Startup Toolkit: Essential Steps to Launching Your Business

The backbone of any thriving economy is the success of its small micro and medium-sized enterprises (SMMEs). South African SMMEs have a proven track record of fuelling job creation, driving economic growth, and aiding local communities in overcoming challenges and recovering from difficulties. Whether you're an individual consumer or a large corporation, choosing to support the growth of small-to-medium-sized businesses (SMBs) is crucial for the well-being of communities.

Let's delve into the details in our startup toolkit and gain better understanding of how you can initiate your journey as a startup in South Africa. We'll also explore some effective tactics and tools to assist you on this path.

What role does funding play in supporting this growth? Lenders focused on assisting South African SMEs comprehend their challenges and objectives. They are driven to explore ways to utilise alternative data to help these businesses secure funding. However, some of these businesses are still in the startup phase and may lack all the necessary tools for success. FundingHub typically sees over 9000 SMMEs registering for funding on its platform each month. Most of these businesses are well-established and have a track record of successful trading. However, there is a small segment of enterprises on the FundingHub platform just beginning their business journey. This "handbook" aims to offer a comprehensive set of tools and resources to assist any business in getting started in South Africa.  

If you're reading this because you're eager to set up your own business, congratulations! You've successfully taken the first step, which is getting started and doing the research. Becoming an entrepreneur is often challenging and can be quite intimidating at first. Even if your business isn't actively engaged in online sales or marketing, nearly every business leaves a digital footprint. If you have business bank account – each transaction creates data. The same principle applies when using a POS device or depositing cash into a digital vault; every interaction contributes to your digital footprint. This startup tooklit not only assists in setting up a business but also explores how digitisation can work to your advantage. We believe that improved data empowers businesses to make better decisions, additionally it helps lenders in making more informed lending decisions.  

Startup toolkit: 6 steps to effectively start a business in SA

Embarking on a business journey from the ground up? We've got some intriguing tips and tools to kickstart your endeavour. For those with established businesses, perusing these guidelines might unveil hidden tricks that could elevate your operations. Let's explore the insights together.

Step 1: Register your business

We’ve come across many individuals that are venturing into entrepreneurship without a formal structure, conducting trade under their personal name and through their individual bank accounts. While it's a swift and straightforward way to begin, it does have its plenty of limitations. Here are a couple of the reasons why it’s a good idea to register your business in South Africa.  

Benefits of registering your business

Tax benefits: Businesses enjoy different tax treatment compared to individuals. The fixed taxable rate for companies is set at 28%. Additionally, you have the opportunity to offset expenses related to income generation, reducing your taxable income.

Access to funding: Registering a business opens doors to a range of banks and lenders specializing in business finance. Due to the structured and regulated nature of businesses, accessing finance through a registered business is often more cost-effective than doing so under your personal name.

Limited liability: One of the key benefits of formal registration is limited liability. This means your personal assets are safeguarded from business-related debts and legal liabilities. In case of financial challenges or lawsuits, your personal assets are generally protected.

Enhanced credibility: A registered business often enjoys enhanced credibility in the eyes of clients, suppliers, and partners. It signals a commitment to professionalism and adherence to legal standards, potentially attracting more business opportunities.

Government contracts and opportunities: Some government contracts and business opportunities are available only to registered entities. Registering your business makes you eligible to participate in tenders and projects that may be restricted to registered businesses.

How to register your business

You can simply register your business with the CIPC. Through this process, you will create a company, chose your company name generate all of your tax details and boom it is done! The CIPC is a good government service, but we know the process is still a bit dull and cumbersome. Also, cookie cutter company registration is not for everyone.

That is why we have partnered with InfoDocs who are specialists when setting up your company. They will take you through the process and create a company for you with all of the details and information that you need.  

Step 2: Setting up a business bank account

Now that your business is registered, the next step is setting up a bank account to manage your income and expenses. At this stage, most bank accounts offer similar features, with the choice often coming down to cost and functionality. Remember, you're not limited to just one bank; as your business grows, you can explore multiple providers.

TymeBank have made it as simple and easy as possible for startups and small businesses to open a bank account.  

And just like that, your business is now registered, you have a business bank account in place, and you’re all set to send and receive payments. In the next step, we'll guide you through some tools that can make your business operations smoother.

