Question: How did you manage the uncertainty that comes with starting a new business? By Rapelang Rabana, CEO and co-founder of Yeigo Communications
One of the most popular questions is, “How could you take the risk of starting a business?” Well, I got over the illusion that there was certainty and that there are no risks in the first place. I didn’t believe that going to a corporate and getting a job was going to guarantee me the life I wanted. None of those things are guaranteed any more and it was about dropping the illusion that someone else or a company is going to look after you. You are in a better position to control your life when you start a business for yourself and you are able run it. You know everything that’s going on with it, instead of being in a corporate company where you will have less information. So, I think people assume there is certainty and uncertainty by creating the illusion of certainty, when there really isn’t any of that.
Question: How can you collaborate with competitors? By KK Diaz, founder of Rekopane Payroll Services
We don’t have big loans to be able to employ all the skills necessary to run a particular business, so partnering with other businesses has always been key to us. And we’ve been lucky that we haven’t felt threatened or intimidated by our competition. And what we’ve actually done is we’ve adopted what we call co-opetition, and that’s cooperating with our competition to be able to service bigger clients and do bigger jobs, recognising that we’re not specialists in every field in our industry.
So, when clients require us to service partly what we do as well as things that we don’t do, we’re always happy to call on other accounting firms or other accounting and payroll software consultants so that we handle the jobs better and make sure everyone benefits.
Question: How can you stay happy and healthy? By Justin Stanford, founder of 4Di Capital
I think it’s important to retain some level of balance, no matter how hard you’re working. Relentless pursuit of success is one thing, and it’s important, but health and happiness are probably the two most important things in life. And it can be hard at times to keep that balance and to retain your perspective. So while I definitely think you need to be able to persevere and drive hard on your business, you need to also just keep sight of balance in your life and look after your health and to look after your happiness. Ask yourself, “Is what I’m doing something that I like? Am I happy chasing this objective? Is this truly going to satisfy me, or am I just chasing the money?” Because often in my experience, chasing the money isn’t the best choice whatsoever, and I’ve had lots of opportunities where I could have taken a decision which would chase the more obvious short-term money, but in the long term would be less fulfilling or possibly even less successful, so I think it’s quite important to retain that objectivity and to be conscious of the decisions you’re making.
I think the most practical example that goes right back to the beginning for me is that, when I wanted to start a business, when I was 17 or 18, I was pretty much told that I would need to move to Johannesburg because that’s where all business took place, it was the centre of commerce, that’s where all the money was. I thought hard about it and decided that I would rather stay in Cape Town, against the odds and against conventional wisdom. And so I did, and I still managed to make a success of it in Cape Town. And I’m glad that’s the decision that I took, because on the whole I feel that I’m much happier and healthier for it. So one needs to be careful of what motivates you when you make decisions and how you balance your time and your life. Be ruthless and be judicious with your energy and your time. Make sure that what you focus on is working towards happiness and that you’re not sacrificing health and that you don’t get caught in the trap of just chasing the money.
Question: How do you allocate your limited marketing budget in a startup? By Jason Xenopoulos, CEO of Native
I am talking to a large extent from personal experience, and I think that one of the most important things for any new startup venture is to really hold onto to the cash, particularly when it comes to marketing. I think that we are too often concerned, particularly when starting an online startup or a mobile startup, about the fact that you need to be first. You need to have that first-mover advantage in order to gain a critical mass of users in order to win the war, and so you spend a lot of money at building the brand, staking your claim and getting there first. But, in fact, the bigger danger is that you are too soon and if you spend too much money on marketing in the early days the likelihood is that you are going to run out of steam before your product or service comes of age.
I have seen a number of businesses that were great ideas but they spent all their money in eighteen months and went bankrupt before the market caught up with the idea. Smaller competitors of theirs who spent much less money and manage to just kind of crawl along for the full duration of those three years actually ended up winning the war because they were still there when the floodgates opened.
So I think that as a startup you need to be very, very careful about the way you use your cash, particularly in terms of marketing your brand. You need to try and give yourself as long a time frame as possible for your product or service to mature for the market to really grasp what it is you are offering them, particularly if it is a new product or service that they have never been exposed to, where you are answering a need that the consumer doesn’t even know they have. And I think if you can do that, if you can trust in the fact that you aren’t suddenly going to have your lunch stolen away from you by a big competitor who gets there first, then you have a much better chance of surviving.
I think that this notion of the first-mover advantage is very misleading. I think the truth of it is that we are talking about first right-mover advantage. Yahoo had first-mover advantage, they seemed indomitable, but Google had something better. The same with Myspace and Facebook, so I think that when it comes to building your brand or product or service in a new startup, you really need to give yourself as much time as possible to build that brand.