A new business venture is always exciting. When you’ve rolled that idea around your head too long already, and you’re ready to take the next step, all too often the realisation hits you that your passion and excitement are simply not enough to get things going. How do you begin? Where do you start?
There are four basic factors for a successful business venture: a qualified entrepreneur, a profitable business idea, a well thought-out business plan, and adequate funding. It is important that you answer the first two factors, before you move on to the next two. Here is a practical checklist to help you finally make concrete that business idea of yours.
Are you qualified enough to be a business owner? When starting out a business, it is crucial that you ask yourself some of these questions: do you have what it takes to handle your own enterprise? Are you qualified to be a business owner? Have your past work experiences prepared you enough for your own venture? Evaluate what you know and what you can do. Identify the qualities of a successful entrepreneur and check them against your own strengths and weaknesses.
Problem-solving: can explore innovative ways to respond to challenges and opportunities.
Goal-oriented: can envision a desired outcome, as well as plan and implement the activities required to achieve it.
Self-confidence: believes in own ideas and abilities, and conveys that belief to others.
Risk-taking: can abandon status quo, explore options and pursue opportunities.
Decision-making: ability to make prudent choices even in a stressful environment.
Persistence: can tenaciously pursue goals regardless of the energy and commitment required.
Communication: can speak, listen and write effectively.
Inter personal relationships: can understand the wants and needs of others, as well as inspire them.
Leadership: can direct others effectively and empower their performance
Evaluate further, now that you know your strengths and weaknesses are you confident enough to forge ahead? How do you maximise your strengths? How will you compensate for weak points?
Is your business idea profitable enough? After determining that you are indeed qualified to handle your own, answer the next most important question: Is your business concept feasible? Are you offering a product or service that is truly profitable? Study your industry, market and competition. Is there real opportunity for you out there?
Does your product or service satisfy the need of customers?
Are there enough potential customers to sustain your business?
Do you have identifiable advantages over other available products or services?
What are your product features and benefits?
What are your differentiating factors?
Is your price competitive enough versus other products?
Are those advantages easily communicated? Or readily seen by your target customers?
Take time to answer these questions and evaluate the profitability of your business. You may be excited about an idea that will be difficult to sell, or will not sell at all. Or is carving out a new market niche part of your business idea? Is this something new that will require market shaping and concept selling? What kind of marketing promotions and activities will you need to sell your product? Once you’ve answered these questions, you can now move on the next key success factor for your business.
Is your business plan solid enough?
This step is critical to the success of your business venture. How you make your plan, how it turns out and how you use it will either make or break your business. This is a time consuming process that involves a lot of research and study, and heavy preparation, but all these are necessary. Your business plan is your guiding compass that will steer you to where you want to go.
When you sit down and write your business plan, it compels you to make business decisions at the onset – management, marketing, personnel and finance, and you forced to go about it in a systematic and organised manner. It then becomes a well thought-out plan. The plan becomes an essential tool, as a constant reference of business visions and goals. The following are some considerations on what your plan constitutes:
Who are you? Introduce yourself, what you know and what you can do. Outline your education and experience that qualifies you to manage your business successfully.
What are you going to do? Describe your business concept, your product and the kind of services you have to offer. Identify your market and where your business will be located. Include your investment value and how much additional capital you will need, if any.
Where are you going? List your business goals – short term, mid-term and long-term. Goals should be measurable with corresponding time frames.
How are you going to get there? What strategies will you use to meet your goals? What are the financial implications of these strategies? What concrete tactics will you do to implement the strategies, and effectively compete in the market you identified?
Is your funding adequate enough? With any business venture, a stable financial base is an absolute necessity to see you through. Calculate your start up costs, monthly operational needs, and other expenses that will require advanced spending from you. As with any business, return on investments happen at a much later time and you should be prepared enough, have enough to fund your business costs. What is your source of capital?
Own money. You’ve saved up enough for a start up. Is it enough?
From partners. Are your partners putting in capital as well?
Business loan. If your own money and the capital your partners will put in (if any) will not be sufficient for operational costs, you will need to draw out a business loan.
When you take out a loan, you have to sell your business concept to the loan facility as well. You will need to present your business plan to them. This will prove to your future creditors that you have the expertise and know-how to grow the money, and more importantly, repay the loan. Your loan application will be evaluated based on the 5 C’s of credit: capacity, capital, collateral, character and condition.
Believe in yourself, believe in your ideas, and believe in your own capabilities. You will need that passion and determination to start your business venture and see things through, as you carve your way to success.