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Growing to profitability

Growing to profitability

This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in August 2011 and is posted here by their kind permission.


A new entrepreneur faces a steep learning curve with no mentoring



The challenge

An entrepreneur started a website to provide youth with a free service for employment and small business opportunities. The income comes from web publishing and affiliate programs. He has no IT background and has to learn operations, marketing, finance and everything at once. He also doesn’t have anyone to bounce new ideas off.


This entrepreneur, operating in a rural area, wanted to make a difference to young people and small businesses. The web site breaks even but he is frustrated at the slow growth and his own lack of knowledge. This is a near-universal problem with new businesses, the learning curve is both steep and multi-disciplined. Affordable advisors are hard to identify.

Learning and getting advice

Finding appropriate learning opportunities and information while running a new business is a challenge. There are many courses advertised and choosing the right one is crucial for entrepreneurs on tight budgets and with limited free time.

Start with the free information on the internet. Entrepreneur magazine’s website at is a valuable resource, so is the SME Toolkit ( and many others. There are many great business blogs which starts ups can follow at no cost including my own at It takes time and patience to search for good information, but this is time very well spent.

Entrepreneurs should not be afraid to ask for advice, but only when they have done the basics. Many business people are happy to help but don’t expect them to come up with answers when the entrepreneur has been too lazy to investigate options. Start with a successful business nearby that is not in competition with yours and then ask the managers for assistance. This works well in the internet world, where free advice is a part of life. Coaches and mentors are available for a fee, but set the expectations and budget in advance.

 Will the idea work?

The entrepreneur’s second concern is marketing, but before thinking about marketing all entrepreneurs should be able to answer the question: How can I satisfy customer needs profitably and sustainably?

His business addresses a huge need, but he must show evidence that he is satisfying the need, not just attracting browsers. His challenge is measuring the success rate and then getting enough seekers and providers to use the site. If that happens advertisers and service providers will be attracted to his site.

Will his business model work sustainably? Will it generate sufficient cash flow? The entrepreneur must plan how and when this will happen, and test the plan for potential weak spots. Then he needs access to experienced mentors to check his assumptions and act as sounding boards. All start ups should investigate where they can pose questions to experienced business people. This may be by asking questions over the internet as this entrepreneur did, or by finding a local mentor.


Once the entrepreneur is clear about which audiences he needs to communicate with, and his target numbers including site visits, successes, advertisers and service providers, he can start to structure marketing promotions. The business is internet based so it makes sense to use the internet as the primary marketing medium. Beware, there are many incompetents styling themselves as internet experts. Check references with a knowledgeable source.

Social media engagement, e-mail campaigns to companies, SMS notifications to job seekers, RSS feeds from site that publish tenders and offer jobs and reciprocal links to blogs and sites providing useful information should all generate traffic, and a percentage of these will become jobs filled and tenders won. The learning curve on how to use these tools is steep but can be done with the free resources on the net. Look in the help files and forums on Facebook, WordPress and Google as well as the many blogs. There are many free or low cost e-books and courses on web site design, web marketing and attracting visitors to web sites. The rules of engagement on the internet change all the time though, so this means an ongoing commitment to learning.

© copyright Entrepreneur Media SA (Pty) Ltd. All rights reserved. No part of this article may be reproduced, stored in a retrieval system or transmitted in any form without prior permission of Entrepreneur Media (Pty) Ltd.  Permission is only deemed valid if approval is in writing.


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