Congratulations my dear friend, on your decision to start your own business. This is a positive step, not only for you but for the economy as small and medium scale enterprises form the bedrock of any economy. However running a successful business is not an easy one. Research shows that 7 out of every 10 start up businesses fail within the first 5 years. However with proper planning you can increase your chances of success. Here are some steps you can take.
- Do your research
This is the first and most critical step. Lots of would be entrepreneurs go into business without understanding the dynamics of the business. Do I hear you ask “what type of research am I supposed to do?” Well let me give you a few examples.
- Is there a demand for your product? It is easier to sell a product or service that people want. Therefore it is important you make sure whatever you want to provide has a ready market.
- What is the competition like? Try and find out how many companies are offering similar products and services in your target market. On what basis do they compete? Is it on price or free delivery etc.
- Try and observe the operations of a similar business. What makes the place tick? You might learn a thing or two. You do this by visiting the place and posing as a customer.
- Interview some of your prospective customers. Find out what their needs or expectations are. Are they completely satisfied with their present suppliers? If not, why? This would help you position your company to meet their needs thereby helping you gain market share.
- Start small
It is best to think big but start small, even if you have the money to go all out. When you start small, you conserve funds. Since you are still learning the ropes of the business you are bound to make mistakes. Mistakes on a small scale are easy to handle and recover from. When you have grown confident of your abilities in managing the business, you can then start to expand slowly to the level you desire.
- 3. Separate personal finance from company finance
A vast majority of business owners run afoul of this rule. The lifeblood of any business is its cash flow. When you continually withdraw funds from the business for personal expenses you run the risk of running out of cash to run the business. This is especially true in the early stages of business. If it is possible I would advise you don’t make any withdrawals from the business in the first few years or till it is on a sound footing. If you cannot do this, you place your self on a salary and please stick to it. Also be reasonable when deciding on the salary. As the business expands you can always increase the salary to.
- Get an auditor
You may be wondering why you need an auditor, especially if your business is a small one. The truth is an auditor performs to important roles for you. First he helps you set up proper account keeping processes. This is very important as without proper accounts you can never tell the true state of health of the business. Secondly due to the auditor’s training and experience it is very easy for him to spot problems or potential problems with the business while examining your books. This will help you to nip such problems in the bud before it gets out of hand and affects your business negatively.
With these steps you greatly improve the chances of your business succeeding especially in the first few years which are always the most difficult.
