Things I wish I knew before I started my own business
Starting a new business is exciting and astonishing at the same time. It is exciting because you are making yourself a Director and a Boss of your own with enough control of your time and other resources. Starting your own business may result in employment creation, making yourself a Boss to other people you will employ. It is astonishing and fearful because one begins to venture into new things never before. It is out of the fear of the unknown. It is common and natural to be fearful while entering new environment. Starting a business involves money expenditure which can be a sunk cost if not properly planned. The extent of fear and excitement depend on the type of motive to start such business. This article is meant to harmonize those starting business with fearful minds and at the same time to stabilize those with excitement.
Motives for starting a business
- Being a boss of your own is motivating
- Fulfilling own passion and vision
- Looking for financial independence
- Need for control of lifestyle and daily schedules
- Getting advantages of tax benefits
- Looking for job security
- Looking for a wide range of skills
- In search of creativity
- Looking for daily bread
Regardless of the motive that pushed you to start your business there are steps that are a necessary consideration in starting any new business.
Steps necessary for starting a new business
- Develop a Strong Business Idea
- Prepare your Business plan
- Decide the legal structure of your business
- Formalize the Business
- Determine your capital/funding
- Choose your Business Location
- Market and Promote your product or service
- Mobilize your Team and operate your business
Develop a Strong Business Idea
Starting a new business means actualizing one’s dream beginning with developing a strong business idea. Several individuals ask themselves as to how one can develop a business idea and more so a strong business idea. Developing a strong business idea is not an automatic exercise but rather a process that covers several essential steps. Critical steps for business idea development include the following:
- Detect problems and challenges facing the community members in their daily life activities.
- Shortlist all potential solutions for the problems and challenges facing the community.
- Where a possible solution exists, think of how you can make your solution better than the existing ones.
- Polish and narrow down the ideas to get the most vital idea as per requirements. This step is also known as honing the business idea.
In the process of narrowing down the solutions consider your passion. Your passion speaks of what you can easily identify and successfully work on it. Do not allow yourself to venture into a business that you are not passionate about. Passion is an inner force, desire, and appetite to do something. Doing business that comes from your inner desire is a great strength. The process of narrowing down the business plan should thus be guided by what will make you up and excited every morning.
Prepare your Business Plan
Once you are done with developing a strong business idea, the next step is to prepare a business plan that will help you keep your house in order. A business plan is an important document, especially for start-ups, as it allows you to keep defined objectives in place and chart out how to achieve the goals. A business plan provides a roadmap towards funding, technical know-how, marketing, and operational guidelines.
A business plan is also a practical resource allocation gadget. The business plan will identify areas that require more time and other resources and, hence, facilitate the proper allocation of resources. Furthermore, a business plan describes the current problem and the potential solution your business will be offering, an overview of the product or services offered, who and where the target market is. It provides a short analysis of the existing competitors as well as the funding plan.
Some people think that a business plan is not an essential step for start-ups. Startups require a business plan than those already in business. Startups need to think through the step necessary in doing the business. A business plan is a microscope of your business that can prepare you for the best way to handle the business challenges that might arise. In other words, a business plan facilitates you knowing where you are and where you will potentially be in a while. The business plan offers an insight into how to manage your small business. A wise man once said, “If you do not know where you are going, any road can do.” Not knowing where you are going, any road can take you anywhere, and you may find yourself in a ditch. A business plan is a monitoring and evaluation tool for your small business. Make it a ‘must do’ step.
A business plan entails the following sections.
- Executive Summary
- Overview and Objectives
- Products and Services
- Market Opportunities
- Sales and Marketing
- Competitive Analysis
- Management Team
- Financial Analysis
How Business Plans Benefit Start-ups
Business start-ups are in different situations, conditions, and requirements. Hence, the ability for start-up business owners to grab the benefit from a business plan differs from one owner to another. The basic benefits include the following:
- Business plans help startup owners to identify business opportunities not thought of and plan how to exploit them. Timely knowing business opportunities enrich the start-up and avoid derailment during the business implementation process.
- Through the Business plans the owners may realize any weaknesses in the business idea and address them before opening the business.
- Business plans help the owners to scrutinize the market and competition concerning the business idea. The results of the analysis of the market will make the business idea stronger than if one does not know the market.
- A business plan can be a persuasion tool for potential partners and collaboration.
- From the business plan, one can estimate the breakeven point and quantity. A Break-Even Point (BEP) is a level at which total cost (TC) equals total revenue (TR). Knowing the Break-Even Point sets a performance governor for the business.
- Facilitate the business operator to determine the target market and strategize how the performance.
Decide the Legal Structure of your Business
Deciding the legal structure of the business is key before registering your business. The selected legal business structure has an impact on the way you will manage your business. The impact cut across from the management of taxation issues to the personal liability of the owners or directors. The available legal business structure/ forms include sole proprietorship, partnership, corporation, and limited liability company.
Formalize Your Business
Formalization of Business is the step that considers the legal acceptance of the business. The step includes registering your business with the business registration authority or agency, obtaining a Business License, and registration with the tax authority as a taxpayer. The exact steps here differ from one country to another.
Determine your Capital/ Funding
Starting a new business requires money. Thus, establishing mechanisms of getting funded is amongst the critical steps during business start-ups. While considering funding, the business start-up owners need to consider the following, among others.
- Determine how much funding you need
- Consider the optimal source of the financing in the following flow;
- Funding the business from your savings
- Getting a small loan from friends and relatives
- Get a loan from formal financial institutions
- Consider partnership as a means of mobilizing more capital
Choose your Business Location
Choosing a business location is one of the steps before starting a new business. Like other areas, there are rules of the game for selecting the proper location. The first and foremost is for the business owner to evaluate what one has and what is expected shortly. It is worth keeping in mind that the consequences of a bad location may be difficult to cure. The appropriateness of a business location depends on the type of business.
Market and Promote your product or service
One of the motives for starting a business is achieving financial independence. Financial independence is possible if the business can sustainably generate revenue and hence profit. Hence, marketing and business promotion are essential. Consider the Marketing Mix while planning for your marketing and business promotion.
The Marketing Mix phenomenon is also referred to as the 4 Ps of marketing covering Product, Price, Place, and Promotion. The marketing mix concept should help you to offer the right product or service needed by your customers, at the right price accepted and managed by your customers, at the right place, and at the right time.
Mobilize your Team and Start Doing Your Business
If your business requires the involvement of people other than yourself, you will need to start building not only the team but the right team. You will therefore need to determine the composition of the team and the cost of maintaining that team before putting it in place. Key personnel include though not limited to those responsible in keeping books of account, and those responsible in distribution of the goods and services.