1. What does it take to start business?
An Idea.
Every business starts as an idea, where an entrepreneur offers a solution to the society. However, the ideas offered are usually aimed at solving an issue in society. Before any entrepreneur comes up with a good business idea some questions are key to help contextualize your business and its objectives.
Therefore, every entrepreneur should consider asking themselves:
What problem does the business aim to solve? Is it a societal problem? A political problem? Is it an information problem?
Who does the solution aim to help? What group of people will the solution through the business help? Children, Persons with disabilities, Women, Men, Families?
Why do you think your business will offer a solution? This usually is answered with facts and requires the entrepreneur to go deeper into the problem they seek to solve.
The above questions aids in pin pointing the objectives of the business, which forms the most crucial part of a business as it lays down its foundation.
After the above questions have been fully and satisfactorily answered, the entrepreneur can move on to questions on logistics such as:
Where will be the business be located?
Is an office space necessary?
Where are funds coming from to help the business as it starts?
This What will be the business name?
What expenses will I incur before starting the business?
Look at time, Is money required to register the company?
What competition do I face?
What type of business do you want to form?
Is it a partnership, a company, a sole proprietorship?
2. Why is financial planning extremely needed?
Financial planners such as a business plan, a launch board, a power point presentation or a template are essential when starting a business this is because they help to:
Establish long term views of the business
Financial planners help in establishing long term view of hoe funds will be used in a business. This will help the company efficiently allocate funds to meet their financial goals.
Develop clear marketing strategies
Business marketing strategies give well-framed tasks for a business, starting with strategizing, executing and implementing. Planning your finances helps your business to identify which marketing strategy will help most in attaining the goals of the company.
Measuring liabilities and assets
Financial planner such as business plans ensure that the ratio of liabilities and assets a company has is balanced. Liabilities in business refers to things that a company is responsible for such as loans, bonds, wages and income taxes. While assets are items or property owned by a company that are regarded to have a certain value such as cash or property.
Additionally, financial planners identify the specific liabilities a company faces and the specific assets it has and wants to gain in the future. This also helps in establishing long term goals for the business.
Measuring Profit and Loss
Financial planning helps one to know the projected profits and projected losses that the company may face. This ensures adequate planning on how to mitigate the future losses and maximize on the profits.
Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.
Establishing a relationship with a financial advisor you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized for the business.
3. The Do's and Don’ts of a Small Micro Business
Do’s
Do clearly analyze and define your target market by interacting with the people.
Do keep in mind that a new business can be very demanding on your personal resources.
Do have a budget and enlist the help of a professional to avoid over projecting the sales.
Have patience when starting a new business as proper planning helps to ensure customer satisfaction and good quality.
Do determine the number of direct and indirect competitors and their market share.
Do have super social skills. Have the ability to form new relationships and nurture the existing ones to create a strong customer base.
Research whether or not adequate demand for your product or service exists.
Have a business plan.
Don'ts
Don’t solely rely on textbook knowledge.
Don’t underestimate the costs of starting and operating a business.
Don’t be overly optimistic regarding the sales.
Don’t underestimate the length of time it takes for a business to be ready to open.
Don’t underestimate the competition.
Don’t underestimate the amount of marketing and time required to build a customer base in a new business.
Don’t assume there is a demand for your product or service.
Don’t depend on someone else to write a business plan for you.
Other than that, Good luck!
Josephine Nyambura and Sharon Muoki.
Entrepreneurship Unit
Strathmore Law clinic.
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