Personal attributes for an entrepreneur
1. Self Disciplined: These individuals are focused on making their businesses work, and eliminate any hindrances or distractions to their goals. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives.
2. Self Confidence: The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success. They are confident with the knowledge that they will make their businesses succeed. They exude that confidence in everything they do.
3. Open Minded: Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being generated about workflows and efficiency, people skills and potential new businesses. They have the ability to look at everything around them and focus it toward their goals.
4. Self Starter: Entrepreneurs know that if something needs to be done, they should start it themselves. They set the parameters and make sure that projects follow that path. They are proactive, not waiting for someone to give them permission.
5. Competitive: Many companies are formed because an entrepreneur knows that they can do a job better than another. They need to win at the sports they play and need to win at the businesses that they create. An entrepreneur will highlight their own company’s track record of success.
6. Creativity: One facet of creativity is being able to make connections between seemingly unrelated events or situations. Entrepreneurs often come up with solutions which are the synthesis of other items. They will repurpose products to market them to new industries.
7. Determination: Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They are determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneurs do not believe that something cannot be done.
8. Strong people skills: The entrepreneur has strong communication skills to sell the product and motivate employees. Most successful entrepreneurs know how to motivate their employees so the business grows overall. They are very good at highlighting the benefits of any situation and coaching others to their success.
9. Strong work ethic: The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. They will come in on their days off to make sure that an outcome meets their expectations. Their mind is constantly on their work, whether they are in or out of the workplace.
10. Passion: Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They are willing to put in those extra hours to make the business succeed because there is a joy their business gives which goes beyond the money. The successful entrepreneur will always be reading and researching ways to make the business better.
Successful entrepreneurs want to see what the view is like at the top of the business mountain. Once they see it, they want to go further. They know how to talk to their employees, and their businesses soar as a result.
How to Start a Small Business
Starting and managing a business requires motivation, desire and talent. It also takes research and planning. Like a “Draft Board game”, success in a small business starts with decisive and correct opening moves. And, although initial mistakes will not destroy your business, it takes skill, discipline, hard work and at times additional resources such as time, labor or funds to fix them.
To increase your chances for success, take time up front to explore and evaluate your business and personal goals. Then use this information to build a comprehensive and well thought business plan that will help you reach these goals.
The process of developing a business plan will help you think through some important issues, that you may not have considered yet. Your plan will become a valuable tool as you try to raise money for your business. It should also provide milestones to keep track of your success.
There are four factors that are required in any given business endeavor. Before starting, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are:
- You want to be your own boss.
- You want financial independence.
- You want creative freedom.
- You want to fully use your skills and knowledge
What type of business is right for you?
To determine what business is “right for you.” Ask yourself these questions:
- What do I like to do with my time?
- What technical skills have I learned or developed?
- What do others say I am good at?
- How much time do I have to run a successful business?
- Do I have any hobbies or interests that are marketable?
- What niche will your business fill?
- Is my idea practical and will it fill a need?
- Who are my competitors? What is my competitive advantage?
- Can I deliver a better quality of service?
- Can I create demand for my business?
Based on your response to the above questions, you can clearly start to see through the noise of many business ideas.
Before starting a business, it is always important to think of how your business is going to turn out. Below is a summary of some of the questions to help you start preparing by considering most of the requirements.
- What business am I interested in starting?
- What services or products will I sell? Where will I be located?
- What skills and experience do I bring to the business?
- What will be my legal structure?
- What will I name my business?
- What equipment or supplies will I need?
- What insurance coverage will be needed?
- What financing will I need?
- What are my resources and how will I compensate myself?
Your answers will help you create a focused, well researched business plan that should serve as a blueprint and provide details on how the business will be operated, managed and capitalized.
What business structure, do I want?
When organizing a new business, one of the most important decisions to be made is choosing the structure of a business. Factors influencing your decision about your business organization include:
- Legal restrictions requirements
- Liabilities assumed
- Type of business operation
- Earnings distribution
- Capital needs
- Number of employees and management
- Accounting/Tax advantages or disadvantages
- Length of business operation (business cycle)
Understanding your market
In this topic entrepreneurs will learn how to identify needs in their local community using their skills. Knowing customer needs is very crucial in ensuring that your business grows and generates revenue. Here entrepreneurs are required to use their own skills and talents to assess the market needs. The skills needed are mostly those we use in our daily lives to mingle with the community. Proper identification of market needs provides a powerful force to launch a viable business enterprise. Below are key items to consider
- a) Assess demand
The first step in starting a business is to identify a need in the community. Establishing the size of that need is called assessing demand. It is a waste of time to jump into developing a business plan before undergoing a thorough and proper demand assessment first.
