There is a general prevailing statistic that small businesses in Nigeria fail within five (5) years. It could be for some reasons, including political instability, poor bookkeeping, poor management practices, and more.
However, most of this business failed to thrive because of problems that are from the setting-out stages. It may be from poor conception or improper planning.
Having the capital to start a business is not the only prerequisite for starting a business. Other factors contribute to the success and sustainability of businesses.
The first step to ensuring that a business survives is to ensure proper planning that involves considering all stakeholders and their impact on the business continuity. Here, then, are some of the things to consider before starting a business.
All businesses begin with an idea. When you have a super idea that works, you can start a business. It is best that you offer something that no one is offering yet. However, not everyone can birth a new idea. Alternatively, you can explore existing ideas and find ways to make them better. Ask yourself questions like, ‘what can I do to make this idea better?’ Will I be able to get a sizeable market share from this sector? What are others not doing that I can do to make this better? In what ways can I do what others are doing differently and better?
2. PLAN, KNOWLEDGE AND EXPERTISE:
Once you have an idea, it is best that you draw up a plan. Planning helps you to identify most of the factors to consider when starting a business. There will be different versions of the plan as more information comes to light.
By planning, you can identify your knowledge and skill gaps as it concerns the business. This will enable you to get the right knowledge and skills for starting, operating, and sustaining the business.
You may not have all the required skills and expertise. It is essential that you explore collaboration and employment to bridge the skills and expertise that are lacking for your business.
Doing this successfully requires knowledge and competence. Do not be shy to hire the right professionals to help you during setup.
3. MARKET RESEARCH AND DEMAND:
It is important to research your target market and determine the level of demand for your product or service. Determine who your customers are, and how you will be getting your product or service to them.
Do a market survey to determine the size, growth potential, buying habits, possible margin, price elasticity, and different segments of your target market. It is also good to predict the market share that your business may capture.
Exploit the tools and reach of social media for this purpose. It is also good practice to research your competitors and decide on strategies to stay competitive. This will also help to shape your market entry strategy. Nowadays, we are beginning to see more cooperation than the competition.
4. CAPITAL AND FINANCE:
The next stage will be to do your cost analysis. You will want to know the cost associated with rent, collaborating, hiring professionals, constructions if required, purchasing equipment and business consumables, energy, and operations.
Most businesses prepare the cost for a calendar year, with the presumption that the business will thrive to start catering to their operating expenditures. It is better to plan costs for five years and adjust for inflation. It is like the old saying, ‘prepare for the worst.’
Once you have an idea of how much is needed to start, your next step is to determine how to finance the business. Are you getting a loan, seed funding, or are you bootstrapping? You can even self-finance if you have the money. Another option is to find a financial partner and go into strategic partnerships.
Location is very important to your business, especially if you will be producing goods. A retail business cannot thrive in a sparsely populated community, and a wholesale business will not thrive at a location that is not easily accessible. A niche product or service requires you to locate your business within the cluster of your competitors. Depending on the nature of your business, you will locate it with the best consideration for all stakeholders.
WRAPPING THINGS UP
A good factor to also consider is the effect of political changes, and policies on the sustainability of your business. While this is not a factor that you can completely control, it is better to review your situation periodically and develop mitigating strategies for every identified eventuality. Periodically, perform a gap analysis to validate your assumptions, track your progress, and update your plans.