Starting a business is at the forefront of the mind of a lot of people. However, the process may look cumbersome and scary.
In this series, we aim to simplify this by providing information on basic things to consider before you embark on that entrepreneurial journey. This 7 blog series will help you determine what type of business to go into, strategies to adopt, available financing options: equity or debt, choosing a business location and many other factors.
The key, regardless of what type of business you’re starting, is to be flexible.
So here we go!
Step 1: Generate Ideas through Personal Evaluation
To start an entrepreneurial journey, a critical step, which most people fail to take, is personal evaluation. We are all too quick to join the bandwagon and follow the trend. “My friend is doing this successfully, so I can” and many more such scenarios. This, I believe, is a major reason why over 50% of small businesses close shop in the first 5 years. [Read More]
Step 2: Validate Your Idea
Once you decide on the business that fits your goals and lifestyle, you need to evaluate your idea by answering the following questions:
1. Who is the ideal person that will buy your product or service; the one that will derive value from using your product? We call him/her the “Target Customer”
2. Who else in your environment is offering the same or a similar service? We call him/her the “Competitor”
3. How much do you need to start the business? Where would the money required to start the business come from? We refer to this as “Funding” [Read More]
Step 3: Make it Legal
Registering your business is the first step towards achieving your dream of Entrepreneurship. Now, your business is an entity on its own. To do this, you need to understand the various types of business formations available, and their pros and cons.
If possible, work with a Lawyer to guide you. This is not an area you want to get wrong. You will also need to get the proper business licenses and permits depending on your industry and country. [Read More]
Step 4: Develop a Plan & Strategy
A business plan is a necessity if financing is from external investors and financial institutions. However, it is still an essential need if you are self-financing, as it helps you figure out how much money you will need to get started, what you need to do and where you are headed.
In fact, your business plan does not have to be a formal document at all if you don’t need to present your plan to outsiders. Instead, your plan can follow a lean planning process that involves creating a pitch, forecasting your key business numbers, outlining key milestones you hope to achieve, and regular progress checks where you review and revise your plan. [Read More]
Step 5: Start
A lot of theory has it that, you should get the financing ready before you start but more often than not, you will need to bootstrap. This model is more advisable as most investors or banks will need your business to have some traction before investing.
So start where you are TODAY! If little or no finance is available, then start with what you can, then scale gradually as the business generates cashflows or you get investors.
You’ve got a long list of things you need to do: Find a location. Negotiate leases. Buy inventory. Get the phones installed. Have stationery printed. Hire staff. Set your prices. Throw a grand opening party. [Full blog coming soon]
Step 6: Finance- Debt or Equity
Depending on the size of your venture, you may need to seek financing from an “angel” or from a venture capital firm. It is advisable for most small businesses to begin with private financing from savings, friends and family. Additionally, finance can be gotten from credit cards, personal loans, and so on. [Full blog coming soon]
Step 7: Trial and Error.
Whether you’re starting your first or your third business, expect to make mistakes. This is natural and so long as you learn from them, also beneficial. [Full blog coming soon]