How To Start A Business..
Starting a business for the first time can be overwhelming. Between planning and securing funding a lot of important tasks can fall through the cracks. This can become even more daunting when you do not have a business background to draw knowledge from. In this article, I will be giving you a basic guide to make your journey as aspiring entrepreneur smooth.
Here is a business plan template that can guide you through the process of analysing your business idea in more detail.
1. Business Idea
When starting a business, it is always a good idea to have a clear and harmonious idea of what you plan to offer the market. This includes classifying the nature of your business; whether you are offering a service, selling merchandise or manufacturing a product.
Achieving this will allow you to list the type of expenses and overheads that you are likely to incur over the course of your business establishment and operations.
2. Target Market
In business it is important to understand your target market and their needs. It does not bode well when your business idea does not appeal to the public as it will fail to fulfill a demand in the market. Market research will help you understand and reach your target customers. In doing so you can assess the feasibility of your business idea and perhaps take pre-emptive steps to make it more appealing. Consider aspects like pricing, packaging, branding, accessibility and usability to name a few.
We have all heard the adage “It’s all about location, location, location” and while it might seem like it is a minor detail however, this is a particularly important facet of your business to take into consideration. The location of your business could be the difference between you succeeding and failing altogether.
When you have identified your target market, it is important to be located as close to a dense population of that market. It is simply a matter of being in the right place at the right time. Selling customised snowboards and skiing equipment in a desert town is not going to generate as much foot traffic as being in a town just outside a ski resort.
Accessibility is also important, making sure that your customers can easily find you. Ways to achieve this is by locating yourself in places of high traffic for example along main roads, in shopping centres and within business districts.
4. Start-Up Costs
At this point you have a clear idea of what you are going to offer your market and where your business will be located but how much will it cost? Having clarity on how much it will cost for the inception of your business will enable you to mitigate unwarranted costs. Doing market research is paramount. How much is the average expenditure for a business like yours? With this information creating a budget and planning will be beneficial in mitigating miscellaneous expenditure, ultimately saving you and your business money.
5. Capital & Finance
The money that you will need to put in your business is defined as your start-up capital. It is essentially what you need to finance your start-up costs. Raising capital can be done in a multitude of ways. You could save money; however, this might take some time and a lot of patience on your part when using this method. Alternatively, you could find investors who are willing to give you capital in exchange for a stake in your business.
Financial institutions like banks offer loans to perspective business owners that qualify for their funding schemes in addition to government institutions to individuals that qualify and meet their requirements. Lenders and stakeholders require that their investment in your business earn them a profit or dividend. In this regard be prepared to negotiate terms to the best of your ability in a manner that will be beneficial to all parties involved.
6. Suppliers, Knowledge & Expertise
Depending on the nature of your business you might require suppliers or individuals with knowledge and expertise in a particular field or a mix of both. Identify suppliers who will provide you with the stock you will require to sell in your business or individuals that will share their knowledge and/or expertise. Analyse which will be a best fit for you and forge a business relationship with them.
7. Operating Expenses
While it takes money to start a business it also takes money to keep it running. Operating expenses are the expenses you incur to keep your business running. These are your day-to-day expenses such as wages, rent, office supplies, water and power bills, inventory costs and the like. Make a list of the different expense you are likely to incur.
More importantly this will help you when calculating how much capital you will need to finance your business venture. You can consider this as part of your overall business plan. It is recommended that you take between 6 to 12 months of operating expenditure into account when raising your capital. These fledging months are likely going to show fluctuating cashflows for your business. Having enough capital to mitigate this will prevent your business from going under before it is able to gain traction.
Depending on the scale and nature of your business you might require staff. You can acquire staff in two ways, by hiring or outsourcing labour. Outsourcing is when a company hires another party to perform or provide a service that would normally be found inhouse. Outsourcing takes care of any management responsibilities you might have if you were to hire staff yourself. When you hire staff there are salaries and other regulations you will have to consider. While both methods have their respective pros and cons it really comes down to what is in the best interest of your business and its outlooks.
9. Marketing & Advertising
Marketing is important to any business. This tool aids you in reaching your intended and prospective customers. How will they know of your business if you do not tell them? This is where market research comes into play. When you understand your market, you will be able to discern which medium is most suitable for the product or service you intend to offer. With the prevalence of social media platforms that reach billions of users across the globe and influencers with hundreds of thousands of followers it has never been easier to reach audiences. You are also not restricted in just one medium of advertising; there is also television, radio and newspaper publication that offer slots for adverting as well.
In order to know how your business is doing you need to have a reliable accounting system in place. This allows you to analyse the financial health of your business. In addition, you can account for the business’ in and out cash flow. By keeping accurate financial records, you will find it easier to comply with tax and accounting regulations. Stakeholders are also interested in the liquidity of your business; therefore, accurate accounting records will also keep them in the loop on the health of their investment.
11. Registration & Licencing
Once you have considered all the above, made appropriate plans and are ready to start your business it is important to register your business with the appropriate governing bodies. Depending on the nature of your business obtaining licences might also be necessary. This is also another expenditure that you might incur during the inception of your business. Most importantly register with your tax office for compliance of legislation.
In my previous article l discussed types of business structures which you mind find useful.
Now that you have done all this planning and consideration you are ready to be on the road to entrepreneurship. It will not be easy, but it will be well worth it. In the words of Walt Disney: “All our dreams can come true, if we have the courage to pursue them”.