Demand refers to the willingness to go out and buy a certain product/service. Hence, market demand is the total of what everybody in the market wants.
How can an entrepreneur assess demand of a product/services?
There are several ways to assess the demand of a product / service in the community. Some of the most common ways include;
- Listening to peoples’ complaints about a specific need in the community
- Conducting informal survey especially at the market place
- Sending out questionnaires to sample population
- Scoping by reading and listening for highlights of needs in local newspapers or radio programs as well as other sources of information.
- Complaints or demands highlighted on social platforms.
Accessing demand is amongst the biggest milestone you will make before establishing your business. This will help you establish the right business for the right people.
Assessing your target market
Before you are able to sell anything, you have to understand who you are selling to. You have to create a complete portrait of your customer and know why they want your product and how they will use it. By determining who will buy your products, you can fine tune the various aspects of your marketing message to appeal to this group and to avoid wasting time, money and other resources on non-customers. One needs to assess the kind of customer attracted in buying their products /service and from which demographic segment they come from such as their age, gender, occupation, education level, location and socio-economic status amongst others.
Assess your market size
The starting point for estimating the market size is to understand the problem you solve for customers and the potential value your product generates for them . You need to analyze whether the market is growing in numbers or declining and how to reach them? In addition to this you need to examine trends which are relevant to the target market.
You need to demonstrate how your product/service differs from that of your competitors. Here you may try to ensure that the quality of your products is superior to that of your competitors. You may also want to package your goods in a more attractive package and brand it better than your competitors.
- b) Sizing up the market
Sizing the market is a necessary task for business planning and budgeting for all start ups. If you wish to invest in a certain business then you need to understand the potential market size. In order to determine the market size for your start up, you need to ask yourself the following questions.
- What problem are you solving?
- Who is your target customer?
- What competitors’ products/services exist in your space? And
- What is the estimate number of target customers?
Customers must be made aware of availability of a new product or service and should be able to obtain it. Helping customers to understand the product and service and how they can obtain it is referred to as a marketing strategy. It is very crucial for any business to have an effective marketing strategy.
Any marketing strategy must take into consideration the following factors:
The location of the business – The business must be located at a place easy to reach, it must have enough space to accommodate many customers at once, and with enough car parking lots.
Advertising – A special budget can be set aside for advertising your new business. The advertisement can be done through social media, blogs, local newspapers or placing posters to road junctions and at areas where people meet.
Packaging – Make sure that your products are well packaged and branded. The package must make it comfortable for customers to carry and needs to be neat and attractive.
The need for good relationship with other businesses – Establishing your business doesn’t mean that you don’t talk with your competitors. You need to be close to them and have a good relationship, competitors are members of your community hence having a good relationship is key for your social wellbeing.
Reputation in the community (word of mouth) – In normal circumstances it is not easy to please everyone, but try as much as you can to be close to members of your community. Talk nicely and set time to participate in social activities.
Competitor’s price – You need to examine clearly prices for the same goods as yours, which are present in the market. This will guide you to set competitive prices for your products.
All in all any entrepreneur should be willing to adapt products or services to customer preference, taking into consideration local safety and security regulations. A new product may have an initial period of high demand. However, a saturation point may be reached and demand may stay stable or even decrease. A sustainable market is one in which demand price keeps on increasing or stays stable with a steady rate of replacement.
- c) Estimating cost and setting a price
A product or service may be exchanged for money or for another product or service. Most businesses will want to make profit on product or services sold. Profit is the difference between cost price and selling price. A part of the profit can be reinvested or used for expansion of the business. A reasonable margin of profit enables the business to continue and even expand.
Definition of “Costs”
An amount that has to be paid or given up in order to get something. All expenses are costs, but not all costs are expenses.
Types of Costs
There are two types of costs;
Direct costs: These are costs directly related to the product or services that business produce or sell. E.g. the money we pay people who work in making or selling product; transport of materials or product; and consumable bills.
Indirect costs: These are all other costs for running the business. They include; rent, license, security, utility among others. Indirect costs are also known as overhead costs as they are paid whether the business is producing or not.
