Starting a business is not an easy step to take. However, if you are planning on starting a business their are factors to consider before starting your business of your own, either it is a small or big business these factors need to be taken into consideration so that you can avoid future or unknown problems.
Fortunately, I have explained some of these factors in my article on how to start a business don’t worry I will make my points explicit enough so that you can understand as fast as possible so that you can also kick-start your business ASAP.
Factors To Consider Before Starting Your Business
A lot of people want to become a boss and start a successful business, no one want to begin a business that will be declining.
Below are the factors to consider before starting a business of your own;
1. The Business Idea
You can’t start a business without having an idea of what type of business you want to start. The business idea you have must be a practical idea is the only thing on which the development of your business will depend. Moreover, as a lot of companies are involved in the market, you need to have a unique idea that stands out.”
If you want your business to stand out, you will need to offer something that no one else has offered till date.
There might be hundreds of businesses just like the one you are going to start. Yet you can make it better by answering the following questions:
- What do I need to do to make this better?
- What is it that I can do better than what the other guys are doing?
- Will I be able to grab some market share in this category?
You may have a great business idea; but unless it solves someone’s problem it is not going to work. So start by listening to people’s frustrations – both of yours as well as others (your family members, your neighbors, your friends, and your associates). Once you have understood these, here is what you can do:
- See what best you can do to address these frustrations.
- Identify the skills in you that will help you offer the right solution.
- Find out if you are actually passionate about offering that solution.
Every business structure has its advantages and challenges. A serious business weighs each of them, compares the benefits and drawbacks and makes a conclusive decision. The type of business will determine the legal requirements and financial requirements of the business
2. The Type of Business
Yes, what type of business do you want to start, is it going to be a retail type of business and are you planning to be a sole proprietor or is it going to be a partnership type of business. If you consider having a partner, ensure your the partner is capable, trusted and also share your visions. Don’t rush when picking a partner, take your time to examine your chosen partner(s) strengths and weaknesses.
Single proprietorship – you’re the sole owner of the business.
Partnership – you can divide the business with another person(s) which you will call partners. You need someome to form parnership with and a partnership business consist of at least two people.
Corporation – you can divide the business with another person(s) which you will call stockholders. You need at least five people to form corporation.
Yes the location of your business will determine it success, if you place your business in an undesirable location or location where your services, products aren’t needed, your business may fall off the slope. So ensure you are choosing a desirable location.
For example; If your type of business is a retail business you will have to look for a well-populated area that is easily accessible.
Offices can be set up in any place that is accessible and offers good facilities such as parking spaces, refreshments, transportation, and so on.
Make sure the location fits well within your budget and offers scope for expansion. An ideal location would be one that complements your business in the best possible way.
4. Target Customer
What type of customer are you targeting?
The location of your business will also determine your targeted customer.
Having a service or product to sell is not gonna make you profitable if you do not have customers who will buy it.
If you plan to start a business and you know what to sell, before you begin, study if there is a market for it. Identify who your customers are. Remember the saying, a product or service for everybody is a product or service for nobody.
Capital is the amount or value you need to put in the business to get it started and operating.
No business in this world can run without money. Depending on the type of business you are starting and the initial costs that you will have to pay up for, you will know what kind of capital you would need to start your business.
To know how much capital you need, list down all the possible spending you need to make to start and operate, such as assets to purchase, renovation, lease payments, operating expenses etc.
Whatever steps you take, to finance your business, you will have to make sure you have the required funds to take you through the startup phase.
The financing pattern is one of the most important factors to consider before starting a business. This generally includes the capital that you can introduce from your savings as well as the funds that you can borrow.
Identity potential suppliers needed to produce the service or goods you will sell. Consider their price, location, reliability and operating hours.
7. Market or Demand
Once you are sure of starting your business, your next step would be to explore the market or the demand for your product or service.
Start by answering the question, who are your customers. If you are selling your product or service locally, you may have to assess the demand for it. In case you are taking up on an international level, you may have to understand the rules and regulations of dealing internationally.
