Starting a new business is no mean feat. It is not an idea you dream about and wake up the next day ready to pounce on, neither is it something you enter into as a last resort, perhaps after other more-prioritized alternatives have failed you. This is because hundreds of businesses spring up each week and a majority of these businesses do not ever sprout, dying due to faulty foundations, inadequate research and preparations or outright indifference on the part of the business owner.
According to estimates released by the Small Business Association, over 627,000 new businesses open each year. At the same time, about 595,000 businesses close each year. This only goes to accentuate the need for adequate preparation before one delves into the dicey affair that is starting a new business.
To be a successful business person, you must not necessarily study business administration, neither must you possess millions of naira or be an Albert Einstein in business practice. In as much as these could be a plus on your chances, other relevant prerequisites must be considered, like ensuring proper planning, factoring in several financial decisions and paying keen attention to legal restrictions are very vital.
These fundamentals, necessary in starting a new business, have been delineated into 8 solid bricks, arranged in chronological order and begin with the most important of them all.
1. Undertake A Personal Evaluation Of Yourself
Before you attempt to register your business name with the Corporate Affairs Commission or to brainstorm into a business idea to delve into, you must carry out a conscientious appraisal of your intentions for going into the business. Ask yourself, why you really want to start a new business.
Is it because you want to make more money? Is it because you are tired of the dreary routine that is a 9-5 job? Or is it because you feel your skillset is better utilized as an entrepreneur? Be objective and honest in your answers. Remember, the key to the growth and survival of any business is its foundation, and if it is faulty, your business will remain stagnant.
It is like using a motorbike to carry a tricycle. There is a huge disparity in their capacities and eventually the motorbike cracks and breaks down. As such, your reasons for going into the business must be sturdy enough if the business will be sustainable. Once you have arrived at the reason for the business, you will be able to answer other questions like your areas of expertise, your available capital as well as your passion.
2. Brainstorm On A Business Idea
Notice I didn’t use words like think of or imagine or arrive at a business idea, I used brainstorm. To brainstorm means to suggest a lot of ideas for a future activity very quickly before considering some of them more carefully. (1)
You must dedicate ample time into evaluating a series of possible businesses you could delve in, explore their pros and cons and if they match your available skillset. This process should not be rushed and must be carefully undertaken to ensure maximum reward. Will your business leverage on existing and potential technological advancements? Will it solve an already existing problem or provide a smoother, cheaper or faster means of addressing a need?
Remember, you do not have to undergo this process alone. You could go out and meet people who you can ask questions. You could also seek advice from other entrepreneurs, probably more experienced ones or research ideas online; these will tremendously aid your bid to start a new business. Meanwhile, here is an article that could prove helpful on “8 ways to come up with a business idea.”
3. Conduct A Market Research
After you must have finally arrived at a promising business idea, you must not leave the left of the process to luck and just dive in. Rather, it is advisable for you to conduct market research into the business idea you have chosen. Good market research will help you find customers for your business as well as effectively analyze your competition in other to gain a competitive edge.
In Nigeria, there are numerous businesses all offering the same or similar services. What gives one business an advantage over another is the number of resources it has invested in proper research. You could use surveys, questionnaires or even interviews to gather information so that you will know where your rivals are lacking and what you can introduce to gain more points. Starting a new business involves beating the existing competition and a good market evaluation is a salient part of the process.
This article on “How to Do Market Research–The Basics” explains in simple steps the processes of conducting market research as well as shows three of the most common mistakes people make when starting their market research, which are:
- Using secondary research only.
- Surveying only the people you know.
- Asking only people you know
4. Prepare A Business Plan
A business plan is basically a written document that details how your business will evolve from when it starts to the end product. It is the foundation of your business and serves as a roadmap for how to structure and run the new business. A typical business plan will likely include the following:
- Title page, which should start with the name of your business.
- Executive summary, which serves as an abstract to summarize what the plan includes, and may touch on the company description, the problem the business is solving and the solution.
- Business description, which explains the kind of business you want to start and what it will look like in the future.
- Market strategies.
- Competitive analysis
- Design and development plan.
- Operations and management plan, which shows how the business function on a daily basis.
- Finance factors, which display where the money will be coming from, when and how.
5. Fund Your Business
Funding your business means kick-starting your business. Your business plan should have clarified how much money you actually need to start doing business. At this point, you decide if you have the wherewithal to run the business alone or if you would be seeking external help. If you decide to run the business alone, it means every aspect of the business including decision making and profit distribution belongs to you.
However, if you think you don’t have the financial capacity to bear the cost alone, you could consider options like finding a business partner, requesting a business grant, pitching your need to friends and family, obtaining a bank loan or seeking for venture capital investors.
6. Build A Compact Team Of Like Minds
No successful entrepreneur is an island. You need to work with people to ensure the actualization of your business goals and objectives. You will need to hand off responsibilities to other people; you need to build a team.
The task here involves arranging a team of like minds, people who share your ambition and understand your vision. When seeking for partners or employees, make sure you state your goals clearly and also ensure you establish and maintain a strong company culture.
7. Seek An Appropriate Location
Do you know that after carefully observing the above-stated steps, choosing a wrong location can end up rubbishing all your efforts? A good business idea needs a good business location to thrive. When choosing a location, make sure to consider your customers and their proximity to where the business is situated. Also consider how accessible the location is, as well as your proximity to other businesses and services.
Research the history of the site, nearby competition as well as other expenses like rent and available utilities.
8. Make Your Business A Legal Entity
You’re finally checking all the important prerequisites to starting your own business. Another important thing to consider when starting a new business is legalizing your business. This way, you don’t have to worry about someone taking your business idea, or abusing the stipulations of a partnership.
You should begin by creating a checklist of things to clarify. They include:
- Business structure: Is it a limited liability company, a corporation or a partnership?
- Business name: your business name must be unique and represent your business idea.
- Register your business: Once you’ve picked the perfect business name, you must make it legal and protect your brand. In Nigeria, the Corporate Affairs Commission is responsible for this. To know more, click here.
There might be a need to register your trademark, copyright or patent, to create a business bank account and to obtain the relevant license and permits. You must undergo the necessary researches in relation to your business.
Do you intend on starting a new business?
The steps to starting a new business as mentioned earlier aren’t easy, but they may be worth a trial. After all these processes, you must keep in mind the need to continually grow and maintain the business as the ultimate aim of a business is to make sales and profit.
You might encounter bumps. No, scratch that. You will encounter bumps, but as Steve Jobs says, “sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.” Do not let your mistakes be your undoing.
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