Factors to consider in setting a price and formulating an effective price strategy
When setting a price for product or service one needs to consider the following:
- Total production cost (direct and indirect)
- How much customers are willing to pay
- Competitors price
- Short supply of product /service “Scarcity”
- Product/ service demand
- Government policies
It is therefore important to accurately calculate each of these, so that the ﬁnal selling price is realistic. Selling price can be established using the below formula
Cost of production + overheads + profits = selling price
The entrepreneur should be careful in setting the level of proﬁt intended to be made on the sale of a product or service, by also taking into account the relationship between demand of the product and the available supply. If demand is higher than the available supply, the price (and thus the proﬁt) may be increased. If there is a large supply, but few people want to buy, then prices may drop. An excessively high price due to a big margin of proﬁt will dissuade customers. When sales increase, proﬁt margins may be reduced. This can enable the entrepreneur to lower the selling price, therefore allowing the business to ‘capture’ the market and even expand it.
Choose the right business
• Don’t tackle businesses that may be too challenging. It is better to identify a one-foot hurdle than try to jump a seven-footer.
• Try to identify a business that has long-term economic potential. Follow Wayne Gretzky’s advice, “Go to where the puck is going, not to where it is.”
• Look for a business that will grow in today’s and tomorrow’s markets.
• Follow the advice of famous business people such as Wallen Buffet. He advice to looks for businesses that focus on a “consumer monopoly” with pricing power and long-term predictable growth prospects.
• Businesses to avoid are “commodity” businesses where you must compete entirely on price and in which you must have the lowest cost to survive. As Mr. Buffett has said, “In a commodity type business you’re only as smart as your dumbest competitor.”
• If you intend to manufacture a product, consider the pros and cons of contracting out production to a low-cost supplier. In other words, operate a “hollow corporation.” A “hollow corporation” is a company that subcontracts manufacturing and packaging.
Top Ten Do’s and Don’ts in starting a business
Begin saving up money for operating your business.
Learn your business by working for someone else in the same business first.
Consider the benefits of starting a moonlight business.
Consider the advantages of operating a family business.
Objectively measure your skills and training against potential competition.
Consider subcontracting to low cost suppliers if you’re manufacturing a product.
Test market your product or service before starting or expanding.
Make a “for” and “against” list describing the business you are in or considering.
Talk to lots of people for advice.
Quit your job before you have completed start-up plans.
Consider operating a business in a field you do not enjoy.
Risk all the family assets. Limit your liabilities to a predetermined amount.
Compete with your employer in a moonlight business.
Be in a hurry to select a business. There is no penalty for missed opportunities.
Select a business that is too high a risk or hurdle. Go for the 2-foot hurdle.
Operate a business in which you must have the lowest price to succeed.
Neglect to learn the negative aspects of an intended business.
Permit entrepreneurial self-confidence to outweigh careful diligence.
Allow the promise of a conceptual high reward to deter reality-testing first.
Checklist for Starting a Business
Click here to download a checklist for starting business
Types of business structure
One of the first decisions you will need to make for your new business is choosing the type of legal organization that is best for you. The choice you make is important because it will determine what your business can and cannot do, what will happen if someone sues you, and how both you and your business are taxed.
Today we are going to talk about four of the most common business structures namely; Sole Proprietorship, Partnership ,Corporation and franchising
This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for your business.
There are likely to be fees to register your business name and other necessary licenses. The Business Registrations and Licensing Agency requires that when starting a business one needs at least Sh20,000 to register a business name.
A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, such as Nancy’s Nail Salon. The fictitious name is simply a trade name–it does not create a legal entity separate from the sole proprietor owner.
The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only to register his or her name and secure local licenses to start operation.
A distinct disadvantage, however, is that the owner of a sole proprietorship remains personally liable for all the business’s debts. So, if a sole proprietor business runs into financial trouble, creditors can bring lawsuits against the business owner. If such suits are successful, the owner will have to pay the business debts with his or her own money. Below are some of the pros and cons of sole proprietorship
Registration is instant, easy and inexpensive.
Carry little, if any, ongoing formalities.
Owners may freely mix business with their personal assets.
Owners are subject to unlimited personal liability for the debts and losses of the business.
Owners cannot raise capital by selling an interest in the business.
Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value.
