Starting Big of starting Small [2006]
- Date : (2006-01-04)
- Author : SAIE
Starting Big or starting Small
Many people think that you need lots of money to be able to start a business. They think that you need a big loan from the bank. They also know that it is difficult to get a bank loan so they quickly make up their minds that it is too difficult to get the money to start a business, so they never start.
Many of the most successful businesses have not started off with a big bank loan but rather started off with a determined person who was prepared to work hard, often for very little money in the beginning. The one thing that all of these entrepreneurs have in common is a burning vision of what is possible and a determination to succeed, even if they have to change course along the way. These people never take NO for an answer, they just keep on trying. They tried and tried and tried again until eventually they succeeded. Some people have said, “…but these people are just lucky. They must have been in the right place at the right time!” Most of these successful business pioneers would simply answer with a smile and say, “…..the harder I work, the luckier I get!
Barney Banarto started by selling boxes of matches from a tray hanging round his neck on the streets of London. He managed to make enough money by selling matches for a ticket on a ship to Cape Town. He arrived in South Africa at the time that diamonds were discovered in Kimberley. He found his opportunities in the diamond business and worked hard and eventually became a director of De Beers diamond company.
Anton Rupert who set up the Rembrandt Group of companies that sell cigarettes and luxury goods like Dunhill and Cartier around the world, started by rolling cigarettes in his garage in Pretoria.
Herman Mashaba started by selling hair care products out of the boot of his car and has now grown the Black Like Me empire.
Mark Shuttleworth started working on computers at home in his parents garage, he was so successful that an American company eventually bought his business for over 3 billion Rand.
Richard Branson started by writing a student newspaper with a group of friends. Some of those friends are still with him, helping to run the Virgin group, which has expanded through music sales to airlines, gyms, cosmetics and a whole range of other products.
Some people are able to start a bit bigger. When Raymond Ackerman was fired from Checkers, he managed to scrape together enough money from friends and family to buy one supermarket which has now grown into Pick n’ Pay.
For many of these entrepreneurs, starting small was the only option. They had no chance of getting big bank loans to start their businesses. They had to rely on themselves and their own efforts to get things going.
A few weeks ago we told the story of Noludwe who came asking for a loan of R 5000 to be able to open a fish and chips shop. I gave her a loan of R 100 to get going with selling cooked fish from her house. The R 100 grew to R 600 as she found out how to run the business and where to get her supply of fish at a good price. The R 600 grew to R 3000 as she found out the best places to sell her cooked fish. The R 3000 grew to R 6000 as she was able to buy a fridge and a freezer to be able to expand her business. The R 6000 then grew to a point where Noludwe was able to assist two friends in different areas to start their own fish businesses with advice and a loan of R 100 from Noludwe.
Now I wonder what would have happened if I had given Noludwe the loan of R 5000 that she had asked for originally? She would have found a shop to rent, bought a fish and chip fryer, and had to pay back R 500 a month on the loan. Would she have had enough customers to keep going? I don’t know the answer, but I do know that if you offered her the fish and chip shop now, she would probably say, “What, I don’t need it, I am too busy making money, working from home!”
For Noludwe, starting small had few risks, she was in control and she did not have a big loan repayment to make each month. She had the advantage of finding out about her business as it grew. She had no problems sleeping at night, wondering if she was going to make enough money to be able to repay the loan. After 3 months she had grown R 100 into the size of the loan she wanted and she would have no repayments to make as she had earned all the money herself.
“It’s funny,” she said, “the money that I have grown for myself, feels very different to money that I would have to borrow. The fact that I know that I earned this money myself makes me feel so much more powerful and in charge. If I had to borrow the money, I would feel much more vulnerable.”
Starting big can work well but you need to be able to manage the risks and make sure that your business will succeed. As the saying goes, “The bigger you are the harder you fall!” If you start out big and everything does not go right, things can go spectacularly wrong and people can get hurt and a lot of money goes to waste. Unless you are very sure of your plan and have a team of experts who know their industry well, it is less risky to start small and let people watch you grow to big.
