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7 things you should know before launching your startup

Startups are a tricky business to get right and it’s clear why most fail. For Henk Kleynhans, knowing how to price his product correctly was the number one need when he launched Skyrove. At the time of launch, the internet junkie was committed to the idea that there must be a better and cheaper way for internet to be available everywhere. Today, Skyrove is South Africa’s largest independent Wi-Fi hotspot network with over 600 Wi-Fi hotspots in South Africa.

Here are seven things he wished he knew before he launched his startup.

1. Think Local First. From day one Kleynhans tried to build a large-scale global business. “So a lot of my decisions were based on that: We priced in dollars instead or rands”. That conversion was in place for 5 years and was a legacy leftover from trying to do billing for a global market. “My thinking is build your businesses to be best locally and then expand from there. Even in a local ‘small pond’, there is a tolerance for mistakes that is not there globally”.

If you are trying to build in two ponds, you are constantly trying to balance the one and the other. Henk believes Groupon has the formula right. “It’s a global business, but it’s got local focus. So everything is different. They used local currency and are willing to modify for that city if it is really necessary. That is the benefit of thinking local.”

2. Done be afraid of hiring staff. When Henk first started he didn’t look to hire people. “I wanted to incentivise other companies and was always a little afraid of paying salaries. That kind of thing you should not be afraid of.” Given South Africa’s myriad labour regulations that complicate employing and firing, Henk recommends every startup goes through a human resources agency to ensure compliance with complex procedure. “At one point we paid a subcontractor 70k per month for basic tech work. A technician would have cost us R5 000. We were spending a lot more money outsourcing”. Henk adds he did this for months before taking on an employee.

3. Don’t be afraid of firing somebody. “You may think your technician is indispensable because he has good relationships and if he leaves tomorrow, you’ll be sitting with angry customers and issues you are scrambling to address.” But no-one is indispensable. In the same vein, Kleynhans adds he wish he knew about professional HR consultants who help startups through the process.

4. Pay for professional services. “Pay a lawyer before you enter a legal agreement. Don’t only get someone before it falls apart.” Henk says every entrepreneur must make sure everything from day one is legally done the right way. “The HR and legal professional can help you build a great business so get them involved early on.”

5. Don’t ever give shares away for nothing. “They have to be paid for in cold hard cash,” he warns. “Don’t give shares to someone because they will help or will be a strategic advisor or whatever. If they have nothing to lose they will only waste your time. And they will not have your interests at heart.”

6. Check references. Finally, “it may sound like the stupidest piece of advice but it’s one of those things we all know, but don’t always follow” he says. “We had a guy do a test and he was technically brilliant. He knew what he was doing and he worked for three days and had excellent customers references. The problem was he asked us to pay for a laptop which he had stolen from his previous employer”. When Kleynhans did call the former employer, he got the facts he wish he had before.

7. Trust your gut. “My closing shot is never go against it. Every time Skyrove has taken someone on when our gut told us otherwise we regretted it.”