According to recent statistics, 20% of new businesses fail during the first two years of being opened, 45% during the first five years, and 65% during the first 10 years and therefore, only 25% of new businesses make it to 15 years or more. Bringing it back home, it states that South Africa has a higher start-up failure rate – 70-80% of small businesses fail in the first five years.
There are a few common factors that could lead to a business’s demise, including: starting a business for the wrong reasons, not doing enough research, lack of knowledge or skills, insufficient access to networks and mentorship, bad management, wrong location, and poor marketing, to name a few. One also needs to bear in mind that entrepreneurship is no easy task and requires an individual that is determined, filled with passion, and is not afraid of taking risks.
However, starting and maintaining a business is not just about having a great idea or a passion-led project. There is a great deal of planning and management involved, particularly when it comes to time and money.
“Finances are a huge part of running a business and will determine its longevity over time. Entrepreneurs need to be especially cognizant of the way they manage the cash flow within their business,” advises Gary Epstein, MD of EasyBiz Technologies.
“I’m proud to say that I started my first business 30 years ago with just R1000.00 capital and today I’m on my third start-up business running and growing further. With a love for what you do, hard work, dedication, discipline, and a good relationship with money, your business can run for generations with a solid plan.”
These are Gary’s top financial tips to help entrepreneurs and small business owners succeed past those daunting first five years:
- Reinvest your money back into your business to reap long-term results.
- Control your finances wisely by managing your cash flow. Ensure you know what your daily, weekly, and monthly costs are, and what your income should be. On that point, have a strategy for invoicing out to make sure your customers pay you on time. Follow up on debtors to turn outstanding amounts into hard cash. Control your overheads and expenses efficiently.
- Keep daily accounting records and keep records of your tax requirements.
- Negotiation skills are imperative not only to your suppliers but to customers as well.
- Build up a good credit line and know that taking out a legitimate loan can be helpful.
- Plan for the future and for growth and have a reserve to be ready for any financial challenges.
“I am a firm believer in learning how to manage and control your energy. Everyone has the same number of hours in the day, and as an entrepreneur, you will most likely be working for most of them. The importance of prioritizing and ensuring that your energy is spent productively and effectively will assist you to get you steps closer to your goals”, says Gary.
“Entrepreneurship is certainly no easy task, but the benefits it carries for the country’s economy are endless and it provides many solutions for the various problems we are facing as a country now. That is why my mission is to help entrepreneurs and SMEs succeed, and I have built my own business on providing innovative technological products and services that assist small businesses,” concludes Gary.
