Starting a Business: Some things to consider
A large percentage of persons dread plunging into something new. This is also the case of so many persons when business is mentioned. This ought not to be so. The reason for this is probably the uncertainties and the wrong myth surrounding venturing into a new business. Starting up a new business could be an amazing experience provided sufficient knowledge is obtained. And this is exactly what I intend to provide here.
A business cannot be entered into overnight. It would have to be thoroughly and painstakingly planned and followed through. The reason so many business are barely surviving is the fact that most businesses are entered into without adequately being planned for.
Many at times, people want to start a particular business and they get scared of starting small. There is absolutely no problem in starting small. On the contrary, there is greater joy in seeing a business that probably started small grow into a very large one than there is in just kicking up big or probably buying up an already big business.
STEPS IN STARTING A BUSINESS
IDENTIFYING AND HARNESSING BUSINESS OPPORTUNITIES: A business can only be said to have been successful if a specific economic need is found and met in a most effective way to the satisfaction of its customers. Before venturing into a new business, the very first step to take is to identify a business opportunity. Identifying a business opportunity entails taking a close scrutiny at the environment in question, looking out for economic needs and taking a bolder step to meet such need. After identifying these opportunities, they must be harnessed. By this we mean, effort must be made to see to it that this opportunities are converted to business deals. In our world, every day we stumble on business ideas that translate into business opportunities. But it is only when these business opportunities are harnessed that we can say a business opportunity truly existed.
PREPARING A BUSINESS PLAN: A business cannot be ventured into without having a well laid plan. The old saying, “if you fail to plan, you plan to fail” also applies in the business world. I have known little or no businesses at all that have succeeded without a well laid plan. A business plan is a formal statement of business goals to be attained by such business and it also involves the strategies to be taken in order to meet such goals. A business plan, if properly prepared, often guarantees the smooth running of such business. It could serve as a map, guiding you through. Business organization without a business plan, have no means of effectively evaluating the progress of such business because a business plan ensures that the standards that have been set are met. The content of the business plan would vary from one business organization to another one. The estimated cost and revenue must also be stated in the business plan.
SURVEYING THE TARGET MARKET: where no customers exist, then it could also be said that no business exist. Customers are what make up businesses. The target market represents the totality of the customers a business intends to direct its marketing strategies to. The target markets are those that would most likely buy the goods and services that you are willing to offer. You would have to answer certain questions such as; the goods and services you choose to provide are they to be consumed by the older or younger persons or both, or are they to be consumed by the females or the males or both. It is in answering these questions these questions that you would then know how to direct your marketing strategies.
LEGAL STRUCTURE: At this point, the legal structure of the business should be established. Should the business take on the legal structure of a sole proprietorship thereby having the advantage of quick decision making and a disadvantage of unlimited liability or should it take on the legal structure of a partnership thereby having the advantage of sharing of loss amongst the partners and capital expansion as a result of more persons. If it chooses not to operate as a sole proprietor or as a partnership, it could also choose to operate as a private limited liability company with its advantage of perpetual succession and limited liability or it could also operate as a public limited liability company. The legal structure to take on would largely depend on several factors like: the capital structure, the transferability of shares amongst other factors.
THE START UP COST: This includes the total amount it will cost the owners of the business to kick off such business. The owner of the business has to know the cost of the raw materials it needs to produce its goods. They also have to know the cost of all the plant and machineries that would be needed in the production of such goods. These would entail a thorough planning. They have to decide if the plant, machineries and equipment to be used would be purchased locally or otherwise imported. Once the start up cost of the business is known, the owners of the business can then go ahead to source the funds to finance it.
FINANCING THE BUSINESS: After identifying business opportunity, preparing a plan, and determining the legal structure, you would need to plan the financing of such business. The financing of the business could either be internal or external. By internal I mean from you as an individual starting the business. Some of the internal source includes savings, sales of private properties like cars, land and buildings, jewelry etc. And by external I mean going beyond you as an individual and extending your arms outside to get the financial resource to run the business. You could choose to take to the traditional borrowings from friends and families or you could move on to more sophisticated means of borrowing like selling of equities either by private or public sale, sale of debentures, borrowings from financial institutions or some other forms of borrowings. For a small business, traditional borrowings from families and friends could be recommended but for a larger one, short term or long term loans could be acquired from financial institution.
HUMMAN RESOURCE REQUIREMENT: most often than not, people start up business without considering the human resource requirement. The human resource is the totality of the human factor required to run the organization. This human requirement is largely dependent on the form of legal structure it takes on. For instance, if it operates as a sole proprietor, the human requirement would not be as it would have been if operated as a partnership and this also in turn would not be as much as that operated as a private Limited Liability Company.
MARKETING STRATEGY: Now that we know that there’s a demand for the goods and services that we are willing to provide, we also need to have a definite strategy as to how to ensure that these goods and services gets to the hands of those who are in need of it. There are several marketing strategies that the owners of the business could choose from. They could take to direct sales whereby their staffs go out to the streets to get customers directly. Thanks to the emergence of the internet, the goods and services could also be sold through the internet. The owners of the business would have to develop good marketing strategies. A good marketing strategy would help the owners of the business to understand their customers more and seek for ways to meet the needs of these customers in the most satisfying way thereby increasing the turnover of such business.
LOCATION: Another very striking point in starting up a business is the location of such business. The location of a business is very vital. Some businesses are barely surviving because they are wrongly located. No one would want to go through the stress of getting a product from a very far distance when he could easily get it from a place close by and so the business has to be located in areas where the demand for its goods or service is high. If a business is located far from those who demand for such goods or services or if it is far from where it could get its raw materials, such business will not thrive.
After all of the above have been done, the potential organization could go ahead to register the business and also insure the business. At this point, the business is good to go. You have successfully started a business. But the fact that you have done all that was listed above is not a guarantee that such business would experience no hitches all through. In the long run, the weakness and the strength of the business will be discovered; threats to the organization will also be discovered. What has been created here is just the basis in starting up.
I wish you a happy beginning of your business and also a happy running.
AUTHOR: Ogor Loveth Temitope
The article first appeared in www.mocaccountants.com