Having a business idea is one thing, starting the business takes another form entirely. The job of an entrepreneur is to see a problem (could be human resources, legal, sales and marketing, intellectual property protection, financing, liability protection, and more) and it is the responsibility of these entrepreneurs to solve these problems.
So, any service or products a customer is willing to pay for is a business and it usually start with one idea, it will remain an idea if certain task are not done to convert it into a profitable and sustainable business. It is very risky to wake up one morning and throw capital into a business idea without sitting down and counting the cost.
You might have the capital but be in the wrong location for example, starting up a surf board business in Liberia or in Iran. In some other places, such business is selling fast but in some places it is not or even staring a snow parking service in Africa (great business, wrong location).
So it is important to understand how to start a business before starting one. There are four common structures of Business which are limited liability companies (LLC), sole proprietorships, partnerships and corporations.
Depending on the type of business you run, the process would be different for each of them. Some businesses provides products while some provides services, regardless of what you provide, there is need to answer the question of:
- Is it problem solving?
- Is it making profit?
- Is it sustainable?
- Is it right for the location?
Some many other questions about business will emerge from this, so understanding what business entails is very important. Value analysis is very important in a business because it’s different your business from your competitors and gives an edge during competitions, it gives an overview on what value you are giving to your customers.
We want to simplify your quest for knowledge by taking you through The ABC of starting a business listed below which will give an insight on what to do start up a business, company:
A- Audience
For that business idea, who are your target audience? And does your location favor your idea? Understanding who your product and service is meant for as a business is very important. Target audience determines how you sell your products/services and how you place price on it, ways to achieve this is speaking to friends and family and getting feedback from them, embarking on a market survey or using online tools to reach out to more people and analyze results easily.
B- Business plan
A business plan is the foundation of any business. Planning determines how consistent and intentional you are with your business, business plan which include your pricing system, competition, key partners, cost, value preposition. One of the aim of having a business plan is to work with data that help make your product accessible to the market.
Online tools like Business model canva can help give a better understanding on how the business plan looks like. Your plan may include how to get capital (just in case you will be involving investors), what you will be needing to set up and how to get it and finally what type of labor the business would require.
C- Competition
Competition is inevitable because ideas are being conceived every seconds, there is need to research into other business that are into something similar as yours. This research will help you to be Distinct to your audience. Many consumers have seen it all, they want to know what makes yours different.
There is a need to understand why too many people are into a particular business because when there is over supply, profit might reduce, same as the reason why people went into a particular business and fail. There is a need to solve all this puzzle before starting up any business.
D- Demographic
Gather the demographic information of your target consumers for better opportunities for gaining customers which includes interests, and population data on age, or any other consumer info that is relevant for your business.
E- Exit strategy
There is need to understand if your business is long term or short term, how long do you want to run the business for. Understand who your key partners will be friend or partner but there should be a partnership agreement regardless whosoever is involved.
F- Financial Model
Know the factors that will drive your business model. There’s a sales side and an expense side to all financial models. The revenue side will be guided by the product/service price/fee and amount of (number of transactions). The cost side would be driven by the daily expenses of running your business, such as rent, salaries and other overheads (if you have employees).
In addition, you can incur set-up costs (inventory you will need to purchase, manufacturing costs, rental deposits, website hosting, etc.) when starting out. Try to do a break-even analysis that would show you have recovered your set-up costs at what point in your company? It would be advised to use a reasonable monthly forecast of sales and costs against which you can monitor your results.
G- Go-to Market strategy
How do you plan on marketing your service/product? If you sell a product, you intend to do so directly online, through aggregators or through retailers. You must have a presentation that outlines your brand, business vision, competition (and your differentiator) and pricing (wholesale/retail) when approaching other businesses to market your goods. You have to promote yourself if you are a service provider like me. You should have a web page, in either case and also chalk out a social networking plan, but be careful not to let social media become your day job instead of your business.
Have a detailed profile on Linked in, a link to which you should add to your business cards, written in the first person. I also have a blog where I try to interact with my audience. Write up a line of tags. It should be something that, in one or two simple sentences, describes your company. At times when you are out at a networking event and have to talk about what you do, this will help you.
