Many people have the aspiration but very few know how to start a business. Being your own boss gives you an exciting feeling but to so many people, the excitement disappears as soon as they start. The reason is simple: many aspiring entrepreneurs don’t take the right steps in developing their business ideas, hence many businesses fail for this reason.
How then do you start a business that succeeds?
This is the exact question the following paragraphs provide answers to.
A poorly conceived business will certainly fail. You may have a lot of ideas but starting a business around an idea requires careful and diligent planning. This is so that you do not launch a service that the market does not need. In deciding on your idea of business, I recommend strongly that you:
Stay with what you know
It is best to start a business in an area where you already have some knowledge, skill or experience. For instance, if you have been a teacher for so many years, you will likely found that establishing a school of your own is fun and exciting. You have a greater chance of success as a school proprietor than becoming a poultry farmer.
Of course, there have been instances where people succeed in strange areas where they have no prior experience. But the reality is that most people will succeed more in what they know than in what they do not know. If your interest is so great in an area where you have no prior experience, skill or knowledge; you must endeavor to get some training. Acquire relevant knowledge before you venture into that area of business.
Settle for a business built around an idea you are passionate about.
It is a fact that if you are not excited about what you do, you will not likely give it the push it requires when things are not working according to plan. It is your passion that will encourage you to hang on there even if you are unable to secure that first contract. Or attract a good number of customers to buy your products or use your services.
When passion is put first, you will ultimately make the money. But if money is on the front burner, the first sight of disappointment will throw you off balance. The enthusiasm you have in your business is what will carry you through rough times. The absence of it will cause you to run out of energy and give up.
Choose a business that fits your long-term needs.
If the nature of the business makes it challenging to achieve your reason for seeking independence in the first place, think of other ideas. A man who loves to spend time with his children will realize that running a bar is a wrong business. Why? Bars thrive more in late hours and weekends. However, as a family man, these are the periods of time your children will need your attention. For a similar reason, you will be helping your family life by not considering businesses that will constantly take you out of your station.
#2 DO YOUR RESEARCH AND STUDY THE MARKET THOROUGHLY
So you have a fantastic idea and you think that once you open your doors, customers will line up to buy from you. It definitely does not work that way. It would be a disaster to set up a shop and display items that no one is interested in buying. So one of the initial steps to your business start-up is to study the market critically in order to be certain that your idea is viable.
Your investigation will focus on identifying and measuring the size of the market. You want to know how many people want the service you are about to offer or the product you are about to sell. What is the competition like, that is, how many people or businesses are already offering similar services or selling the same products in your location? What are they doing and what will you have to do differently to get patronage.
Exploration research of this kind is not difficult to do as you may think.
There are enormous amount of information available online. Check out the web pages of existing businesses in your market to know what they do and how they do it. Visit the information desks of trade associations, chambers of commerce, and such other bodies for valuable market intelligence on the product or service you want to offer.
#3. DRAW UP A BUSINESS PLAN
As the saying goes, a failure to plan is a plan to fail.
Most people do not realize the need to write a business plan when they want to start a business. A business Plan is a critical element of the entire start-up process. They serve a variety of purpose. Apart from helping you think through your strategy, it is very important for fund raising.
A business plan is simply the articulation of your ideas and programmes for your new business. The document provides you with the road map for managing your business. Contrary to what many would think, it does not have to be complex or decorated with financial jargons. Your business plan could be as simple as ideas, programmes, timelines, etc., you jot down on a notebook. Something that you refer to at every stage of the process of taking your business off the ground and managing it.
You may, however, need a professional assistance if you are preparing a business plan for third party use, say a financier, an investor or a bank. The professional adviser will help you put your plan in the format required by the fund providers but essentially will contain what you articulated as a roadmap for your business.
#4. RAISE CAPITAL
If you do your business planning very well you will discover that the question of finance will crop up very early in the planning process. It will also re-occur several times during the life of your business. You must know how much you will need to open your shop and how you intend to raise the needed money.
There are many sources of raising money for your business. For many people, past savings is their first source of financing. Those who are fortunate will get some help from family members, friends, and well-wishers. Other sources of funding that easily come to mind will include loans from individuals and banks, grants from NGO’s or government agencies, assistance from development finance institutions, etc. However, raising money from these sources is not very easy.
Raising money for an ongoing business need not be such a hassle. Unfortunately, many small business owners either lack proper information on sources they can explore. Those who have the information find that they are not qualified to do so because they have not organized their businesses to meet the requirement of the funding agencies.
#5. GET SOME BUSINESS SKILLS
You may be technically sound in what you want to do. But you will need to have some basic business skills to be in a position to run your business successfully. Essential skills you need to get before setting out will include basic financial management, marketing, sales and customer services. Also essential are negotiation, communication and networking skills. People skills, time management and problem- solving skills are required.
All these skills can be acquired by attending short seminars and business boot camps organized by entrepreneurs’ capacity building firms and training institutions.
