While Africa plays home to an impressive and vibrant startup scene, the continent’s entrepreneurs still face a myriad of challenges – funding a key one of them. Here, Bruce van Wyk, director of South African payroll company PaySpace gives his five bits of advice on how to bootstrap your startup to success.
Africa’s entrepreneurial energy is an impressive display of self-sufficiency. Fuelled by advanced technology leap-frogging legacy infrastructure, a growing middle-class and rapid urbanisation, the continent is exploding with small business owners and startups.
Globalisation has also enlarged the playing field, giving African entrepreneurs access to, quite literally, a whole new world of opportunities. Regardless though of actual location, launching a new business can be a very challenging venture. In Africa, obstacles such as limited access to financing, inconsistent government regulations plus minimal state support and weak national infrastructures, are a frustrating norm for most, if not all entrepreneurs.
For many startups, a lack of funding is possibly the most significant obstacle to their success. As such, they spend a lot of time applying to private investors, banks, foundations and state-run initiatives for seed capital – as well as further funds once the business is up and running. Should the financial support be forthcoming, more valuable time needs to be allocated to managing the relationship with the financial provider.
When my brothers, Warren and Clyde, and I started developing PaySpace with our close friend George Karageorgiades, we got some good advice: until your startup is profitable, time is the only resource you have. Every other apparent resource, like an investor or bank loan, is just a factor of how you spend that time. We realised that we wanted to spend our time on developing our product for our customers – and that we wanted equality in everything. The four of us decided to pool our salaries and bootstrap our startup.
Pull your business up by the bootstraps
The bootstrapping business model eschews external financial help or capital. These startups fund the development of their company through an internal cash flow. It often means a huge financial sacrifice for all involved but the pay-off is debt-free autonomy. No capital funding from investors means the business retains 100 per cent ownership and can focus on developing their product or service – rather than managing investor relations.
PaySpace is a bootstrapping success story. We launched our cloud-based payroll platform in South Africa in 2007 and are now active in 37 countries across Africa. It wasn’t all plain-sailing though – the early years were busy, stressful and scrappy. If you’re looking to finance your business from the inside, here are five things we learnt from our bootstrapping experience.
1. Failure is not a crime
There are no wins without a few knocks. Starting a new business is a risky venture so you have to accept that not everything will work out well. When failures do happen (and they will), don’t view them negatively and become overly critical. Turn them on their head and put them to good use – analyse them, learn from them and understand what went wrong. Do this, and next time you will do better.
2. Go with your gut
You are the boss which means you need to lead. Sometimes, this means making hard and fast decisions with limited facts or information at hand. You can’t play it safe, you have to call it. In these situations, the only thing you can do is go with your gut. You won’t always know what to do so be prepared for some mistakes – and then learn from them and move on.
3. All in
You are going to work harder than you ever thought possible. You will discover reserves of energy and extra gears you never knew about. Often, it’s only when things get really tough that we switch into overdrive. It can get manic but it’s all worth it. Put in the time and you’ll be amazed at the creative solutions you come up with.
Your family and business partners need to be all in too. Without some sort of balance and support, you will burn out so make sure that everyone involved shares your startup vision.
4. Get business savvy
Starting, and running, a successful business means you have to do things over and above your passion. I’d love it if I could spend all day every day developing software, but it wouldn’t amount to much on its own. Spend time and attention on getting to grips with the day-to-day operations of your company and get involved with tasks such as recruitment, marketing, finance and sourcing office locations.
5. Find the right people
When you bootstrap your business, the first few years are going to be lean. Choose who you hire very carefully. Look for the people who are willing to bet on themselves and believe in your vision. They’ll also need to do various things across various roles – you don’t want a stickler for a job title – you want a fast thinker and an able doer. If you can build a culture that is able to solve problems and get things done quickly with limited resources, you’ll have a clear competitive advantage in the market.
The thing about bootstrapping is that you’re forced to get really good, very fast. There are no shortcuts, only hard work, dedication, commitment, and a passion to control your own destiny. For a continent like ours brimming with energy and opportunity, a lack of investment or the wrong investment doesn’t have to make or break your startup’s success.