So where do you start? Do your homework

I remembered the day so well when my domestic girl came into my sewing room, asking me what the possibility will be to stay in the apartment at our building yard, situated on a plot outside the city. She longed to have her children with her, who was at that stage still in their home town, 400km away from Cape Town. She wanted permission to bring them down to Cape Town, stay on the plot and commute to work by train every day. I brought her case before my husband who agreed to this.

Earlier that morning, while sewing, I had a request to God. At that stage the building industry was in a recess. The last year Pieter did not sign up building contracts for new properties, only here and there he got a small job. We had to cut on our daily expenses. Unfortunately school fees went up, food costs exploded and I could fell the urgency of the fact that I was not bringing any income in.

My request to God was that He must help me to find something to do to help providing for our family’s expenses in general. After Mitzi left the room, I suddenly experienced a mind blowing incidence. God gave me a word and it just came up my mind: “Why not changing the outside cottage into a self-catering apartment, renting it out to visitors attending the hospitals in our area.”

Our house was five minutes walk from a very known hospital in the Northern Suburbs of Cape Town, equipped with a heart unit , an ideal stay-over for patients and visitors visiting these facilities.   At that time, 25 years ago, self-catering apartment accommodation, as well as guest houses, was still something new in the hospitality industry. The only other available accommodation was hotels which was very expensive, specially for the middle-man. Therefor this would be the ideal type of business for me to start with.

Here I must stop for a while and help you identifying your needs, regarding starting your own business.

Firstly, you have to make sure that the kind of business you plan to start is something sustainable. If there would have been a lot of selfcatering accommodation establishments in my area at the time I started my business, it would probably never been a success. It’s no use starting up something, which are already over-established in the area and at the end of the day you don’t get any clients.

If you want to start a bakery, first find out how many bakeries already excist in your area. The same applies for any other kind of businesses. It is no use starting a convenient shop in your area, if there is a convenient shop on every corner of the township you are staying in. You will have to find a product that is unique in your community, something that’s in command.

 Secondly you must ask yourself: “Must I start my business at my house, or must I immediately occupy premises in town.” My honest advise is: Start your business from home. Built it out, till the point where you don’t have any more space to expand the business anymore, then move to premises which is suitable for this purpose. Even then, make sure that you occupy the appropriate premises for this purpose. It’s no use, occupying a place in the industrial area, from where you want to run a bakery, if there is no feet in the area. Pick a spot which are accessable for everybody in town to be able to reach you.

In my case, I would never started with this kind of business if I had to go and rent an apartment in a complex to rent out to guests. The rental amount would immediately broke my ability to be successful.

If you decide that you definitely want to rent premises in town, do not sign up a contract that will bind you for more than a year.  In a year’s time, you will know if the business is a success.  Signing up a contract for longer than that, can put you under tremendous stress, if you have to close down or even better, move on to bigger premises.  Property owners will not release you from a binding contract, unless you can find them another qualifying tenant.

I personally signed up a contract for office premises when we started the estate agency in 1984. I desperately wanted that particular premises but the owner was not prepared to sign up a contract for less than five years.  My balloon bursted within 6 months because of a very serious operation I had to go for.  The buyers who bought the business from us, decided to work from home and just cancelled the contract which was signed up in my husband’s name and we had tremendous problems reversing that contract. If we rather started up, running the estate agency from home, it would be so much easier just to close down the business, as a result of my sickness and no ill feelings would come in between.

The second time it happened, it was not a very pleasant one at all.  We rented premises opposite our apartment business’ offices for laundry purposes.  The owner was liquadated and when the new owner take over, the rent went up with R5000 per month.  I could’nt afford it at that time and we had to look for another tenant to take over.  When I wanted to rent a property from this guy three years later,  he refused to sign up a contract with me, as he was scared that I will do the same as three years before.   So, what actually happened is that my name was affected by the cancellation of the previous rental contract.

When you start your own business, there is a lot of initial capital involved. I can assure you, you will probably think that you have everything you need to start the business and then suddenly something pop up which you never thought of.

Starting at home, safe you a lot on overhead costs. Only when you can see that your business is profitable enough to cover expenses for renting premises, you can consider it to move to a location in town.

If you decide to rent premises, take in mind that before you can count on an income for yourself, you first have to pay rent to your landlord. Im not going to discuss Biblical principles right now, but I believe that before you can take anything for yourself, you first have to pay your tithes and secondly your rent. No, no monies for luxuries, ect!! Debts first. Don’t forget about cashflow – it is no use making some money and then spent everything on yourself, without having money to buy stock again.

Thirdly,  rather settle for smaller equipment in the beginning.  Do not sign up contracts to rent appliances.  Back in ’84, starting up with the estate agency, we made the fault to sign up a contract for a copier/fax machine.  The manager whom we appointed for the job – this is another subject that I will deal with in my next post – insisted that we get the latest technology for the office.  Another contract, that had to be cancelled in six months time.  We had to pay the rental company for breach of contract.  Later on, we heard that someone very near to us in the business, take advantage of this and take the photocopier over almost for free.

Fourthly, If you decide to work from home, make sure that the local municipality will not have a problem if you run a business from home. Make sure that you know all the no’s and pro’s. Don’t cry later on, rather prepare yourself before hand to put all the paperwork in place.

Im presently reading a book from David Green with Bill High “Giving it all away and getting it all back again.”   David start telling the reader about his family’s personal experiences in establishing their own business from home. He said that he started an after hour project in his garage, trying to bring extra funds in to uphold his family’s needs. Later his wife and small boys had to keep this project ongoing, as a result of the many orders that came in, while he still had a full time job during the day. At a later stage he had to quit his job to run this suddenly, expanding business. Later on, they had to move into some premises in their home town. Today Hobby Lobby is the greatest hobby chain shop in the USA and they support Evangelical projects all over the world.

So for today:

  1. Make sure that the kind of business you plan to start is something sustainable.
  2. Ask yourself: “Must I start my business at my house, or must I immediately occupy premises in town.”
  3. Settle for smaller equipment in the beginning.  Do not sign up contracts to rent appliances.
  4. Make sure that the local municipality will not have a problem if you run a business from home if you decide to do so.

 

 

 

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