#6. ACCESS YOURSELF FOR THE ENTREPRENEUR’S DNA
Let’s face it; some people are not just wired for the rigors of entrepreneurship. The world is full of former corporate chieftains who failed in entrepreneurship. They became a disaster when they attempted to set out on their own. They did not have the entrepreneur’s DNA.
Does it mean that entrepreneurs must be borne? Not necessarily. There are borne entrepreneurs as well as entrepreneurs who are made. You can acquire the necessary skills you need to succeed in business but you must first understand and appreciate the personality traits of an entrepreneur that are lacking in you. Once identified, make a conscious effort at working on them if you wish to succeed in your business endeavor
It is in your best interest that before you take the plunge, you do a self-assessment test to find out if you have the business man DNA. If you score poorly on the personality test, I will advise you consider another career other than starting a business of your own.
#7. CHOOSE AND PROTECT YOUR BUSINESS NAME
You have to decide on a name by which you wish your business to be identified. You also have to protect your business name by registering that name with the Corporate Affairs Commission. That way, you will be rest assured that no other business in the country will trade or do business in that same name.
How to register your business should not be an issue as this can now be done online without necessarily the need to engage a consultant. However, using a professional such as a lawyer, chartered secretary or chartered accountant will help you a great deal in crafting your business objects as well as deal with other related matters
#8. DECIDE ON THE LEGAL FORM OF YOUR BUSINESS
The law recognizes three shapes a business can take. These are the sole proprietorship (popularly called One Man Business), Partnership and the Limited Liability Company (LLC). Each form of business organization has its strength and weaknesses. It is worth emphasizing that the legal form of your business to some extent determines the kind of opportunities you may be able to exploit.
But an important reason you should carefully consider the kind of legal structure your business will take is that the law treats each form differently; particularly in matters concerning how you deal with people, debts and taxes.
For example, a sole proprietor is liable for the debt of his business up to his personal assets. Whereas promoters of a limited liability company are not so liable. The liability of the promoters of a limited liability company is limited to the extent of their investment in the company, except in a case of a criminal investigation.
#9. TEST THE WATERS
If you currently have a day job and wish to start a small business, it will serve you right to start on part time while keeping your regular job. This way you are not in a hurry. And you are able to learn, make the mistakes an d build traction before going full scale.
If you are not employed and you are considering business as a career, you still need to take the cautious approach. Start small, learn the ropes, the tricks and incrementally invest more to grow the business.
#10. GET A MENTOR
Most successful entrepreneurs have role models who they can copy and learn from. Your mentor will inspire, guide, direct and steer you away from the potholes. Identify someone who has a measure of success in the type of business you want to start and let him mentor you. Ask him all the relevant questions and observe him in practice and try replicating his practices in your own small business.
Ask him for guidance when you come across challenges in the course of doing your business.
You can also learn from established business people by reading the books they wrote or books written about them. Read their biographies and businesses. Understand what they do and have them replicated in your own business.
#11. CHOOSE A LOCATION
Deciding on where to conduct your business from is an important part of your business planning process. Usually your choice of location is influenced by a number of needs. The most common of which are: the need to be close to your market, where you source raw materials from (if you are involved in the production of physical goods), cost of the location such as office rent and associated levies, amongst other factors.
However, with the pervasive role of the internet, the traditional considerations can be dealt with easily. Many small business initiatives operate from home and many big corporations today started from the garages of their founders. With a good web presence, you can meet customers’ needs satisfactorily across the globe. You have to decide whether to operate from your home, at least during the initial period, or pay for an office space. Working from home will save you money but you will have to deal with the distractions of family members.
A very important factor that will determine your choice of location for your small business will be the type of service you are rendering or product you are selling. If your business requires that you meet your customers in their own business places, then a home office will be just fine. The convenience of your customers and the ease of service delivery should be the overriding consideration in choosing a small business location.
#12. OBTAIN RELEVANT PERMIT
Depending on the nature and kind of business you are doing, you may be required to obtain trade permits in addition to registering your business. It will be illegal to do a business without the relevant permit if the law requires it. Usually, businesses in the oil and gas industry, banking and financial services; export trade and mining will require that you obtain special licenses from the relevant authorities. It is wise to consult with a professional Adviser such as a lawyer or an accountant when you are planning to start your small business for guidance on procedures and rules.
Now you know how to start a business that succeeds.
The long and short of it is that you must do your due diligence very well before you decide to open that shop. In exploring all that small business ideas in your head you must conduct a deep and sincere self examination, scan the environment, articulate your strategy and go about the launch methodically so that you are able to navigate through the rough edges because avoidable mistakes made at the early stages mean that your small business is dead on arrival.
Buchi provides small business owners with strategic, financial, and digital support to help them build strong, successful and profitable enterprises. He is a Blogger at night and by day, Team Lead at Stalwart Investment Partners Ltd, a research, business and investment advisory firm.