2 lessons from how township businesses start and grow

I was giving a talk a few weekends ago at an Inspiring Women event. I spoke of the ‘importance of starting small in business. One of the examples I related was on what can be learned from how township businesses are started.

There are a number of reasons someone in the township starts a business. The exemplary world view is a mother starting a business out of the need or desperation to feed one’s family. Be it as it may, ‘passion to enterprise’ is fast overweighing the desperation to make ends meet. People are being exposed on how to offer great value even when in a dire situation.

Township business is sometimes looked down on, but it practices brilliant concepts which anyone can use to start and grow their business. However they the township businesses forget to grow and progress further on the very principles.

After the talk, 2 groups of people came to me asking further on the teachings of township business. They found the concept very enlightening and helpful.

So here I borrowed few words from my free booklet ‘Township Biz Fastrack’ which I co-authored with www.spazanews.co.za.

Normally when township businesses are started, the startup products are either strategic or ‘passion products’.

What I mean by strategic is, the business owner realises there is a gap in his surrounding market. It could be he/she believes he can sell colder soft drinks than the nearest shop or that his neighbours travel far to get soft drinks.

By neighbours, I mean it in an African sense, LOL, not neighbour in the proximity sense.

A passion product is, for example: the lady starting the business could be good in making artchar or baking – so she decides to enterprise on the skill. Normally when people are passionate about something, they make sure it’s good. They have an advantageous edge on regular competition.

Ok, how they would start is, they would start with smaller quanties of stock, then add more with the proceeds to grow the business. In modern entrepreneurship definitions, this is called bootstrapping. The business is grown by funding its own growth. Isn’t this awesome, it is less risk on own funds.

Ever asked the new spaza shop down your street to sell airtime or anything you need which they don’t stock? This is it, customers will then advise the shop owner/keeper who only sells soft drinks or artchar to add something that would of convenience to them.  This is called validation.

It is an easy transaction, customers are advising what to stock and they will buy.

The lessons:

  1. If you start small, you learn more with minimal investment. Of course we know of a timer who got their pension money and invested it all into something he calls a hotel but things don’t quiet work out. So they lost out big as they went in big.
  2. The experience which you gather informs you of where to re-invest your proceeds and invest your savings – WISELY.

So, there is hope for even businesses which are started out of desperation to feed one’s self or family. Validation and bootstrapping are important to grow any business.