Every successful business starts with an Idea. Once you have an idea, the next step is to get sound Knowledge about ‘how to start a business’. Followed by a well detailed Plan and careful Execution. These four ingredients must be present in every venture that hopes to be profitable. When you think about how to start a business, you must think about these vital ingredients.
How can you develop a business idea, acquire sound knowledge, prepare a business plan, and execute your plan effectively? Apart from these key ingredients, starting a business also involves strategic planning, sourcing for finance, making proper financial decisions and meeting up with series of legal obligations.
My name is Darlinton Omeh. I am here to guide you through the journey to a successful business venture. As a home grown entrepreneur who have been through this road time and again, I know exactly what you need. I am here to assist you every step of the way as you prepare to start your own business. The purpose of this article is to help you in meeting all the requirements towards starting an enterprise and becoming profitable. Take enough time to read this (lengthy) article to the end, including the links. And don’t forget to ask me questions, I am online to answer your concerns.
First, let’s get to understand the rudiments of an enterprise. A business enterprise is an economic institution engaged in the production and/or distribution of goods and services in order to earn profits and acquire wealth. The scope of business is very wide. It includes a large number of activities which may be classified into two broad categories i.e. ‘Industry’ and ‘Commerce’. Production of goods is the domain of ‘Industry’ and distribution comes under ‘Commerce’.
Every entrepreneur aims at starting a business and building it into a successful enterprise. The term ‘entrepreneur’ means to undertake and pursue opportunities and to fulfill needs and wants of people through innovation. He/she innovates and combines resources in the form of human resources, materials resources and money and brings them together to make the business venture profitable. He/she is prepared to take risks and face challenges.
Thus, innovation and risks are the two basic elements of a good entrepreneurship. Like I said before, the whole process of starting a business begins with an Idea, followed by writing a good plan. A good business plan is the key to setting up a successful business. Once a plan is prepared, the entrepreneur faces various challenges while implementing the plan. Now, let’s begin with an Idea.
1. Getting A Business Idea
Idea is best when it is flavored with passion. Your passion for a business, the profitability of the business idea, and the knowledge you have about the business. These are the three things you must consider when picking up a business to work on. Every business goes through difficult times at some point, your passion is what will sustain the vibe in time of difficulty and keep you going until your business becomes profitable.
Likewise, no one would like to invest his passion and resources in a business that may not be profitable, neither will it be wise to engage in a business you have no idea how it works. Now let’s look at the relationship between these three
Every business must encounter obstacles at one point. Passion will help you sustain the drive while you navigate the turbulent terrain. Passion let you have fun while doing your business. When this is lacking, the business may not survive the first major obstacle.
Passion without knowledge is like eagle without wing. You can’t start a business because you have passion for it when you have no clue. Passion can sustain your business in time of trouble but knowledge is what get it going in the first place. That is why learning how to start a business by reading this article to the end is very essential.
Profit taking is the essence of business itself. With all the passion and knowledge of this world, once a venture is not profitable, it can not be called a business. Before settling for any idea, you must be sure it can be profitable at the long run.
Make sure the foundation of your business idea is laid on passion, knowledge, and profitability. Each must be present in whatever business you decided to go for.
Having decided on your business idea, the next huddle is to come up with a detailed business plan, a road map to guide you every step of the way.
2. Create A Business Plan
Before you think of how to start a business, think of a plan. A business plan is one of the most important aspect of your startup and it does not come easy. However, the benefits of having a good business plan far outweigh the hard work involve in creating one. Lack of a business plan could mar your business and prevent you from getting funding from venture capitalists. It is important you undertake the task of preparing the business plan personally for good reasons.
While it is important to seek the knowledge and advice of lawyers, accountants, and consultants. That should however not replace your personal touch. The reason is that writing the plan personally will help you get more acquainted with every aspect of your business plan. After all, you are the one expected to be making decisions about your new venture. To do that effectively, you need to be familiar with every details in your business plan which may probably not be possible if someone drafted the plan on your behalf.