Understand the use of PR for your company and advertising. Try and, if you can, find as many PR sources. Many magazines and newspapers offer low advertising rates for start-ups and free space is also offered by many local newspapers. Make sure you have fully exhausted all the free services before using paid advertising.
L- Location
Where is your business going to be based? Are your target audience in the location you choose to setup? These are things to consider before setting up a location.
M- Maintenance and consistency
These are important factors to note. When starting a business, there is likely to be challenges and setbacks. Maintenance and consistency is what will keep you in the market. Many successful businesses did not start out making millions. So many of them almost ran into debts but with consistency and the will to not give up until they have made a name for themselves in the market, they were able to stay active and are popular today.
N- Naming
You will want to choose a business name that is not offensive and also reflects your brand identity which does not clash with the type of services you offer or goods you sell causing you insurmountable legal and business hurdles. An attractive business name always has a way of attracting customers. When choosing a business name, do not choose names that are hard to spell and Conduct a thorough research to find out if it has been taken by anyone.
O- Organized bookkeeping and accounting system
You need to keep track of all your finances, both the one that comes in and goes out. This will only be possible if you have an accounting and bookkeeping system in place. You need records for your income analysis, profit, capital expenditures, expenses and loss, etc. This is important to help you understand your business’s cash flow and also for tax-filing purposes.
P- Pay attention to business contracts
During the cause of conducting some business deals, you might need to take the legal route to avoid a clash. Contracts drawn for business purposes are legally binding written agreements between two or more parties and are ought to be negotiated before being signed. They are like rules and guidelines in which both parties would have to follow within the period the contract is valid.
Smaller businesses might not really need signed contracts but it is safer this way. In case of legal actions where a business matter involving the owner of the business goes to court, the court will judge and make ruling based on signed evidences. The contract will involve obligations to be fulfilled by both parties, limits, working time frame (period of validation), payment terms, responsibilities of the parties.
Contracts could be drawn for different reasons during a business transaction like Consulting agreement with any independent contractors (this protects your intellectual property), Confidentiality and Invention Assignment Agreement (for employees and independent contractors) and Non-disclosure agreement (NDA)
R- Research
An idea is just the seed that needs help to germinate. Research is one of the resource your idea needs. It is important to understand your consumers and what they need, I would say the improved version of their needs. This will help you know how to package that idea and sell it to them. So many businesses might be competing to offer the same market services you are targeting.
Research is one of the most powerful tools that you have at your disposal if you want to be different. There are many resources available to help you like going to the library, Research your competitors, Find out what customers are looking for online, and be inventive.
S- Source of Capital
You need to have a clear understanding on how much will be needed to start the business and how you will source for the money, is it through grants, family, friends, loans and at what time of the business you will need a financial addition. Ensure you understand your set-up costs and whether or not you can self-finance them.
W- Website for your company
It is not enough having a name for your company, you also need a business website place where people can visit to understand your services. Call it a mini office. Prospective investors and partners are going to want to check out your site and see what you have to offer, as well as your customers. So it must be professional clean, simple and detailed (high quality original content).
The first thing you should do when mapping out a website with a website designer is to Check out competitor sites and sketch out a template. Make sure the site is fast and the search engine optimized so that it can easily turn up on Google search results. Ensure your site can easily be accessible for mobile devices.
U- Understand the challenges
Every business comes with its own challenges, so if you come across one, you do not need to be scared. You may encounter issues like trying to make product or service different from others, making your business idea strong, sufficient capital and cash flow, Finding suitable employees, more working hours and reduced social life, rejections from investors and customers and then effective management. All of these can be discouraging when they arise but it important to understand the challenges and how to effectively handle the situation.
V- Verification for employees
An incomplete reference check on employees could end up costing the business a huge loss. Asides from the regular details they submit about themselves, one should endeavor to also add background investigation. Part of what you must look out for are educational degrees with dates, previous salary, prior job role and responsibilities, previous jobs and why they left, strengths and weaknesses
Even though we were not able to pick every letter in the alphabet, you must have been able to pick points for what you need to bring that dream to life. Get a pen and a paper. Write out your goals, fill out how you want to achieve them using the alphabet guidelines and watch your dream become a reality.
Hope you have learn from this educative post? Please comment below and share your business experience with us. You can also drop your comment on the comment session below. You can Register your business here
