Starting a business – realistic things to check

It is a good thing to adopt a more realistic approach when planning to launch your own business. It is not advisable to leave paid employment to go into self-employment simply because of enthusiasm. Starting a successful business that would stand the test of time has to be done systematically. Lots of brainstorming, planning, verification of facts and speculations have to be done.

The market
Get reputable consultant and a realistic overview of the market for the products you have in mind. You need to know the extent of the local, national and international market for the product. Paying a consultant is eating into his savings. But paying a lifeguard is so much better than drowning in the unexplored waters of self-employment.

However, do not leave everything for the consultant to handle, make sure you drive your business yourself. “Some people fail in business because all the planning for the business they are to run was done for them by consultants. The consultant should simply be a guide or instructor and not the person at the steering.”

Competitors
find out the existing competitors in the field you want to enter and get information on what each one is offering. Then ask yourself this question, “What can I offer that they are not offering? Decide to identify them and enter the market with such superior customer satisfaction.

Target/market size
Working with consultant, they estimate the market size that could be realistically captured. They are able to do financial projections of the money needed especially at the take off point. Know the capital needed gives you some measure of relief. You can produce fewer quantities initially. The production costs would be a bit higher as they would not be taking advantage of economies of scale. But reinvesting the profits until his capital gets to the point they projected would bring in the benefits of economies of scale.

Location
A good location for production with proximity to the customers is good.

Product Quality
Even if the money is a gift and not a loan from someone, targets it towards getting customers. Getting customers is more important than getting a superb office except the nature of the business is such that a superb office would attract customers. That is for those in service business that customers have to come to the office regularly.
But for someone producing goods, the quality of the goods mean more to the customer than your beautiful office. Someone said, ‘The experience of a bad product lasts longer with the customer than the satisfaction the producer deprives from making extra money producing sub-standard products. So much more resources should be channeled towards producing quality goods or services.

Hitting the market
“No matter how great the products are, if they are not consistently demanded by customers, the business will sink. That also goes for those in service business. Quite often though, the risks in the service businesses are lower than in manufacturing.”

Product type
this is very important. This is because some products can saturate a market. “Some products make an entry into a market, their manufacturers and suppliers make huge sums of money but if new markets are not captured, demand reduces.
This is because the type of product is such that the demand is a one-off thing for most individuals. Even when the customer comes back for a repeat purchase, it might be several years later. Such products include heavy capital goods such as houses, personal computers; cookers etc.

If you want to continue to operate in a particular market segment, then you have to have an accompanying product or service that would ensure your customers keep patronising you. For instance, phone companies do not just sell their lines; they sell recharge cards and provide other accompanying services.
Food business thrives because no matter the quantity of food consumed, people still need to continue feeding. So in making your business plan, you have to know if the products is such that will enable you to continue earning reasonable profits staying in the same market or if you need to constantly capture new markets. If you have to stay in the same market, is the product type such that will enable your firm to provide accompanying services? Find out.

Passion/aptitude
Do a realistic appraisal of what you are good at in your current employment. Most times people want to launch a business so they would be able to do what they love doing. But running a business involves so much more. Know precisely the things you love doing. Plan your own job description to include the things you enjoy doing or have the aptitude for. If getting others to do those aspects you are not good at would incur so much cost, then acquire those skills before launching out. You may need to do them at the initial stages of the business.

Training
After having done a realistic appraisal of your aptitude for going into self-employment, you may still need to go for courses on entrepreneurship. You need training in business generally and in context of the line of business.

Buying an existing business

Find out if there is an existing business you can buy rather than starting one from scratch. You would therefore not be a new entrant into the market. You will enjoy the goodwill of that business, the loyal customers and so many other things.
But you need to do a lot of checks. These include the reason the owner(s) want to sell, if you can work with the present staff, if the business is in huge debts, its reputation in the market and with is publics etc. If all these things are all right, buying an existing business offering the same thing you want to offer is better. You could then build on the exceptional idea you have.

Family’s capacity to withstand lean periods
You need to inform your family of possible financial challenges at the early stages of this business. Most especially your partner (wife), “You will definitely become the wife of a multi-millionaire but you may have to make certain sacrifices before then.” Together, they make plans to reduce expenses.

Juggling paid employment with self-employment
You might consider the possibility of staying in self-employment in the initial stages of his business. Check your current work schedule. This enables you to know if you can conduct the business within that time. But testing the water is so much better than drowning in unexplored waters.

BEST OF LUCK