Step 3: Streamlining your financial processes  

Registering your business and setting up a bank account are crucial steps in launching and sustaining a successful business. Another vital aspect is optimizing your financial processes to ensure efficient operations and long-term profitability. While running a business presents challenges, the upside is that others have navigated similar waters before. Importantly, there's a range of tools designed to assist in managing businesses. While not every tool may suit your business type, exploring them can offer insights into potential growth opportunities. To guide you, we've highlighted key aspects of your financial operations and recommended tools specifically for streamlining financial processes.

Financial tools that can assist with streamlining financial processes  

Managing payments

When it comes to SMMEs, payment collection typically happens through three channels:

Many businesses leverage all these services to enhance their cash collection. For instance, an electrician might offer pre-payment options when customers book appointments online, use a physical payment device for on-site transactions, and send invoices after completing the work. While various solutions exist, we'll highlight some of our favourite ones.

1. Online payments

Generally, small businesses seek a swift setup process. This entails the payment provider managing your merchant account and periodically disbursing transactions to your account, instead of funds reflecting directly in your merchant account. What you're seeking is a reliable entity that offers a quick and hassle-free setup. It's difficult to find services that beat what Payfast and Yoco have to offer. Both payment solution providers have tailored their products with the small business owner in mind, providing excellent tools, accessibility, and a straightforward setup process.

2. In-Person card transactions

Let's talk about the payment method we're all pretty familiar with - the good old in-person card payment. It used to be something only the big players like PEP could handle, but thanks to the fantastic efforts of Yoco and iKhokha, even small businesses can effortlessly manage card payments.

All you need is to grab yourself a card machine and do a bit of initial setup, which involves a FICA onboarding process (so, have those company registration docs ready!). Once that's sorted, you're ready to start accepting card payments, and you'll hear that delightful kaching in no time!

‍3. Invoice sending

One aspect often overlooked is the simplicity yet complexity of sending an invoice. Amidst your daily tasks, it's easy to forget to send an invoice or follow up on one that's been sent.  

We're strong advocates for excellent invoice software, and here's what you should prioritise:

• Ease of Use: Is it straightforward?
• Professional Look: Does it present a professional image?
• Reminders for Late Payments: Does it help with overdue invoices?
• Integration with Accounting Platforms: (We'll delve into accounting later)

Our top three picks, scalable for both enterprises and startups, are Wave Apps, Zoho Invoices, and QuickBooks. These tools not only look professional but also simplify the invoicing process.

Managing finances & taxes  

Now that you're handling payments and managing incoming funds, it's time to consider how to effectively oversee the flow of money and handle your business accounting. Our approach revolves around two key elements: having a robust accounting system that accurately tracks income, expenses, and balance sheet items while also facilitating cash flow management. Equally significant is addressing your tax submissions.

Numerous accounting software options come equipped with features to assist with income tax, pay-as-you-earn, and VAT submissions. However, we'd be amiss not to highlight the commendable work our friends at TaxTim are doing for both individual and SMME taxpayers.  

If you're seeking more than just a technical self-managed system, consider empowering yourself with OutsourcedCFO. Beyond managing your accounts, they offer substantial assistance in establishing processes and procedures, providing valuable consultation when needed.

Step 4: Set up a marketing and sales strategy

Marketing and sales strategies vary depending on your company and industry. For instance, a gardening service business will employ a different approach than an e-learning company. However, regardless of your field, two fundamental online elements for every business are a domain and a website.

While functional, using a Hotmail account for business lacks the authenticity that businesses can create, that’s why it’s always a good idea to have an email address with your registered domain name.

Here are key steps to enhance your digital presence:

1. Set up a domain: use GoDaddy for a professional domain.

2. Email marketing and engagement: opt for MailChimp to boost communication.

3. Website: develop your website using WordPress.

4. E-commerce website: If applicable, consider Shopify for your online store.  

Once these are in place, the challenge is driving traffic to your website, encouraging newsletter sign-ups, and most importantly, converting visitors into customers. Treat your digital assets like your physical assets—constantly update, monitor, and drive traffic.