Partnership is the most common type of business structure for businesses with more than one owner. There are several types of partnerships. The two most common types are general and limited partnerships. A general partnership can be formed simply by an oral agreement between two or more persons, and each person is full responsible for the business. A limited partnership is where at least one owner is a general partner and at least one owner is a limited partner. The general partners make everyday business decisions and are personally liable for business debts. However, limited partners simply invest in the business and have little control over business operations.
If you opt to have a limited partnership, it is highly recommended to have an agreement drawn up by an attorney.
A partnership agreement drawn up by an attorney could be helpful in solving any arising disputes. However, partners are responsible for the other partner’s business actions, as well as their own. Based on best practices, a Partnership Agreement should include the following:
- Type of business
- Amount of equity invested by each partner
- Division of profit or loss
- Partner compensation
- Distribution of assets on dissolution
- Duration of partnership
- Provisions for changes or dissolving the partnership
- Dispute settlement clause
- Restrictions of authority and expenditures
- Settlement in case of death or incapacitation
A business may incorporate without an attorney, but legal advice is highly recommended. The corporate structure is usually the most complex and more costly to organize than the other three business formations. Control depends on stock ownership. Persons with the largest stock ownership, not the total number of shareholders, control the corporation. With control of stock shares or 51 percent of stock, a person or group is able to make policy decisions. Control is exercised through regular board of directors’ meetings and annual stockholders’ meetings.
Franchising is a type of business ownership where an entity is authorized to distribute or sell goods and services for another company in a certain area. An example of franchising is on Pepsi products. Generally , Pepsi Company produce syrup concentrate only and sold to bottles around the world who finish the product and distribute to retail stores.
In addition to a well-known brand name, buying a franchise offers many other advantages that aren’t available to the entrepreneur who is starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error. It is recommended to find out the following before entering into franchising business;
- If the franchisor–as well as the current franchisees–are profitable
- How well-organized the franchise is
- If it has national adaptability
- Whether it has good public acceptance
- What its unique selling proposition is
- How good the financial controls of the business are
- If the franchise is credible
- If the cash requirements are reasonable
- What the integrity and commitment of the franchisor are
- If the franchisor has a monitoring system
- Which goods are proprietary and must be purchased from the franchisor
- What the success ratio is in the industry
Finding a Niche Market
A niche market is the division of the market on which a specific product is focused.
A market in its entirety is too broad in scope for any but the largest companies to tackle successfully. The best strategy for a smaller business is to divide demand into manageable market niches, or areas of special focus.
Small operations can then offer specialized goods and services attractive to a specific group of prospective buyers. There are undoubtedly some particular products or services you are especially suited to provide. Study the market carefully and you will find opportunities.
While researching your own company’s niche, consider the results of your market survey and the areas in which your competitors already have strong businesses.
Put this information into a table or a graph to show where an opening might be for your product or service. Try to find the right combination of products, services, quality, and price that will ensure the least direct competition. Unfortunately, there is no universally effective way to make these comparisons. Not only will the desired attributes vary from industry to industry, but it also takes imagination, which cannot be learned from a book.
A well-designed database can help you sort through your market information and reveal particular segments you might not see otherwise. For example, do customers in a certain geographic area tend to purchase products that combine high quality and high price more frequently? Do your individual clients take advantage of your customer service more often than large groups from hotels? If so, consider focusing on being a local provider of high quality goods and services, or a service-oriented company that pays extra attention to individuals.
If you do target a new niche market, make sure that this niche does not conflict with your overall business plan. For example, a small tour guide shop that focuses on individual clients go after the market for cruise ship tourists.
STEP 1: Apply for clearance of the proposed Business name
In this, one needs to apply for the proposed business name by submitting three names (Fist name, Second and Sir name). Submitting three names aims to ensure that your business name doesn’t coincide with already existing business names. Business Registration and Licensing Authority (BRELA) is responsible to register all businesses. Business registration can now be done online.
After your business is registered, you will receive a notification confirming your registration then the applicant is supposed to prepare a memorandum and articles of association and submits to BRELA
NB: This process is free off-charge. Further information on business registration and name clearance can be obtained at www.brela.go.tz.
STEP 2: Obtain a notarized declaration of compliance
In this an entrepreneur/business owner should visit the notary for notarization of the declaration of compliance. Notaries do charge at the range of TZS 10,000-50,000, for notarial services to normal documents. E.g. Form 14b
Click here to get details of notary agencies in Tanzania
NB: Notary is a person authorized to perform certain legal formalities, especially to draw up or certify contracts, deeds, and other documents for use in other jurisdictions.