So, write your business plan and be acquainted with it. The following resources will be of help to you towards preparing a robust plan
- 5 Important Steps Every Planner Must Take
- Advantages Of A Business Plan
- 15 Questions To Answer In Writing Your Business Plan
- 7 Benefits Of Having A Business Plan For Your Startup
- How To Write A Business Plan (Template)
- How To Write A Feasibility Study
It’s sad to say that most people who aspires to start a business don’t know what a business plan is really. I have had a good number of people contact me for a business plan and assume it’s the same thing as article or letter writing. You may not be able to develop a plan for your new business if you don’t understand the enormity of what it takes. Going through the resources on the table above will help shape up your mindset regarding business plan.
Like I said before, the hard work involved in writing a business plan is nothing when compared to the benefits. Worst still, a business is nothing without a plan. Once you are done with your plan, the next step is to choose the location for the new business.
3. Choose Location For Your Business
Location could make or mar a business, you need to do this very careful and be mindful of many factors. You are in love with Sao Tome doesn’t mean you should take your haulage business there – It may not fly. Don’t let sentiment decide your business location, you must consider these factors before settling for any location
Laws and Taxes
Being a business owner, it is your responsibility to comply with any existing laws that governs your business in your chosen Location. You need to understand these laws before hands. In the United States of America for example, there are different laws that regulates different businesses and sectors of which you are expected to comply with. This resource will help you understand which requirements do apply to yours.
Basic infrastructures such as electricity, good road networks, available water supply, good and affordable housing could determine your profit taking. If most of these are completely absent such location may not be ideal for any business. As far as infrastructure is concerned, you shouldn’t rely on information obtain from TV and internet to make your decisions, you must visit that location to access things live.
No matter what you put into the business, if the environment is not secure, you could watch your investment disappear like smoke in just one day. Your business location must be free from human and natural disasters. Granted, no place on earth is completely secure and free from disasters, but some places are more insecure than the others. Carry out your due diligence before settling for a location.
Some may argue that high population density is not directly related to sales, that may be true. However, most populated countries of this world such as China, India, United States of America, Nigeria, and Russia are known to have strong purchasing power parity (PPP).
Compare the economies of countries using their purchasing power parity (PPP) prior to making your decision. Comparisons using PPP are arguably more useful when assessing a nation’s international and domestic market as well as the structure of its economy because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates which may distort the real differences in per capita income.
Other factors such as cost of labor, cost of data, and cost of transportation may apply. Be flexible and wise when choosing a location for your business. Some have lost the brightest opportunities in the past because they were overly sensitive about certain country. Now that you have decided on location, it is time to proceed to register your company.
4. Register Your Business
Your business begins to take shape the moment you fulfill all legal requirements and register it. Here I would like you to think in more broader perspective. Think of brand equity as well as marketing perspective. What I mean is, don’t just register your business with the governments, register and secure your Internet domain name as well. In fact, before you settle for any business name, make sure you have it registered as internet domain name.
Now, you can proceed to register with the government of the land where you wants to have your business. The process you go through depends on the government requirements. Find out what the laws demand as regards company registration in that region.
Follow the Due Process to Register
In the United States for example, business registration is quite simple and you can fulfill all legal requirements of any state and register within hours.
Other countries are not the same, business registration could take series of process and can last for weeks. In Nigeria, you will need a lawyer and even go to court to register your business. In UK, you can register your business online, so the process depends on location. Some says in China you have to file loads of papers. Let’s use India as an example: In India the process of business registration could take up to 30 days to complete.
Before you proceed to register your business, choose your structure according to your need. Know exactly the structure of your business before registering it. Below are summary of the business structures.
This form of business structure called sole proprietorship is the most basic type of business to establish. In this setting, you alone own the company and are responsible for its assets, management, and liabilities.
Limited Liability Company
An LLC, LTD, PTY is more complex than sole proprietorship and is designed to provide the limited liability features of a corporation and the tax inefficiencies and operational flexibility of a partnership.
This is partnership in structure. People form cooperatives to meet a collective need or to provide a service that benefits all member-owners.
A corporation is more complex and generally suggested for larger, established companies with multiple employees.
Once you followed the due process and register your company with the government of your location. The next thing is to begin the process of setting up your business.
