Starting a business: The start-up process

The process of starting a new venture can be daunting, especially if you do not know where to start or what the order of procedures are to follow.  The following steps are a guideline of the order in which to do things before starting up.

Step 1: Prepare a business plan

The business plan forces the entrepreneur to think about and plan the marketing, production, operations, management and finances of the new business venture.  The importance of meticulous planning cannot be stressed enough, many small business owners will say that they rely on a “gut feel”, but lack of planning or strategy is the number one reason why businesses fail.

Step 2: Decide on a legal form of business

Review the different tax benefits and other factors that will play the deciding factor on which legal form of business to choose.  The options to choose from are Sole Proprietorship, Partnership, Close Corporation (CC), Private Company or Public Company.  It is advisable to seek the help of an auditor in order to make an informed choice.

Step 3: Register you business

Apply for registration.  If you are working from home, contact the municipality with regard to by-laws that may affect the business.  Once you have a business registration number, you can apply for a business bank account and obtain an income tax number from SARS.  If it is applicable for your business, you can also apply for a VAT number.

Step 4: Find premises

Formal businesses that rent office, trading or manufacturing space are required to pay closer attention to location factors than informal businesses, because of the permanency of their decisions. This is the time to determine fixtures, fittings and equipment costs.

Step 5: Apply for financing

This is only applicable if your business is going to need external financing in terms of a long term loan or bank overdraft facility.

Step 6: Consider the legal needs of the business

Apply for any licences, certificates, etc. that will be required for your business to legally trade.  If your business needs protection such as copyrights, trademarks or patents, apply for these as well.  Appoint  an accountant or bookkeeper and an attorney.

Step 7: Locate suppliers

Locate key suppliers and negotiate for prices and discounts, credit terms and delivery options.  Establish inventory requirements and create systems that will ensure the timely replacement of inventory.  Decide on product/service prices and discounts. 

Step 8: Start the employment process

If you are going to need employees, decide how many employees you will need, and what their skills should be.  Draw up job descriptions and establish terms and conditions of employment.  Start doing interviews based on this criteria, and after selecting employees, start training.

Step 9: Prepare for employment issues

Inform the Department of Labour and register employees for UIF and Compensation for Occupational Injuries and Diseases.  Review all your responsibilities as an employer in order to comply with all necesarry legal requirements.

Step 10: Take out insurance

Make sure that the appropriate insurance cover is taken out to protect your business, you as the owner and your employees.

Step 11: Prepare promotional materials and opening specials

Plan a detailed activity schedule for communicating and selling your product or service to the market.  Make customers aware of the new business by promoting your opening specials.

Step 12: Start the business

The logistics of the processes for starting a new business are very important.  Treat the process as a project with action plans that have deadlines and decide beforehand which resources will be needed to accomplish each action plan.  It is also very important that risk management and quality control procedures be established very soon after start-up, to prepare for successful future growth.