Are you planning or even thinking of starting a business? Then this article is for you!
Starting a business can be very tough and if proper planning is not done it can lead to serious losses. We are going to explore some of the key things to consider when you are about to start a business.
- Have a business plan
- Do your market research
- Pay attention to legal aspects
- Consider your location
- Learn to manage debt
- Determine legal business structure
- Assess your finances and save for your business
- Consider getting a mentor
- Always consult a professional
1.Have A Business Plan
When starting any business it is important to have a business plan. It covers all important facets of your business. These plans must include an executive summary, your product or service that you are selling, the strategy to sell it, company and management summary(structure of your business) and a financial plan.
These are the key elements to a a basic business plan and you must take your time to write it down before you do anything else.
2.Do Your Market Research
Any business that is starting must always know who its clients are otherwise it will not make sales or will have a tough time selling its product. In order to understand your market or your main customer, you have to know what problem you are solving with your product or service. This is always a good place to start. Get to know who your clients are and understand their needs.
A good way to do this would be to write down what your goals are and what you hope to accomplish with your services or your products. Then line that up with writing down who your ideal client is.
For example if you are selling toys, then your goal may be to bring happiness to children or to introduce toys that are safe for children below the age of 5 to play with. Your client would be parents with children below 5 or people with friends and family with children below the age of 5.
If you follow that example you will notice how you go from having no idea or clue who your ideal client is, to getting specific. Naturally you can get more specific and say the toys are maybe to help children learn while they are playing and so now your client becomes parents who want educational toys for their children. The table below is a simple example that can help you understand how to find your target client.
|Toys for kids age 2-5||Educating children||Parents with children age 2-5Want to educate their children|
3.Pay Attention To Legal Aspects
A major mistake most start ups make is not doing taking the time to do their due diligence when it comes to getting their documentation right during business registration. They end up losing a lot of money which they cannot afford and end up not being able to start at a slight disadvantage.
You can either pay a lawyer to assist you in registering your business and getting your documents in order or you can do it yourself.
Registration alone can take about a week or two. Then you have to get your tax documents in order with KRA, get an NSSF account and NHIF if you are a Limited Company because you will be expected to file returns for your employees. Then there is getting a license from the county government.
If you are starting a sole proprietorship then you don’t have to get NSSF and NHIF that is all voluntary. The most critical documents to have are the business certificate, Tax compliance certificate and county license to operate. These will prevent you from having issues with the law. Keep in mind these requirements vary from industry to industry. Some industries may require you to get extra certificates from other bodies. Such as National Construction Accreditation Certificate if you are doing construction. So be sure to do your due diligence and research on necessary compliance certification.
4.Consider Your Location
Location is very important when starting your business. Is there a need for your product and your services in that specific location? Is it close to your clients? How is the competition in the area? What is the proximity of your location to the road? How accessible is it? If your clients may need parking do you have it? Is there a better location ? Is it just offline or is it fully online?
Sometimes people fail to consider the fact that online these days is also a location in itself! Some businesses thrive more online than they would if they set up a shop and waited for customers and even did online advertising. Make sure you consider these things when choosing your location for your business.
If you are considering going online then read this article on mistakes you should avoid when starting an online business.
5.Learn To Manage Debt
Debt is one of the most serious issues today with about 13.6% of Kenyans having taken loans from digital lenders. However when you are planning to start a business, you must learn on how to manage and avoid debt by all means possible. Debt can end a business when not properly managed.
One good way to manage debt is cutting down on unnecessary costs using that extra money to help you reduce your debt. Also you can consolidate all your debt into one more manageable loan and make payments on time. If you can learn to manage debt before you get into business you will be able to manage your finances better.
Also it is not advisable to start a business if you are already in debt. This can make things worse especially if you do not have well thought out plan.
6.Determine Your Legal Business Structure
A legal business structure is basically deciding if your company is a sold proprietorship, a partnership or a limited liability company. The difference between the first two and a limited liability company is that, a limited liability company will treat you and your business as two different entities.
Therefore, in the event of anything going wrong and you end up having to go to court, your business will be treated as different from you. Your personal finances will be generally secure from any losses. However a sole proprietorship or partnership you will end up using your own money and assets to settle anything that happens in the business.
Note there is a limited liability partnership as well. It is always advised to start up with a limited liability company just to protect yourself however if you cannot it is alright just make sure you plan your finances well to avoid any issues and keep good track of your finances.
7.Assess Your Finances And Save For Your Business
If you want to start a business, you have to get ready to pay for the cost it comes with. For this reason, you have to assess your finances and see if you will be able to afford it. Also save up once you know how much it will cost for you to start up the business and save extra because you will definitely need it.
Do not rush to quit your job because you have started a business. Businesses take time to grow and they need a kind of cushion sometimes in case of anything. So if you are starting do not quit your job until your business starts to pick up which takes about 3 months most of the time.
While planning for your business and assessing your finances. It may be a good time to also look into getting insurance policy for your business and check out different policies.
You have to be fully committed to your vision and your goals. Develop a clarity in your mind of what your business does and know its goals better than anyone else. Be more committed to the success of your company more than anyone else in your team. You have to be willing to practice this discipline even with your finances. You cannot afford to go for parties with money from your business when you are starting out.
One of the major reason most businesses fail is due to the lack of discipline of the owners. To succeed you have to be strict and dedicated to your success.Do not compromise on your work. Discipline also means understanding the need to have a healthy balance in your life.
9.Consider Getting A Mentor
Business mentor is anyone who has more entrepreneurial experience than you. Most Kenyan business people don’t have mentors, which leads to them making serious mistakes. This mentor doesn’t have to be in the same field as you. Even though that would be amazing, they should at least have significantly more experience than you.
A mentor helps you avoid mistakes that would set you back and to expand your social circle. This is relevant to your business and will only cost you time. The return on investment is definitely worth every minute you spend with them learning and growing.
10.Always Consult Professionals
A major pitfall in start up business is most owners try to cut down on cost by doing everything themselves. This may work if you are, going to pick up your supplies yourself, but not work for technical things like setting up a website.
Consult and hire a professional to do the things that may cost you more money in the long run if you mess things up! You may know how to change a bulb but do not do electrical wiring for your shop if hire someone to do it and simply negotiate on the cost. Same thing applies to drafting of contracts between partners. Hire or consult a lawyer and ensure the terms are favorable before you sign anything.
Keep these tips in mind when starting your business, it will help you save up and avoid a lot of major issues startups face.
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