Starting a business is like embarking on a far journey. It requires adequate preparation to ensure success.
You don’t just go into business because, you see other people going into business or you are excited about starting a business.
I wish to share with you some success factors that apply to any type of business, regardless of the size of the business or the industry involved.
Here are 26 questions which you should ask yourself and be sure that you have the right answers before you start any business:
1. Do I have the knowledge, skills and experience required to start and grow the business?
If you don’t have the requisite know-how to make the business a success, then you can choose to go for training or to employ someone or persons who have the knowledge you need to start and grow the business.
2. Do I need to employ people to run the business for me? If yes, how many staff do I need? How many full-time staff and how many contract staff. What qualifications should the employees have and do I have the money to pay them? How much can I pay each staff? Do I need to start the business alone for the moment and later plan for staff recruitment?
3. Where do I source the raw materials I need for my production? If my business is a trading business, then, where should I buy my goods at affordable rates. In essence, your business should not be too far from source of raw materials or from source of goods to sell.
4. Who are my competitors? This is very vital. You need to identify your competitors. These are people who are already doing the business that you intend to go into. In order to succeed and to beat your competitors. You need to study your competitors carefully and find out what they are not doing and the things that you can do differently that will make customers to patronize you over your competitors.
5. Is there an available market for my intended products? If the business you intend to start do not have a good market size, then you might hardly succeed. Do not produce or sell whatever people do not want to buy, else you won’t succeed. The more people want your products, the better you chances of success.
6. Where is the best place to locate my business? It is always better to locate your business closer to your target market. After all, you want people to buy your goods and services. Then locate the business close to them. Also locate the business close to the source of raw materials ( if you are going into manufacturing ). Locating a business far from source of raw materials will increase your overhead cost due to high transportation and logistics costs.
7. What methods of marketing, advertisement and product promotions will I use? You need to analyse your target market and know the best means of advertisement and overall marketing that would yield the best results. You need to consider if you have the needed funds required to carry out the needed marketing strategies that would yield the best results. Remember that the a fair product with excellent marketing will sell better than an excellent product with fair marketing. Before now, I have identified 16 marketing tips every entrepreneur must know to succeed.
8. What is my expected break even point ? This refers to the when the business is expected to start yielding enough revenue to sustain the business expenditures. In simple words, the break-even point can be said to be a point where total costs (expenditures) and total revenue (sales) are equal. Break-even point can imply a point where there is no net profit or loss. In business, once the business reaches a break even point, you have made some good progress and from there your next target would be to move over the break even point and grow the business in order to begin to yield even more revenue that would become profits and surplus.
9. How can I secure my business from bandits and thieves? This is vital. I have seen many entrepreneurs (especially small scale businesses) whose businesses crumbled, when their shop was burgled. Don’t locate your business in an unsecured location. In alliance with other business owners around your business premises you can jointly employ the services of security personnel to secure your business.
10. How much capital will I need to start the business? If I don’t have enough capital, how can I get additional funds to start off the business? We have identified 12 effective ways of raising capital for business.
11. What is my proposed company structure? Will it be sole proprietorship, partnership, joint venture, public limited liability company, or private limited liability company? What will the company organogram look like?
12. What are the expected constraints? Every business has challenges, difficulties, and set backs that an entrepreneur may face in starting a business. Mitigation measures should be put in place to overcome the problems?
13. How much do I plan to spend on operating costs, ( which comprises of fixed costs and variable costs ) over the first 12 months of the business? A fixed cost is one that does not change with an increase or decrease in sales or productivity and must be paid regardless of the company’s activity or performance. While variable costs, consist of costs that vary with production. Unlike fixed costs, variable costs increases as production increases and decreases as production decreases.
Fixed costs includes amount spent on getting an office space or shop rent, equipments etc, while variable costs includes money used for the day-to-day running of the business, like amount needed to buy raw materials, logistics, cost of electricity and to pay salaries.
14. What is the best time to start this business? Now or later? You may need to go for additional training or wait when you have enough capital. You need to assess the situation and determine when best to start the business.
15. What are my chances of succeeding in this business? With careful assessment using the questions in this article , you should be able to know if your business has good or slim chances of succeeding. Proper timing is vital in business start up.
16. What is my motive for starting this business? It is better to start a business with the right motive. The right motive should include creating value for others and making money in the process of creating value.
Businesses that are started with the motive of creating value have more chances of success and these business endures for many generations.
17. Am I under any pressure to start this business? It is better to start a business when you are not under any form of pressure. An example of starting a business under pressure can be when you just got fired for your job and have no other source of income.
It is better to start a business when you have another source of income, so you don’t have to start putting undue pressure on the business like premature spending from the business earnings when you are supposed to be reinvesting into the business until the business is stabilised. Starting a business when you are not under any pressure will help you think and plan well without bias or influenced emotions.
18. Should I start this business in a small-scale? Starting the business in a small-scale can be a way of test running the business and to have an idea of the profit potential. Even if you have the necessary funds for a large scale business, sometimes it is advised to start small and as the business grows you can continue to invest into it in tranches.
19. Can I start this business part-time? Doing a business part-time will allow you to do other businesses. If the business won’t allow you enough time to do it part-time, then you should consider employing someone else to run the business for you.
20. How much of my time and energy would this business demand from me? Don’t underestimate this. You need to know how much of your time the business will demand and so that you can plan appropriately. Some businesses will require both your mental time ( for strategizing ) and physical time ( presence ) to grow, while others will require just your mental time while you have other people run the business physically for you and report back to you.
21. If this business fails to succeed, what contingency plans do I have? Don’t start a business with all the monies you have. You should have some spare cash to fall back on in case the business did not succeed.
22. Do I have the readiness to put in the required time, sacrifice, effort, commitment and other resources required to get the business to succeed? Think about this. Commitment is very vital.
23. What are my short-term and long-term goals? What level do I want this business to get to in a year’s time or in 5 to 10 years down the line after starting the business? You should have a mental picture of your expectations for the business at different stages. This will give you a direction and focus. This will help you to be accountable for your actions.
24. Should I register the business now as a legal entity or should I wait until the business get to some level? If there are no regulatory specifications regarding registering the kind of business you are starting, then it is usually better to grow the business to some level before formalizing the business structure.
25. What are the regulatory bodies applicable to my intended business and what are the requirements that I am supposed to meet? You need to find out. This will help you to avoid defaulting on any of the laid down rules and regulations that may apply to your intended business.
26. Am I willing to continue with the business and be committed to it even if it doesn’t start yielding profits after a year in existence? Statistically, most start-up businesses require an average of five years to break even. Therefore, if you are not ready for the long run, then you may have to reconsider your options.
You need to carry out a critical assessment of your chances of achieving success in your intended business before going into it. You need to find out the success factors and major obstacles you might encounter and set out appropriate plan of action to address the obstacles.
If well applied, the above considerations can help you make an informed decision when starting a business and increase your chances of success.
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NB: Featured image credit - tracychamber.org