I want a regular salary. Is it safe? [2006]
- Date : (2006-01-04)
- Author : SAIE
Karen Dudley runs her own catering business. We asked her how secure she feels, running her own business. She quickly pointed out that it is never safe! Every time she starts worrying about where the next orders, or new customers will come from she has to remind herself that she would never want to be doing anything else. For Karen, the thrill of achieving her dreams makes up for any insecurities that she may feel. “If you want to feel safe, you need to work for a big stable company,” Karen said, “but then you need to be content with what you get. I love the fact that what I earn is up to me. If I want to earn more, I just have to work harder to grow my market and reach more customers. If I had a steady job, I have to wait for a once a year salary review.”
“Sometimes, when I think about the fact that I am only one out of hundreds of catering businesses, I realise that it is so important to be something special. I know that my food is better and that my staff are a passionate team. Our customers often remark that they are so impressed about our commitment to what we do. The food is served with love and care by the people who made it.”
“The more risk I am prepared to take, the bigger the business gets,” Karen explained. “At the moment I am busy upgrading my logo and image and working on showing my customers what makes my business different from all the rest.”
Karen’s advice to new businesses
• Take little steps from a realistic beginning. Don’t try and start too big.
• Believe in yourself and focus on finding the thing that you can do best.
• Make sure that your product is the best it can be.
• If you are the best in your field and have built up a passionate team, you can build your business with confidence.
One of the most common reasons why people don’t open their own businesses is money. Or rather, the fear of losing money. They also fear giving up a regular salary and losing “job security”. Yet, once entrepreneurs have taken the plunge and started their own businesses, many of them wonder why they hadn’t done it sooner. The same could apply to you. Let’s take a closer at how you can overcome your financial concerns.
1. Having a job doesn’t necessarily mean security. Your employer could go bankrupt. You may be retrenched. Or, you could fall seriously ill and not be able to work. Starting your own business may be risky, but it can make you financially independent and self-fulfilled. Karen loves the fact that she can influence how much money she earns by how hard she works.
2. Giving up your regular salary or wages can be scary. But where there is a will there is a way. With careful planning, you could save up enough money to keep you going for a few months. Or you could find alternative ways to make money until your business is established. Perhaps you have family members who can support you until your business is making money. Karen started her catering business by working part time. She has built it up in stages so that she now employs 3 or 4 people full-time as well as a range of part time staff she has trained to assist her for big functions.
3. Very few businesses make a profit right from the start. If you are too afraid to risk giving up your regular salary, perhaps you could start your business part-time. You could make or sell products in your spare-time after work or on weekends. This will allow you to test your business idea to see if it will be profitable. It will also allow you a regular source of income until your business is established and making a profit. Karen knew that she would be able to pay her costs from the beginning. She did all the work herself to start with, only when the money started coming in did she find somebody else to employ to assist her.
4. Before starting your business, it’s a good idea to plan what money you will need and where you will get the money from. Start with all your monthly expenses. For example, rent, electricity, wages (if you need to hire staff), equipment, machinery and materials. Be honest. It’s better to overestimate than underestimate. You will also need to add a salary for yourself to cover your monthly living expenses. Those will still have to be paid whether or not your business is successful. Once you know what it’s going to cost to run your business each month, you will get a fair idea of how much start-up capital you will need. You can also work out how long you will be able to keep going if your business takes a while to make money. Karen had worked carefully with her family and friends to work out a full business plan. Don’t be afraid to ask for help!
5. There are many business ideas which require little or no start-up capital. There are also many businesses which you can run from home with low “overhead” costs. If money is a problem, perhaps you can start small and grow your business as you make money. Or you could try to raise a loan from a financial institution or institutions like the Umsobomvu Youth Fund (www.uyf.org.za) or Khula Enterprise Finance (www.khula.org.za). You could even raise funds from friends and family. Karen’s family was very supportive when she wanted to start her business. She managed to get going without having to get a loan.
6. Nobody knows for sure that their business will make money. Even the most careful planning and market research cannot guarantee success. You just have to go with what you know, start small and keep trying until you find something that does make money. Karen was relieved when she found that after running the business for the first few months, the money was coming in as planned.
7. Once you start your business, set a target date for when to reach a profit.
If the date passes, try to find a solution to reach profitability. Don’t keep pouring time, effort and money into a business that continually loses money. Keep a regular account of how much money you spend each month and how much money you make each month. If more money goes out than comes in month after month, it’s time to try something new.
8. No matter what anyone says, sales is perhaps the most important aspect of any business. Without sales, you have no business. It’s no use worrying about money all the time. Rather, focus your energy on improving sales and increasing your profits. Whether it’s products or services that you offer, you cannot sit back and wait for customers to come to you. If you want to be successful, you have to learn to sell yourself and sell your business. Karen has a winning strategy here, she made sure that she had enough orders to keep her busy for the first few months before she started. She knows that offering wonderful service to her customers will ensure that they refer others to her in the future.
