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Your Small Business Nightmare by Bertie du Plessis
IF YOU are a small business owner in South Africa, you are probably working 63 hours a week. Those who are employed by others are working about 40 hours a week.
Among small business owners, 35% would go back to full-time employment if they could find something suitable. Many are trapped in a nightmare of fear, frustration and hopelessness.
Bertie du Plessis believes that it does not have to be this way. He has identified 13 reasons for your predicament and many practical suggestions for rectification.
The first reason he gives for your business being a nightmare relates to your choice of industry. Which industry would most people want to join: one that is extremely difficult to get into, or one that is easy?
Many small business owners chose their field because it was easy to enter. The industry did not require years of education or large amounts of capital.
The problem with this line of thinking is that many other people have - or are going to - enter that same industry, making it crowded with competitors.
Paediatric neurosurgeons do not have this problem. Few people have the ability to do their work, and it requires almost a decade of post-high school education.
Unlike industries with low entry barriers, paediatric neurosurgeons can charge high fees that are not going to be driven down by competition.
People selling apples individually from the case they bought will soon find that competition requires them to lower their prices just to stay in the game, leaving little over at the end of the 60-hour week.
Small business owners are the business, or most of it. As such, their natural talents need to match the work that they will be performing.
If you have been interested in food ever since you were a child, and have grown into a magnificent home chef, you are not necessarily suited to running a restaurant.
The reason is that a running a restaurant is only partially related to cooking fabulous food. There are so many other talents you will need. As the restaurant manager, you will need to master buying food in appropriate quantities so little if any goes to waste.
You will need to be able to keep a set of accounts. You will need to be able to manage and motivate your staff. You will need to be vigilant to ensure neither your food nor your money is stolen. You will need to be friendly and outgoing to patrons all day, every day.
Your talent for home entertainment would clearly be insufficient. If you do not have the full skill set required, you will need to team up with people who do.
Maybe you need to go back in to the kitchen and allow your partner to run the business aspects.
If you could tick the two requirements above – an industry that is not overcrowded and that is a match for your talents - you may still be in nightmare territory.
Sticking with the restaurant example, you could find that your well patronised business is losing money despite the number of tables you serve each night. You will only make money if you are charging enough to cover all your costs and more.
To do this, you will need to know how much you are spending each day, week and month. Not having reliable management accounts that can give you answers, condemns you to guessing. Most people guess wrong.
Included in your costs must be the "manager’s salary" (yours!). Only after you have paid yourself the going rate for the value of your service and covering all other costs is your business profitable.
Small businesses are vulnerable businesses, and have extremely small room for error. It is little wonder that the owners tend to price their products or services lower than larger businesses, for fear of losing the sale.
Competing on price could be fatal, especially against businesses that buy more than you do and so can demand better prices.
The error of offering lower prices than your competitor can be compounded by not having a reliable accounting system.
If you have a small business and it is not providing you with a reliable, good living, you should read this book exceedingly slowly.
Think through each of the 13 reasons for failure and do a thorough self-assessment. Then read the remedies, consider each one carefully, and adapt them to your circumstances.
You will be so pleased you did. This is a valuable book.
Readability: Light +---- Serious
Insights: High -+--- Low
Practical: High +---- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy. Views expressed are his own.
IF YOU are a small business owner in South Africa, you are probably working 63 hours a week. Those who are employed by others are working about 40 hours a week.
Among small business owners, 35% would go back to full-time employment if they could find something suitable. Many are trapped in a nightmare of fear, frustration and hopelessness.
Bertie du Plessis believes that it does not have to be this way. He has identified 13 reasons for your predicament and many practical suggestions for rectification.
The first reason he gives for your business being a nightmare relates to your choice of industry. Which industry would most people want to join: one that is extremely difficult to get into, or one that is easy?
Many small business owners chose their field because it was easy to enter. The industry did not require years of education or large amounts of capital.
The problem with this line of thinking is that many other people have - or are going to - enter that same industry, making it crowded with competitors.
Paediatric neurosurgeons do not have this problem. Few people have the ability to do their work, and it requires almost a decade of post-high school education.
Unlike industries with low entry barriers, paediatric neurosurgeons can charge high fees that are not going to be driven down by competition.
People selling apples individually from the case they bought will soon find that competition requires them to lower their prices just to stay in the game, leaving little over at the end of the 60-hour week.
Small business owners are the business, or most of it. As such, their natural talents need to match the work that they will be performing.
If you have been interested in food ever since you were a child, and have grown into a magnificent home chef, you are not necessarily suited to running a restaurant.
The reason is that a running a restaurant is only partially related to cooking fabulous food. There are so many other talents you will need. As the restaurant manager, you will need to master buying food in appropriate quantities so little if any goes to waste.
You will need to be able to keep a set of accounts. You will need to be able to manage and motivate your staff. You will need to be vigilant to ensure neither your food nor your money is stolen. You will need to be friendly and outgoing to patrons all day, every day.
Your talent for home entertainment would clearly be insufficient. If you do not have the full skill set required, you will need to team up with people who do.
Maybe you need to go back in to the kitchen and allow your partner to run the business aspects.
If you could tick the two requirements above – an industry that is not overcrowded and that is a match for your talents - you may still be in nightmare territory.
Sticking with the restaurant example, you could find that your well patronised business is losing money despite the number of tables you serve each night. You will only make money if you are charging enough to cover all your costs and more.
To do this, you will need to know how much you are spending each day, week and month. Not having reliable management accounts that can give you answers, condemns you to guessing. Most people guess wrong.
Included in your costs must be the "manager’s salary" (yours!). Only after you have paid yourself the going rate for the value of your service and covering all other costs is your business profitable.
Small businesses are vulnerable businesses, and have extremely small room for error. It is little wonder that the owners tend to price their products or services lower than larger businesses, for fear of losing the sale.
Competing on price could be fatal, especially against businesses that buy more than you do and so can demand better prices.
The error of offering lower prices than your competitor can be compounded by not having a reliable accounting system.
If you have a small business and it is not providing you with a reliable, good living, you should read this book exceedingly slowly.
Think through each of the 13 reasons for failure and do a thorough self-assessment. Then read the remedies, consider each one carefully, and adapt them to your circumstances.
You will be so pleased you did. This is a valuable book.
Readability: Light +---- Serious
Insights: High -+--- Low
Practical: High +---- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy. Views expressed are his own.
