Things to Consider Before Starting a Business

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So some folks have asked me several times to work out posts along the business Ideas…lines. it has taken me a while to do such posts because I am not particularly one to give any sort of guidance on anything..i tend to have my opinions most times and they are often strong enough in that there is generally no confusion as to where I stand on certain issues. Since I do a lot of business planning work, I will give a bit of my professional opinion on things that need to be done before you start a business.

1. Have you done your market research? Do you know the environment you intend to operate in? Have you identified your selling point? You have to be a detective- operators and end users matter…you cannot take information solely from end users and open a business based on that. You must understand your market from a sellers standpoint…this can be the absolute difference between success and failure. What unique selling point are you bringing to the table? No idea is original. ..but for a lot of people they attach the quality of your goods and customer service to each other….what is your unique selling point?

2. While you believe you have found purpose in your business, you will need to register a company that you can facilitate you business under. If it is a general trading company, a simple registration with the CAC will do…there are several friendly options as to how to register a company…speak with a lawyer. If it is a sector particular business like a school or creche, make sure you understand the regulatory requirements before you attempt to register the business. A simple call to three or five lawyers will help you. Notice the odd number? Because you can guage the correct response based on the amount of times you get that same feedback…lawyers will generally tell you what you need for free, its the actual work they charge you for.

3. Before you invest your money or even actualising number two…do you have a business plan? Even if you are looking at starting a business of N5,000- YOU NEED A BUSINESS PLAN! Business plans are not the holy grail, and it’s highly unlikely you are going to get back exactly what you put on paper, but a realistic (not optimistic) business plan will help you get a brief picture of what you are setting yourself up for and whether or not you should even attempt the business or how to even attempt it. That is; jump in or provide graduated service – what do I mean? Either to start a business small and grow, or to establish a significant presence immediately based on resources at your disposal and expected returns. My advice to anyone is for a business which you intend to generate profit from with a start up capital of more than N1 Million Naira – engage someone who can help you build forecasts if you can’t and then you write the other parts of the plan. Anything involving a start up capital of N5 million or higher, please engage a professional. Ask for previous work samples to be able to distinguish professionals from quacks. I do understand that business plans are expensive…the multinational consultants charge about N10 million while established Indigenous firms charge about N5 million…consultants who have worked for either or tend to charge in the N1 million to N3million range, but with the right approach you can create your plan. A good consultant should have knowledge of the industry you want to play in and be able to articulate it accordingly.

If you can’t afford to pay a consultant or you don’t see the value in paying one, very easily there are basic templates on the Internet. Provided you have done you economic research and understand the workings of the industry you are going into – you can very easily write your own plan..which you can adjust periodically.

The basic parts to a business plan are as follows:

1. Overview….the type of business lagbaja intends to start and why, the said cost of starting and the source of the funding.

2. Company Profile…who is lagbaja. ..what are his or her qualifications or drivers to start the business?

3. Operating environment and market strategies...where will lagbaja operate his or her business out of? How does lagbaja intent to enter the market and compete? This is where knowing the market is key….What are the regulatory requirements to operate in the environment? What is lagbaja’s anticipated timeline for milestones in the business?

4. SWOT …What are the strengths, weaknesses, opportunities and threats lagbaja (the company) and the greater industry face?

5. Risks…what risks do similar companies face? And how does lagbaja intend to manage them?

6. Financial forecasts– what are the start up costs? Profit & Loss analysis (income statement), cashflow management, assets and liabilities (balance sheet) – projections for five to 10 years.

7. Profitability Analysis. Is the business really profitable? You can use a 364 day treasury bill rate to gauge whether or no to invest in a business. If your returns for the first five to 10 years are lower than the t-bill rate, you better just sit at home and buy t-bills and let someone else do the work.

8. A conclusion as to whether or not the business has a future…some businesses have no future with the way the world is going…I wouldnt advise anyone to open a kerosene lamp manufacturing business in this day and age…you get my drift.

Thats my 50 kobo though for today. If I get positive enough responses…i will do more posts along these lines. I AM NOT A LIFE COACH OR A BUSINESS COACH,  what I have provided above are general guidlines that may or may not help. If you have any questions (inexpensive ones only) please feel free to ask.

Winners Wednesday is still HERE

NESTR
OAD

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7 Comments on Things to Consider Before Starting a Business

  1. A very big side eyes at asking “inexpensive questions”

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  2. You sure sound like a Business coach with this points, this points are great

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  3. God bless you for this post. I’ve been waiting to read something like this.

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  4. Thanks Oyinda, I’m a budding entrepreneur and these tips are very useful.

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  5. Hmmm.Lol@inexpensive questions..Ur ideas/tips are spot on.
    U sound like an entrepreneurial aficionado.These tips are quite useful,wouldn’t mind reading more……

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  6. Thank you miss pynk..I have copied and pasted your points in my mail for future use.. Gracias..xx

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  7. Lohla's Melange // August 26, 2015 at 17:37 // Reply

    Ah me I have expensive questions oh. Thanks for this post ma’am please do more of these, it would be much appreciated.

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