Читать книгу Risk & reward - Thabani Zulu - Страница 15

One of the considerations as you decide on your venture is how easy or difficult it is for the average person to enter that particular field. It could be to your advantage if it is easy to get into your line of business and make money, but it could also be a serious disadvantage, as it increases the chances for competition both in the present and in the future. The easier it is for everybody, the more people will want to play in that market and the stronger the competition will be. As you make your assessment, some of the barriers to entry that you have to consider are finance, approvals and skills.

1. Finance

Some industries require huge investments to start and could be significantly unattractive to potential investors because of the risk involved. Think about how much money it would require to start a mining company and how much time it would take before you made your first rand of return. Consider tree planting, and how much you would have to put into the ground before you could smell profits.

The company I referred to earlier that is taking a long time to yield returns is a document management company. In simple terms, we keep documents on behalf of clients. The price to keep a bunch of documents in a box for a month is as low as R1.90. The investment that has to be made, however, is enormous. We have to have a warehouse that satisfies the requirements of the National Archives Act, is attractive and safe for the customers to trust, is adequately racked for ease of access to documents, and is equipped with the right security measures against fire and theft. Clearly, keeping boxes at R1.90 means that it will take a long time for the infrastructure to start paying for itself, which is a serious disincentive for most people. That is why there are so few of these companies around.

2. Approvals

There are businesses that do not have to go through rigorous certification and approval processes before they can be established and run. It is simply a case of starting and flying. Others, on the other hand, require many cumbersome applications, inspections, motivations and approvals before they can operate. The barriers are many, and many people will not make it into that space. The following are examples of approvals and certifications that you would require to succeed in certain fields:

− In the construction industry, government tenders require you to have CIDB (Construction Industry Development Board) and NHBRC (National Home Builders Registration Council) accreditation.

− Training services require SETA (Sector Education and Training Authority) and SAQA (South African Qualifications Authority) accreditation.

− Accounting services require SAICA (South African Institute of Chartered Accountants) and/or CFA (Chartered Financial Analyst) accreditation.

3. Skills

Some businesses require that you acquire the necessary skills and experience before they can make money. That could mean formal qualifications, as in the case of accountants, doctors, lawyers, engineers or architects. Anyone who wants to venture into these fields and compete successfully would have to have at least seven years’ post-matric qualifications. This is a significant barrier and reduces your chances of fierce competition. In fact, this gives you a wonderful head start and you should accumulate more skills, more contacts, and more contracts.