Almost half of business start-ups do not survive for more than a year due to many reasons including, among others, lack of enough start up capital and guarantees to access loans to run the businesses.
However, behind this lies other challenges that many people willing to start businesses normally overlook. It is always important before you start a business to think about the things that you would do to make your business thrive. Here are some of the things you need to consider before starting a business.
What product or service will you provide?
You can develop your business basing on the available knowledge of the market having maybe worked in that particular sector, or else, you identify a market gap that needs to be filled.
However you need to fully understand that there is a gap in the market or a particular product or service is not enough in the market. This will work out better if you carry out research, with companies and individuals who don’t know you.
Avoid getting information form friends and family because they will tell you what you want to hear which would not be evidence based.
Secondly, you need to ask yourself about the uniqueness in your products. For example, what differentiates my product from other products?
Work hard on packaging, branding and the naming of the product or service while using words that people are familiar with in their daily vocabulary will make your business thrive. Also, try to understand the underlying issue behind customer dissatisfaction. For example, if you are engaged in the hotel industry, a hotel that cooks meat poorly will mean an opportunity for you to cook meat nicely and attract customers.
It is also important to know how you will position your company through creating unique ways of approaching customer needs and complaints.
Have a business plan
To understand that your business will succeed, you will see from what you have planned. Don’t write a business plan to present it for a loan facility or to show to people for support.
You need a business plan to understand how your business will run. This does not mean you have to follow all the technical jargons and formats in writing business plans; questions like how am I starting, where is the money, how do I expect to benefit and many others would guide you to prepare a small person business plan before you start your business.
Consider the name as a spokesperson of your business
Most people do not take the name of the company serious in terms of meaning, message derived from the product or service name.
A good name will automatically contribute to great and big profits. For instance, after the victory of US president Barack Obama, a chapati seller in the neighbouring country, Uganda decided to call his chapatti Obama and all people ran to buy just because of the name.
Again you should be able to ask yourself questions like will the business carry my personal names or initials and why, is it a family business? Should it be fully explaining what the business is going to do?
How will you structure your business?
Whether you want to start your business as an individual or with other people( partnerships) , you must be able to clearly print your name and the owner on the premises(sign post indicating what the company does or sales and contact addresses and if possible the owner would be better).
In most cases many dot not prefer this in terms of taxes but it is essential as your customers will acquaint themselves with your branded company. A person prefers to refer to a names person or what it sales rather than hassling with the entire company name.
Importantly make sure your stationery like envelopes, business letters and forms and others bearing your company name and address.
Again here you need to understand the difference between a sole trader and limited company which is always a challenge to people starting up businesses.
What you need to consider is in a sole trader (Individual entity) you are personally liable to all the risks arising from the business in case things don’t go well.
Whilst in a limited company (limited liability partnerships) the risks such as debts would be met limited liability partnership rather than individual partners. This will however depend on how you want to move your businesses and how prepared you are to face the future of your business.
Keep in books with the law- run your business legally
Try to seek for professional advice as far as legal matters are concerned, you may not hire a legal practitioner but try to inquire form the already existing businesses on how they handle their businesses legally. It is more advisable to seek for an accountant in situations where you want to start a partnership with other people.
Ensure that you understand what type of taxes you need to incur in your businesses. It is advisable to contact the tax body to see how you handle the tax issues.
Thinking to evade taxes would cost your business and also make your business lose credibility. People prefer to associate with ‘clean’ businesses.
Next week, we will have five more tips.