Small businesses are cropping up left, right and centre, it seems, here in good old South Africa. And, if the stats are anything to go by in the USA, South Africa is in for a whirlwind of increased GDP but also many personal losses. In the USA, small businesses, which include home-based businesses, employ up to 50% of all private sectors and 50% of this make up home-based businesses.
Here in South Africa, the stats show that R2,39 trillion in turnover was generated by the formal business sector for Q1 of 2019. This figure is made up of 62% large businesses, 29% small businesses and 10% medium-sized businesses.
While the contribution by small businesses to the overall turnover has fluctuated over time (reducing from 32% in Q3 of 2017 to 29% in Q1 of 2019) they do make up quite a large portion of specific industries.
According to Stats SA, published in June of this year, “small businesses generated more than a quarter of total turnover in business services; trade; and community, social and personal services in Q1: 2019. As was the case in 2015, these three industries are characterised by a large number of small players.” Further, and interestingly, on the business services side (community, trade, social and personal services) the turnover decreased – “in Q1: 2019. As was the case in 2015, these three industries are characterised by a large number of small players. Examples include hairdressers, dry cleaning services and veterinary clinics (community, social and personal services); lawyers and estate agents (business services); and corner cafés (trade).”
So, what is my take on home-based businesses in South Africa?
We believe that it is a very good place to start and if managed well, and if the owner knows the pros and cons of managing a home-based business, the business can flourish and grow into more than just a home garage or office scenario.
Planning and Realism are key to running a Home-Based Business
Create your work environment for comfort
Yes, it’s your home, and if you’re not comfortable at home then what? But, there must be a clear division between home life and work life if this is to work for everyone.
If this means having a separate room where you work, close the door at night, and segregate from your partner, children and visitors, then that is what you should do.
Keep overheads down
One of the key reasons to run a business from home is to keep costs low. No office rental fees, no levees, no maintenance costs, no PBX telephone equipment bills, etc. etc. While that may be how you start out, if things start to pick up, you may find yourself spending unnecessarily. Keep a handle on the funds and the expenses.
Outsource as much as you can
While it may be tempting to employ people full time; an assistant, a salesperson, a runner, etc. when starting out, as with above point, keep the costs down. If you outsource those needs, you have them on a contract basis – i.e. they get paid when they get work. Managing it that way will alleviate much stress.
Branding and planning is key
A home business doesn’t mean that you can wing it and run along without a professional element intact.
Start with a branding exercise, a business plan and strategy which filters into a marketing and sales strategy, and then bring it all together with a goal in mind. Where do you want to be in one month’s time? Where do you want to be in one year, five years, ten years? Do you want to sell eventually when you’ve reached a particular milestone? Do you want to grow the business to eventually leave to your kids/family?
All these questions and plans are no different to running a large business.
The trick, at the end of the day, is to treat your home-based business like you would a large organisation, however keeping in mind that your turnover needs to resonate with your expenses and potential market growth.
When in doubt, reach out to an experienced and professional organisation such as Optigrowth.
We have run many businesses over the years and helped small to large-sized business successfully scale and grow.
We are here for you – get in touch today even before you take that step to running your home-based business.