Ok, so you’ve identified an idea, collected some capital and decided to take the plunge and start your own business? It could be a part-time or full time business. Congratulations. You are embarking on a fulfilling but tough journey and to have the highest likelihood of success, there are things you need to know before and as you prepare for the plunge.
Are you ready?
Starting a new full time business takes brains, bravery and what will seem to be endless hours of hard work. When you own your own business, there is always something that has to get done. You will most likely find yourself working many hours a week in the initial stages. With that said, I’ll ask you one very important question: Are you ready to give up your personal life for the next few years? Do you have the required skills to set up and run such a business?
Your business will demand your blood, sweat and tears and therefore, it is important that you give it your all. If you don’t, the chances are, you’ll never have the strength and courage to see it through.
Legal Structure
Before you set up your business, decide what legal form you want it to take. Identify the number of owners the business will have. You have options of setting it up as a sole proprietor and run it yourself, get other partners and get into partnership or register as a limited liability company with directors. This is important because it will determine your business registration process and taxation.
Most small businesses chose to set up a sole proprietorships or partnerships because of the ease of formation/registrtion and taxation requirements.
Market Research
Although you have already identified a business idea, it is not automatic that customers will rush and fall over each other to buy your product or service. Go out and find out for sure whether your business idea can translate into a real business on the ground and will be viable.
A market research is the process of analyzing data to help you understand whether your products and services are in demand in the area you want to operate in and how to be competitive. Market research essentially involves a systematic review of the area you are looking in to and your potential customer base.
To carry out a quick research, find out what services or products buyers need and what factors influence their buying decisions. Is it price, convenience, service? You also need to find out who your potential customers are and how you will reach them, what are their characteristics such as age groups, income levels, education levels, skills etc. The market research will also help you thoroughly evaluate your business idea.
Your research will not be complete without looking at your potential competitors. Almost every business you will start will have competitors, either direct or indirect. Find out who your potential competitors are, how they operate and what their strengths and weaknesses are. This can easily be done by visiting them and observing the products they stock, prices they charge, the image they convey, listening to what customers say about them and looking at their set up and size.
For example, if you want to open a chips café or restaurant, visit a café in the area in which you want to set up, order a meal and observe the type of services offered, prices charged, the set up and layout, equipment they have and size of the business. Start conversations with other customers and note what they say about that café. Visit others and do the same. Understanding these competitors will help you serve your customers better and will also help you set realistic prices for your products and services.
Suppliers
Your business will need products to sell or inputs to use. Before you set up, ensure you know where you will get suppliers for these inputs and products. Be sure the supplier will be consistent and affordable. Ensure that the prices you are charged for the supplies will make you charge competitive prices. Look for several options to avoid relying on one supplier who may either hold you to ransom or even disappoint you later. You may choose to source your supplies from manufactures directly or buy from wholesalers. You need to decide on this and know the cost implications involved.
For example, if you want to sell second hand clothes, be sure that you know where to get them and the process before you set up your second hands clothes business. Confirm that the source is reliable and affordable. If you have to import products to sell locally, identify a reliable supplier or suppliers and take into account all the charges such as freight, clearing etc.
Get it right with the law
All businesses are regulated and have to be carried out within certain legal requirements. Understand all regulations you will need to follow, licenses you will have to obtain and any taxes to be paid for the type of the business you want to launch. Do your own research or consult to confirm the structure your business will take to be in compliance with the law. Establishing a successful business is hard enough. The last thing you need is the local authorities to stand in the way of your success.
Different businesses need different types of permits/licenses to legally operate. These licenses /permits are issued by different authorities such as county governments, Kenya Revenue Authority, Music Copyright Society of Kenya, National Environmental Management Authority, Ministry of Health and many other government bodies. It will be in your interest to learn in which category your business lies and which licenses/permits you will need. The permits will also dictate terms and regulations your business will operate within. Playing hide and seek with these authorities can undermine your ability to serve your customers and may ultimately kill your business.
Location
Your market research would have revealed the best location for your business. Try as much as possible to obey the findings of the research. The location of your business should be as important as the demand for your products and services. Previously, I have talked about how important it is to locate your business in a place where your customers will easily see and access you. Look at your budget and settle for an affordable location or premises that your business income will easily pay for without going at a loss. Good locations can be expensive so do your calculations right.
Business Plan
After gathering all the information you will need to set up your business, develop a killer business plan that will guide you through the process of implementation and operation of your business. Writing a business plan is essential as it will give you a clear roadmap before starting out. This is especially important as you may also need to show this business plan to potential investors, if need be.
Your business plan should be clear and to the point. It should state the type of business, the activities to be carried out, legal and ownership structure, management team and personnel if any, responsibilities, target customers, market trends, strategy and size, competitors, location, suppliers, pricing and sales projections with any assumptions made. You may also state some challenges expected and how they will be addressed. In short, your business plan will reveal what business you will be engaging in, how you will engage in it, how you expect to make money and what you will need to set up and succeed in the business. Present the plan in a well illustrated and friendly format that will capture the interest of any reader, you included.
Marketing
Potential customers must know that you finally plan to get into business and what you have got. They should also know what you can do for them to solve their problems. Chances are that they are already being served by other similar businesses so let them know why they should now come to you and what they should expect when they flock to you. In short, think of effective ways of marketing your business, to the right audience and the platforms you will use to pass your message.
If you go through these steps effectively, chances of succeeding in your business will be much higher. Don’t just set up a business blindly, study your environment and take into consideration all the factors involved.