While marketing is a vast topic, there are toolkits that cover everything you need to know. One of our favourites, is Clickminded (marketing operation system), which offers a comprehensive set of course guidelines and tools to optimize your marketing efforts.  

Step 5: Streamlining your operations and processes

While some view operations and processes as mundane, investing time in building and digitising them can transform tasks into seamless automated processes. This, in turn, frees up your time, allowing you to concentrate on business growth instead of constant management.

We've categorised operations and processes into several broad areas. Each category plays a crucial role in streamlining and enhancing your business functions.

1. Digital operating system

Many startups initially operate with a Gmail account and its provided storage. However, as your business expands, the significance of establishing a proper operating system becomes evident. For smooth onboarding and usage, a great starting point is Google Workspace. This product, like other Google offerings, seamlessly integrates with various solutions and connects well with tools such as Google Analytics and Google Ads.  

Adopting a tool like Google Workspace facilitates the administration of employee accounts and enables seamless collaboration with shared storage for essential documents. Another viable option is Microsoft 365, offering a comprehensive suite of tools for collaboration, communication, and productivity. It includes applications like Word, Excel, Teams, and Outlook.

2. Process optimisation

A rising tech trend revolutionizing business operations is the utilization of low-code tools to streamline processes. By employing a combination of these tools, you can significantly reduce the time spent on administrative tasks. Here are a few of our top picks:

• Docparser: This tool facilitates the extraction of data from PDFs, transforming it into a digital format. Similar functionalities can be found in tools like Adobe and Google Sheets.
• Zapier: Serving as the connector and conductor, Zapier seamlessly transfers data and processes between different tools. For instance, a business owner might use Zapier to retrieve an attachment from an email and send it to Doc Parser for data extraction.
• Trello: Recognised as one of the finest project management tools, Trello stands out for its user-friendly interface and quick setup. Its collaboration features ensure the entire team stays informed about tasks and projects.

3. Legal and compliance  

In South Africa, SMEs are fortunate to operate within a well-established legal and compliance framework. However, for early-stage businesses, navigating this framework can be both onerous and cumbersome, leading to various challenges for business owners.

A highly recommended solution is Legalese, a law firm that can efficiently guide you through the initial stages of your business. They provide customized advice tailored to your industry and its specific requirements. Additionally, Legalese can direct you to consultants who specialize in helping you establish industry-specific policies and processes, ensuring a smoother journey for your business.

4. Human Resources  

Effectively managing human resources is crucial for the success of any business, and as companies grow, the need for streamlined HR processes becomes increasingly important. In South Africa, where businesses operate within a well-established legal and compliance framework, navigating HR complexities can be challenging for early-stage ventures. A notable solution for South African businesses is Payspace, a comprehensive HR and payroll tool.  

Payspace simplifies payroll processing, leave management, and employee self-service while ensuring compliance with local labour laws and tax regulations. By incorporating Payspace into their HR operations, businesses in South Africa can enhance efficiency, automate payroll tasks, and maintain regulatory compliance, allowing them to focus on their core operations and growth.

Step 6: Secure funding for your startup

Entrepreneurs embarking on startup ventures have various funding avenues at their disposal, from traditional business loans to government grants and self-funding. When seeking capital, carefully assess factors such as funding terms, dilution of ownership, risk versus return, and future cash flow impact. The South African government provides support through grants, incentives, and equity funding. For more established businesses transitioning out of the startup phase, platforms like FundingHub facilitate comparisons of offers from different lenders.

Investment from venture capital firms requires some business traction, with investors seeking equity stakes in return. Explore business loans from banks or alternative lenders, comparing terms and repayment options. While most South African businesses are self-funded, entrepreneurs can consider bootstrapping, utilising personal income, savings, and cost-effective strategies. Crowdfunding is another option, platforms like Jumpstarter allow businesses without traditional access to capital to raise funds from friends, family, and individual investors through models like equity, donation, or rewards-based crowdfunding.

Launching a successful business in South Africa demands strategic planning, careful consideration of legal and financial aspects, and leveraging the right tools. entrepreneurship is a dynamic adventure, and with the right resources and guidance, your business can thrive, contribute to economic growth, and become an integral part of the vibrant South African business landscape. Best of luck on your entrepreneurial journey! If you'd like to share our startup toolkit with a friend, just click the share button.