Guide to Starting a Successful Business
ASSESSING YOUR STRENGTHS AND WEAKNESS
How do you assess your strengths and weaknesses? SWOT analysis is one of the components of external environmental scanning. SWOT analysis (Strengths, weaknesses, opportunities and threats). Strengths are the core competencies of a business idea. Therefore what do you think could be one of your strongest unique selling proposition or core competence? A core competence or unique selling proposition is a factor that will make you business stand out from the rest of your competitors (people who do same business as you and with whom you will be competing for customers and market share). Weaknesses are limitations that prevent you from achieving your goal/ objective. Therefore it is important for you to know what are your strengths and weaknesses. This will help you when you are doing internal environmental analysis as it helps you to concentrate on your core competences or unique selling propositions.
ASSESSING BUSINESS AND PERSONAL GOALS
This is where you are supposed to identify what objectives you want to achieve both as a business and as an individual. Setting goals helps you have a unit of direction. Both the business goals and personal goals should be well refined so that you achieve overall organizational and personal objectives. They should be able to merge into one as well as be in line with your interests. You cannot start a business that you do not have passion about. Objectives should arouse interest and hence obtain action.
ASSESSING YOUR FINANCIAL RESOURCES
This is also an important guiding principle to starting a new business. The avenues where you are going to get financial assistance should be first priority. To do this, you will most probably if not obvious, need to write a well convincing business plan. A business plan helps your financier to measure how feasible your business is. A business plan also is a management planning tool as it helps you to organize yourself as well as how best to utilize the resources that will be granted to you by the financing authority. Finance could come from personal savings (Most Recommended), banks, other subsidiary financial institutions, grants and so on. I would personally recommend personal savings because they attract no interest element and you are you own accountant.
IDENTIFYING THE FINANCIAL RISKS
A risk is an unforeseen scenario or situation that poses danger to you or your business. Therefore you should sit down and evaluate possible personal and business risks. Identify what factors could pose a danger to your unique selling proposition or core competence. Financial risks include: inflation, devaluation of currency, interest rates, operational costs, costs associated with stock exchange fluctuations, political risks, future business development, competition and so on. Find out factors either within or outside your business which could affect your business financing plan. This will help you to plan for any shortcomings as regards to your financial plan.
DETERMINE THE START-UP COSTS
Now you have all information you need in order for you to start a new business. You have identified where to get sourcing from and how you will avoid common financial risks. How do you determine the start-up costs? You can estimate your start-up costs by considering the following”
Cost of sales- which includes product inventory, raw materials, manufacturing equipment, shipping, packaging, shipping insurance, warehousing and so on.
Professional fees- This is fees related to setting up a legal structure for your business(e.g limited liability company, corporation), trademarks, copyrights, patents, drafting partnership and disclosure agreements, attorneys fees for ongoing consultation, cost of retaining an accountant.
Technology cost- computer hardware, computer software, printers, cellphones, personal digital assistant, website development and maintenance, high-speed internet access, servers, security measures, IT security.
Administrative costs- Various types of business insurance, office supplies, licenses and permits, express shipping and postage, product packaging, parking, rent, utilities, phones, copier, fax machines, desks, chairs, filing cabinets- anything else you need to have on a daily basis to operate the business.
Sales and Marketing Costs- Printing of stationery, marketing materials, advertising, public relations, event or trade show attendance or sponsorship, trade association or chamber of commerce, membership fee, travel and entertainment for travel for client meetings, mailing or lead lists.
Wages and benefits- employee salaries, payroll taxes, benefits, workers compensation among other factors.
DETERMINE BUSINESS LOCATION
This is where you decide on where your business will be located. It could be in a city, town or local setting but this will be determined by the following factors:
type of business
— marketing segmentation (divisions of your market into homogeneous parts that you can efficiently and effectively cover)
— raw materials availability (for a manufacturing company)
— geography and politics; just but to mention a few.
DO MARKET RESEARCH
Market research is a systematic, objective collection and analysis of data about a particular target market, competition and/or environment. It always incorporates some form of data collection whether it be secondary research (often called desk research) or primary research which is collected directly from a respondent. The main purpose of any market research is to achieve an increased understanding of the subject matter. With markets becoming increasingly more competitive the world over, market research is becoming an increasingly important. Therefore you have to do market research to help you keep up with the current industry trends in your area.
IDENTIFY WHO YOUR CUSTOMERS ARE
The identification of customers involves a process called market segmentation. Marketing segmentation is the process of dividing the target market into homogeneous parts that can be efficiently and effectively satisfied by an organization. The company does this on the basis of geography, psycho graphic and/or demographic. Geographic segmentation is whereby you divide your market according to geographic factors such as location, region, country, country and so on. Psycho graphic segmentation is whereby you divide you target market according to attributes like personality, attitudes, interests or lifestyle and they are also referred to as I.A.O variables (for interests, activities, and opinions). Therefore as an upcoming entrepreneur, you have to take into consideration these factors.
IDENTIFY YOUR COMPETITORS
Who is a competitor? A competitor is a person, or organization/firm that is in the same business as yourself and poses challenges and limitations to your business since both of you sell and target the same customers. It is important for you to know people or organizations that you are competing with because it helps you identify their strengths weaknesses, challenges and limitation. strengths and opportunities of your competitors should be avoided as much as possible. You should instead concentrate on weaknesses and threats as this is one avenue of beating the competition. This is done through a process called competitive analysis.
Competitive analysis helps you to identify your strengths and opportunities (competitors’ weaknesses and threats) as well as those of your competitors. Competitive analysis is done both when doing internal and external environmental scanning. This knowledge gives you ideas on what areas to avoid and what areas to concentrate on when refining your product. Identifying your competitors’ weaknesses and threats and refining them to become your strength is the main reason behind competitive analysis. Your strengths and opportunities form your unique selling proposition or core competence. This core competitive advantage gives you a competitive edge over and above the competition and helps you stay ahead of the pack.
Competitive analysis is also important because it helps you achieve a sustainable competitive advantage which becomes you (unique selling proposition). When the right combination of circumstances and timings permit you take a specific action towards reaching a particular target market, an opportunity exists. These opportunities are presents periods of optimal fit between the key requirements of your target and the particular capabilities of your firm and are often referred to as strategic windows.
DEVELOPING THE MARKETING PLAN
PART TWO OF THIS ARTICLE WILL CONSIST OF THE MARKETING PLAN. BE SURE TO READ IT THE DAY AFTER TOMORROW.
If you are planning to start a business keep in mind the following factors:
— Uniqueness- your business should be unique so that you will have a unique selling proposition
— Leverage- The ability to use borrowed funds most profitably and generate enough capital.
— Turnkey business- You should be thinking of a business start-up whereby you do not need to be there for the business to operate.
— Internet business- I highly prefer an internet business. WHY? With internet business, you are assured that the business is international. This means that anybody can access your website without attracting unnecessary costs. It also helps you to create linkages with other businesses across the globe doing same business. This will help you exchange ideas with different entrepreneurs across the globe.