5. Finance Your Business
Finally, you are about to start your business. No one should be happier than you at this stage but before you begin the jubilation, you need to arrest one of the biggest demon – finance. To begin the process of sourcing for finance, you must to do the following
1. Open A Business/Current Account
Get Tax Identification Number (TIN) which is similar in most counties. Not all banks has products that may meet your needs. Get the details of the banking services and open account with bank that meet your needs. Every transaction counts, you need to get this right from the onset.
Example: I opened my first business account with Guaranty Trust Bank and did $500,000 worth of transaction within nine months. When I needed $10,000 loan and went to the bank, I was told I can only access loan if my business is three years old and I must provide collateral and other things. Upon inquiry, I found out if I had done half of the volume with other banks, I would have access to loan without hassle. Your bank should be your business companion, find out before opening an account.
Probably you have done this prior to registration as some Government would demand for a business address before registration. But if you haven’t done that, you need to get an office/outlet now. The reason is that most financiers and investors would be more comfortable releasing their funds to you haven shown evidence of seriousness by having a office.
6. Go For The Funding
Armed with everything you need know on how to start a business and probably off the ground already, its time to go head long for the fund. You need money to capitalize your business, develop your initial products, do the marketing and branding, and even hire your first set of employees.
To achieve all of these, it’s time to go for series-A funding. Depending on your business, the size of your market and your potential market shares, you should be going for anything from $2 million. How can you achieve that and where do you go?
This is where entrepreneurs are offered the opportunity to pitch investors directly on local meet ups. If you are a regular visitor to the startup hubs, you will be able to get better information about what’s happening in the startup ecosystem in your location. This will help you get better information on where to meet with potential investors and pitch to them directly.
Startups are increasingly raising part of the their Series A round online using platforms such as SeedInvest in the USA and Seedrs in the UK. With good approach, you can pull out funds from these platforms. These blended rounds include a mix of angel investors, strategic investors, and the offline venture capital investors.
You may just be fortunate to get a warm referrer to venture capitalists. Someone who really admire your business may give a head up to an investor he is familiar with.
For you to consider the option of venture capitalists, you must be looking for anything from $2 million. If your business is not big enough to warrant all the stress of legal documentation and diligence involved with venture capitals and investment banks, you may go for angel investors. Your angels may just be your family members or that rich acquaintance somewhere.
7. Start Now And Improve Later
Now that you have the money, it’s time to finally get started. At this point, you should be the happiest person on earth but that happiness comes with sacrifice. Your business must not fail, you must get everything right to steer it clear any obstacle. To do this effectively, you must put many thing into consideration.
If your business is big that you can’t manage it alone, you need to hire but before you do, understand that wrong staffs has the capacity to destroy your venture and descend you into bankruptcy before you realize it.
Find out whatever kind of permit your business requires in your location and make every effort to comply with them. This will put your business on the right side of the laws of the land where you are. Depending on where you are and the type of business embarked upon, environmental protection like air, water, noise, forest conservation,
wildlife protection, emission of hazardous wastes, etc may apply.
Running out of supply of raw materials could hamper your production progress. Raw Material procurement and planning are critical to success of a start-up unit. The raw materials required may be locally available or need to be imported.
Whatever be the source of raw materials it must be bought from reputed dealers and agencies only. Before ordering, compare the prices and get quotation from at least 3-4 places and also check whether price is inclusive or exclusive of transportation costs. While receiving the delivery, check the quality and quantity of the materials.
After Reading “How To Start A Business” You Must Continue To Upgrade
No matter how long this article is, it’s just a summary of how to start a business. Business is so broad and diverse that no book can contain everything you need to start and run a successful venture. Read and read, ask questions, do your researches, contact government agencies, exchange ideas with people who are in the business, form partnership, and get specialized training.
Business is an ongoing process. To maintain your stand in the face of competition, you need to continue to learn and innovate. There are countless of other processes you need to undertake. Find out what they are and fulfill them. WealthResult.com is your number one resource center for ideas and survival tips.
I will continue to update this page in an ongoing basis to make it a resource you can count on. Now that you are through reading, you need to
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