and sales forecasts. At times, you may even need to charge less (or more) to position your brand positively in the mind of your customers.

Budgeting/forecasting and funding capital

No business person can predict the future, but everyone can plan for it by using the data they have available to them.

From determining your capital input to figuring out your day-to-day expenditure and possible income, step 4 is all about the importance of budgeting and forecasting and how to master these processes.

When starting out, we recommend creating a spreadsheet of your start-up costs: estimates of running expenses, marketing costs, staff, and anything that you can put a number to. Don’t exaggerate your numbers – but don’t undervalue them either. Most businesses need to apply for business finance in South Africa, and so the accuracy of their budgets is very important.

When you have the total start-up costs, you can start looking for business finance in South Africa (e.g SMME Funding). This funding can come from banking institutions, partners, loans, or private capital straight out of your savings account.

 When, where, and why should you register a business

Once you have a solid idea, business plan, forecasts, and budgets – it’s time to commit. The easiest way to do so is by registering a company. Registering a company is also incredibly important for your credibility – with funders, suppliers, and customers alike. It says to the world, “I’m legitimate”. Did you know that it can cost as little as R 125 to register your company? Why pay someone else to do this for you when it’s as simple as a few steps. You will need to first figure out what kind of business you’d like to register, but the most common type is a private company – a.k.a. a Pty Ltd. You can register your company even if you don’t have a company name (in this case you will simply trade under your company number). Names can be reserved for an additional price, allowing you to later on when you have decided on a name, make it official. A registered company means no one can steal your company name (this applies even if the name is only being reserved). On most new company applications, you will also be provided with a tax number. Keep these records safe and on-hand should you need them. When it comes to VAT (Value-added tax), most start-up companies won’t need to pay VAT until they break through a specific profit margin or turnover (R1m p.a.), but you can still choose to register for VAT and reap certain benefits while also benefitting any VAT registered companies you work with. Ideally, you should register your business before you are ready to start trading. This way, you will be legitimate and your tax will be compliant. Businesses can be quickly and easily registered via our app, thanks to our partnership with Bizportal. This option cuts out the middleman and saves you money. When registering a company in South Africa using this method, you will be registered via the CIPC.

Wrapping up

We at ShopShipShake have been working with businesses like yours with fulfilling experiences. We offer one-stop services, including an efficient supply chain, over 10 thousand of China’s suppliers, and more.
With a successful track record of over 20,000 clients, we are sure to deliver your orders requirements. Let’s get in touch to build, sustain, and grow your businesses.

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