Setting up small business
Setting up small business entails planning, developing vision and objectives of the business, arranging for the procurement of resources, deciding on the location, raising finances, licensing and registration, hiring manpower, setting up facilities, and so on.
It is an onerous task, but not so for the ambitious, hard-working, resourceful, determined, and persevering person, who is also willing to take risks and dares to think differently and live differently. For such a person, who can brave adverse situations and come through unruffled, success and returns (in the form of monetary rewards) are certain in the long run.
One who can easily befriend others, get others into confidence, and lastly who relies upon self-strength, will, no doubt, emerge victorious and accomplish tasks to perfection. Financial, legal, technical, and marketing assistance can be sought and procured as and when required.
One who is willing to take risks, undaunted by temporary failures, and who does not let success go to his head, will find the going easy, in a small business.
As an entrepreneur, one needs a well-drafted and documented plan to avoid Setting up small business hardships and steer clear of obstacles, and blocks to achieve one's goals and build a profitable business.
A five-step procedure, when followed, assures a person success in a small business:
1) Identify Your Reasons
2) Self Analysis
3) Personal Skills and Experience
4) Finding a Niche
5) Market Analysis
6) Planning Your Startup; and
7) Raising Finances
Generally and as a rule of thumb, a big idea for a small business will, over a period of time, develop into the exact copy of the idea, which has been envisioned at the start. The reality for many business owners is that the first idea only serves as the base for more a more practical, business idea to emerge. .
By the time, one launches the Setting up small business, ones idea will be molded by market research, customer input, cost of development, and other information one learns in the research process. For this reason, it is important in the infancy stage, not to become discouraged if one has to drop out part of the business idea or even the entire idea. Flexibility, adaptability, responding to changes, and perseverance are successful attributes in forming a business idea and getting ahead with it.
When looking around for business ideas, one must keep in mind that they can be based on any of the following:
A manufactured product where you buy materials or parts and make up the product(s) yourself.
A distributed product where you buy product from a wholesaler, retailer, or manufacturer.
A service which you provide.
Having generated an extensive list of ideas, these must be evaluated so that a short-list of preferred options with the greatest potential and lowest risk can be assessed in greater depth.
Once the business idea has been developed, one must devote substantial time to assessment, research, development and planning.
Discuss products/services with prospective customers
Would they buy from you, at what price, with what frequency etc.
Why would they prefer your products to the competition
1. Assess the market using desk & field research
How does the market segment (by price, location, quality, channel etc.)
What segments will you be targeting
How large are these segments (in volume terms) and how are they changing
What are the price makeups/structures
What market share might be available to you bearing in mind your likely prices, location, breath of distribution, levels of promotion etc.
2. Analyze your competition
Who are they and how do they operate
Are they successful and why
How would they react to your arrival
What makes you think that you could beat the competition
At whose expense will you gain sales
3. Consider possible start-up strategies
Will you be able to work from home or part-time
Will you seek a franchise or set up as an in-store concession
Will you start by buying in finished products for resale as a precursor to manufacturing
Will you contract out manufacturing
Will you buy an existing business or form an alliance
Could you lease or hire equipment, premises etc. rather than buy
How will you stimulate sales
4. Set precise targets and prepare first-cut financial projections
Estimate possible sales and costs to get a feel for orders of magnitude and key components and to establish a rough break-even point (when our sales might start covering all your costs). Avoid over-estimating likely sales and under-estimating costs or lead times..
5. Prepare a simple action plan
Cover the first year of operations to highlight the critical tasks and likely funding needed before the business starts generating a positive cash flow. This is critical especially if one has to carry out significant product or market development or needs to advance credit to customers.
6. Critically examine ideas from all angles
Can I raise enough money
Can I get a premises/staff etc.
Will the product work
How will I promote and sell
One must bear in mind that the incubation period for a new
business can easily last several months or even years. One must not rush into the first feasible idea without letting it incubate or develop in ones mind for a reasonable length of time.
One must not hesitate to seek external assistance from professional advisers or from enterprise support organizations. Having firmed up Setting up small business on a specific idea and conducted preliminary research, you have several options including the following:
Undertake more detailed/specific market research.
Do further product research, development, testing etc.
Review and refine your proposed start-up and developmental strategies.
Draft a detailed or outline business plan.
Prepare financial projections.
Start looking around for the key resources - people, money. premises, partners etc.
Most probably, one will start addressing all these issues simultaneously rather than sequentially. Other issues to be taken into consideration include:
Selecting a company or business name, logo etc.
Deciding how one will commence trading - limited company, sole trader etc.
Enquire into any licenses which might be needed, or regulations to be complied with.
Think about where the business will be located.
Look for professional advisers (lawyer, accountant) and a bank.
Consider likely telephone/communications needs.
To conclude, the task of setting up of small business can be put in brief and conclusively as follows:
Define precisely the nature of the business
Offer clearly identifiable products or services
Tap a real need or generate a demand for your product/service
Operate within ones expertise and resources
Have realistic targets and have reasonable expectations
Keep everything as simple and straightforward as possible.
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