3 lessons for budding business owners

This is according to Farhad Sader, MD at Old Mutual Wealth, who says that the support expressed by President Ramaphosa in his Reconstruction and Recovery Plan, encouraging South Africans to buy local and support small businesses is what’s required to inspire a new generation of entrepreneurs.

“The situation we’re facing is terrible and in no way should we downplay the impact of this crisis on our country. But I do believe we need to remain optimistic by reflecting on our successes as a nation and remain on the lookout for opportunities,” he says.

Sader believes that in an almost bitter sweet turn of events, the Covid-19 pandemic, referred to as a black swan event by many, will create new problems that need solving.

With the opening of the economy, there will still be demand for many of the goods and services South Africans needed or consumed before the national lockdown, creating an opportunity for savvy entrepreneurs to service this need.

He adds that the pandemic is also likely to change the way we work, play and spend our cash, creating further opportunity.

“The reality is that we don’t have a real comparison for the impact of the pandemic on consumer behaviour. Fortunately, human behaviour and history can offer entrepreneurs several clues,” says Sader.

Reflecting on the lessons he learnt while completing business studies, it's this point that makes Sader question our fundamental understanding of entrepreneurship.

“A typical textbook definition for an entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards,” he says.

Looking at the case studies of several companies founded by influential entrepreneurs, Sader believes that this definition is too limited.

The entrepreneur is also seen as an innovator and a source of new ideas. In my view, the more modern definition is someone who has the ability to transform the world by solving big problems.

He doesn’t believe that people are born with an innate talent for entrepreneurship, nor does he think that a person needs a business degree to start a business.

Every single business, no matter the size, is founded on solving a problem at a profit. It’s entrepreneurs who identify these gaps and have the courage, curiosity, tenacity, and humility to turn these ideas into streams of income.

“I believe that the necessity created by the Covid-19 pandemic will inspire South Africans with the right attitude to turn challenges into opportunities. And this extends to some of the other challenges we face as a county — both big and small. By applying a creative and optimistic lens, we may be able to identify real opportunities that not only generate much-needed income but also move our country forward more meaningfully. In some ways, our very real challenges are food for innovation”.

Drawing on his business studies, Sader shares some advice for budding business owners in the hope that they will find some inspiration to take the next step in their entrepreneurship endeavours.

A good idea is only about 10% of starting a business

According to Sader, many people are capable of having brilliant ideas, but having a brilliant idea is only a small component of creating a successful business. The rest is about perseverance, drive, determination, picking yourself up, adapting, and moving on.

“Luck is also a big part of it,” he continues. “A different way of saying that is that often you just need to keep trying different things.”

You will always need to take risks

No matter what the focus of your business is, the need to take calculated risks is inevitable. However, Sader points out, “not all risks are equal”. The more successful businesses have a knack for being able to take the right risks, manage downside risk, and find ways of avoiding the risks that will put their businesses under.

Sader elaborates: “My point is that for savvy entrepreneurs, not every risk has to be a gamble.”

Don’t underestimate the importance of building your networks

“Your networks are your bedrock when it comes to keeping informed about opportunities and accelerating your success,” says Sader. He therefore advises young entrepreneurs to “always look to make friends, stay humble, and try to see how you can help others succeed as well - it’s the easiest and most genuine way to build a network that will do the same for you.”

Sader is a staunch optimist and a firm believer in the entrepreneurial spirit of South Africans, especially women entrepreneurs, and the potential this has to stimulate economic activity.

“One thing I know for sure is that South Africans are inherently resourceful and optimistic. It is this very enthusiasm that will see us pull through this deeply challenging period,” Sader concludes.