STEP 3: Apply for company incorporation and obtain the certificate of incorporation
To apply for a certificate of incorporation done at Tanzania Investment Centre Click here, a subscriber, secretary, or a person named in the articles of association as a director must submit the following to the Registrar of Companies:
14a (First Directors and Secretary and Intended situation of Registered Office). Click here to see Form 14a
14b (Declaration of Compliance on Application for the Registration of a Company). Click here to see form 14 b (1)
NB: The Memorandum and Articles of Association are also filed with the forms.
After the forms are filed, the certificate of incorporation is usually processed within 2-3 days. Registration forms are free, and applicable registration fees (according to the New Companies Act 2002) are shown below.
Stamp duty fee:
– Original Memorandum and Articles of Association: TZS 6,200
– Every additional copy: TZS 5,000
STEP 4: Apply for taxpayer identification number (TIN) at the Tanzania Revenue Authority
TIN registration is free of charge. It takes a minimum of 1- 2 days to obtain a TIN number, depending on the number of requests made to the Revenue Authority (TRA) at the time. The Certificate of incorporation shall be attached to the TIN application enclosed with Memorandum and Articles of Associations when a person makes application to TRA.
The limited company shall apply for TIN certificate by filling TIN application forms as follows:
Application for the company
Application for each shareholders/directors, in case any director has already issued with TIN certificates for other purpose he/she cannot make another application. The same TIN number will be used.
At least one of the directors of the company must be physically present at the tax office to give their fingerprints (biometric data). The applicant must visit TRA offices to pick up the TIN number in person. The company will be required to declare its estimated income or turnover for the provision tax assessment for the particular year. At the TRA office, the tax officer may interview the company founders/directors and record their business and personal particulars.
STEP 5: Apply for a business license at the Ministry of Industry and Trade (MIT) and Local Government Authorities (LGAs)
The business license is either issued by the Ministry of Industry and Trade or the Local Authorities depending on the nature of the business. Together with the application, the following documents must be submitted:
Certificate of incorporation
Memorandum and Articles of Association
Proof of Tanzanian Citizenship
Proof of a suitable company premises
Taxpayer Identification Number (TIN)
STEP 6: Apply for the VAT certificate at the Tanzania Revenue
Every business that has an initial capital registration of 50mi millions for the first six months of a business or 100 millions in a year are required to register for value added tax. The tax is not directly affecting MSMEs but rather incured by the last consumer. To register for vat one has to go to the nearby TRA office to obtain papers for registration. The registration applies to all with exception of those businesses offering professional expertise services. Another registration option is through TRA’s website.
STEP 7: Register for the workmen’s compensation insurance at the National Insurance Corporation or an alternative insurance provider
To register for workers’ compensation insurance, employers must complete the Workmen’s Compensation Tariff Proposal Form. This is done at Workers Compensation Fund (WCF) and Tanzania Insurance Regulatory Authority (TIRA). This form should be completed once the firm begins hiring employees and just before the firm becomes operational. However, because the insurance industry is privatized in Tanzania, employers may opt to take an insurance policy instead of the workmen’s compensation claims.
STEP 8: Obtain Social Security registration numbers from all mandatory social security schemes
It takes a week to obtain a social security registration number. Every employer in the formal sector is required to register his/her employees with any of the mandatory schemes, provided that it shall be the right of the employee to choose the mandatory scheme to register under. These mandatory schemes are established by law and guaranteed by the Government to provide social security benefits to employees.
Business plan can have the following advantages:
It gives you a chance to well operate your business and establish your desired business direction
It enables you to make assessment of your business from time to time based on the business’ goals
Help you make wise business decisions- with clear business vision you will be able to separate decisions from bad to good basing on the goals of your business
Creates business sustainability, having a strategic plan will enable you to predict and adapt to different business and market conditions, which ensures the survival of your business
Help you improve your business performance
Things to consider when formulating a strategic plan
Step 1: Determining the position of the business
In this process, an entrepreneur should establish an actual position of the business in terms of funds/money, time, human capital and other specific resources that are available for business utilization. This process is very essential as it helps in obtaining a clear definition of the business environment, competitors and the business competitive advantage, which are all essential components in running a successful business.
Step 2: Identify what are the important issues for the business
This is another essential process in formulating a strategic plan. Establishing important issues of the business helps in formulating priority issues which the business will focus on during the time of its development. In this, an entrepreneur should determine what are the specific objective or mission of the business and then take time to understand them in order to formulate a plan that will focus on the important items of the business.