A market survey should reveal all the details that you may need about the market for your product or service. Basically you are looking for:
- The current size of the market (the approximate number of potential buyers)
- Its growth potential (whether it is likely to grow in size or contract)
- The market share that you can expect to take
- The buying habits of the target audience (and how to exploit them)
- The different segments of the market
- The kind of margins that you can expect from the market
Thankfully social media has made it possible to reach out to target audience, anywhere in the world, without having to put in too much of efforts.
Competition comes from other people doing the same business with you.
Unless you know who your competitors are and what they are doing, you will not be able to survive in the market for long.
You should research how the competitors run their businesses, who their customers are, their pricing strategy, how well they do it, and their challenges.
Their mistakes should be your strong points so as to outdo them. If the market is saturated with the type of business that you want to start, then be keen to develop the right strategies to be able to penetrate the market. If few people undertake the venture, then that is an opportunity to launch a business brand that will be the lead in the region.
9. Hiring of staff
Your staff members are the ones that can make or break your business.
If the business will be a small venture requiring only your services, well, and good.
But if you will require the expertise of other people, you would be needed to plan on how to pay them, when, and how much. At the start, the employees should be as minimal as possible, and with a reasonable remuneration. Having a plan will make you organize your budget, resources, and the environment in which they would be working on. Before hiring anyone, learn how to choose the right employee for your business and be sure that they are the right fit for the job. You would not want to hire someone who will mess up the business.
10. Online Presence
A business is not helpful if it is in the closure. Before you could start the business, you should come up with a clear outline on how you will develop a good marketing plan, and make your business known.
Nowadays, everything is done online, from the start to the growth of the business. Before starting the venture, you should have plans of creating a business website or a blog, creating a twitter, Facebook, and Instagram account, and much more. These are main areas where people get to know about your business. You could also use these channels to chat and speak directly to your clients. A business website is the face of the business. It is from the website that the clients can view what you offer at once, and leave questions or comments.
11. Bank account for the business
Consider opening a bank account separate for your business. This is to simplify your record keeping and avoid mixing your personal to your business especially if you are a single proprietor. When choosing a bank, it must be accessible and available.
Rarely a business sell without a good marketing plan. Marketing is one of the key factor why businesses succeeds, and why it fails. Choose the right marketing platform for your business.
13. Return on Investments
The ROI is got by dividing the Net Profit by the Investment. During the start of the business, the Return on Investments is usually low, then rises as the years go by. For a business to be successful, the Return on Capital should be bigger than the interest rates earned from a bank deposit.
14. Education, Experience, and Skills
Going into a business with no experience, or skills or even knowledge on that particular field could be very dangerous. Wearing designer clothes does not mean that you know how to run such a business. Before going in a business, make sure that you have prior experience, or the required knowledge needed to do that venture. If you are green on that sector, do not be in a rush simply because you have an idea. Take a course on that particular business, arm yourself with the right knowledge and you are good to go. Alternatively, you could look for a mentor who has been on that field to guide you through it.
15. Financial Management
Before you could start a venture, it is very crucial to have a clear financial plan on how you will manage your finances, or how you will hire someone to do so. Financial management requires a professional accountant who understands the balancing between the inputs and output. It is very easy to think that the money in the business is enough, only to end up using the capital for the wrong purpose. To avoid such, you should come with a clear financial plan which captures the amount of money that will be allocated to which session. For a start, you should hire an affordable accountant who will help kick start the business.
16. Future Expectations
A business is prone to failure, though it is not something that most people planning to start a business would love to hear. A business is either made to be successful or unsuccessful. You should be prepared for both situations. When the business experiences losses, you should be able to pick up and soldier right ahead. Failure could also mean that you missed a step, so use that as a lesson and go to the drawing board to discover where you went wrong.
Starting a business is not an easy step to take. You have to be ready for future expectations but once you take these factors before starting a business into consideration then you should have no worries beginning your own business.
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