1. Choose an option that’s right for you
When thinking of starting your own business, choose one that will suit your lifestyle and preferably one in which you have some direct knowledge and experience. For instance, if you want to work regular hours (say 8.00am to 5.00pm), opting for a fast food restaurant isn’t a good idea. Similarly, if you’re thinking of buying a car repair business, it’s important that you have some knowledge of what’s involved, even if you’re not a professional mechanic yourself. Many businesses succeed because they match lifestyles of an entrepreneur. Similarly, knowledge and experience about a particular sector or activity will be vital for success for a start-up business since such a business is least able to hire experienced people to substitute the entrepreneur.
2. Do your market research
Market research does not have to be complicated. It’s important to make sure that there’s a need for your product or service, though. Check out whether there’s any competition already established in your area, whether your offering is unique or whether it fills a special gap in the market. If you can offer a product or service that people need and which doesn’t already exist, you’ll have a good chance of success. For example, you might be able to offer a scholar transport service in an area off the public transport route or develop a new form of health snack where there’s a demand, but no supply. It is common for people to think that there is ‘abundant’ market, just because there are no other local producers of the same product. This is not enough because the cost of production may be prohibitively high for a local producer. Also understand where to get your raw materials and how reliable the source is.
3. Draw up a business plan
Writing a business plan is like drawing up a road map. You’re not likely to reach your destination unless you know where you’re going and what you’ll need to get there. You will need the information that will give the business operational and financial direction. Business Partners offers a free business-planning model for entrepreneurs
4. Choose a specialist investor
When looking for investment, choose a company that has specialist knowledge of the challenges facing entrepreneurs, as well as of the sector in which you intend to work. This could be one of the most important decisions you’ll ever make – for yourself and for your business. It may be more than just money initially as technical skills may be needed to ensure that the product is the right fit for your target niche.
5. Employ the right people
Not all start-ups employ people from the start, but if you do, it’s important to choose carefully. In a small business, people spend a lot of time together, so you need to select employees that you feel you’ll be able to work with. Also, choose people that have experience in the business you’ll be starting – this will give you a valuable support system.
6. Market your business
Business doesn’t come to those who wait – it comes to those who go out there and tell people what they have to offer. Even the smallest business needs to market its services by, for example, placing ads in the local papers, distributing flyers, putting up notices in shopping centres, recreation centres and other public places and developing special offers for special needs or occasions.
7. Put in financial systems from the start
Even if you’re not a financial expert yourself, put in simple but solid financial systems right from the start. There are excellent, user-friendly software packages that can be used to do this and it’s even worth contracting the services of a bookkeeper or other financial professional to assist you on a regular basis. Lack of financial discipline is often where start-up businesses go off the rails.
8. Manage your cash flow
Cash is the life-blood of a business and it’s important to manage cash flow carefully. Ensure that cash is kept within the business to keep it alive. The right investor will be able to assist you in doing this.
9. Supplement your own knowledge with specialist skills
No entrepreneur can be a specialist in every aspect of business and it’s important to contract specialist skills and services when you need them. For example, if you’re thinking of setting up a small factory and don’t have much knowledge of the production process, an experienced production manager will be worth his or her weight in gold. Such services can be hired on a temporary basis.
10. Enjoy yourself
One of the best things about owning and running your own business is that you have total independence. There’ll be good days and bad days, but it’s important to enjoy what you’re doing. Owning one’s own business is an adventure – enjoy it every step of the way.
The author is the Chief Investment Officer of Business Partners International Rwanda SME Fund, a risk finance company for formal small and medium enterprises.