Step 3: Set the level of achievement
After already establishing the mission and the objective of the business, an entrepreneur should set the expected achievement that the business intends to achieve over a certain period of time. Expected achievements are simply objective with clear indication of what will be achieved when the objectives are met. This is very essential as it helps in measuring the level of success of the intended objectives.
Step 4: Assign role to responsible parties
When all objectives and level of achievement are in place, what follows is assigning role to both parties that are involved in the business. Success of any business requires the presence of different individuals that works together towards achieving a similar objective. In order to achieve this, an entrepreneur should assign roles to all individuals that are involved in the business, this process is not only important in making sure people knows what to do, but it can only be used to measure the overall rate of completion of intended task as all responsible parties have things to do.
Step 5: Set a review structure to
Lastly, there needs to be in place a regular review process of the strategic plan. Review process makes sure all the factors for failure or success are included in the planning process, also improvements are made in the overall plan to make sure all issues have been considered so as to make the implementation process successful.
Consider the following issues
Every person who is thinking of having a business or running a business needs to have business strategic plan to ensure the successful and prosperous outcome.
Someone can have a successful business and wonder why would his/her business needs a strategic plan. Having a successful business does not guarantee the future so having your strategic plan will ensure the safety, growth and longevity of your business. Therefore every business is supposed to have a well defined strategic plan.
The executive summary should be clear and concise. It should state your objectives and how you hope to achieve them. The executive summary should be the last section to be written, although it will be the first section to be read. Potential investors often make a provisional judgement based on the executive summary. The executive summary should sum up the following points:
What is the proposal about
Product/service and its advantages
The Management Team
Funding requirements and expected returns
Profile of promoters – their CVs, details of education and qualifications, training courses, work experience, etc.
Details of the directors/shareholders: names, no. of shares, cash investment to date
Financial, legal and other advisors
Describe your product/service and state what it does
How is it different from other products/services? What are its unique selling points?
Describe its benefits and features
What are its weaknesses?
Describe the production process and requirements
Estimate production costs, including raw materials, parts and personnel
Expected level of output after one year in business
Possibility of new products
SWOT Analysis: Analyses the strengths and weaknesses of the business, the opportunities that exist in the marketplace, and the threats to the viability of the project
The Market and Sales
Describe the research you have done and how it was undertaken – by way of questionnaire, interviews, surveys, observations or using a professional service
What is your target market? Who are your potential customers? How will you attract new customers? Why will they avail of your product/service?
Market size and trends – refer to recent changes and future predictions
Analyse the competition – What are their advantages and disadvantages, what are their range of products, how will you compete with them? Why should consumers choose your product over your competitors’?
How will you promote your product/service?
Explain which methods of distribution you will use and give their estimated cost
Describe your pricing strategy
Proposed location and reasons for choosing
Describe the required equipment and its capabilities
Are you going to buy or lease the property?
Have you adhered to Health and Safety, and Environmental requirements?
Raw material sourcing – list your suppliers, the terms of trade and any possible vulnerability in this area.
Employees – Describe the relevant roles and the initial training to be provided
Finance & Funding
Financial requirements for: premises, machinery equipment, office equipment, training, etc.
A detailed set of cash flow forecasts will show how much finance your business will need and when it will be needed
A projected profit and loss account
A realistic sales forecast
What is your capacity to raise finance?
Who are the potential investors in your business?
Amount to be provided by borrowing – from whom and details of repayment terms
What grant aid is available for your business?
What assets/activities will the finance be used for?
Consider your situation if your forecasts do not go to plan – how will your business cope?
What legal structure will your business have i.e. sole trader/partnership or limited company?
Be aware of all your obligations as an employer: registering your business, employment laws, taxation, etc.
Have you adhered to legal requirements regarding health & safety at work?
Is your business aware of professional or industry standards and is it regulated in any way?
What are the insurance requirements for your business i.e. equipment, stock, premises, employers liability, public liability, loss of profits, etc.?
Have you decided on the taxation framework for your business?
Is your business registered for VAT/PAYE/Business Tax?
What are your company’s accounting system requirements?
Detailed financial forecasts: monthly sales, cashflows, Profit & Loss, etc
CVs of key staff
Market research data
How much should I capitalize my business with at the beginning?
As much as you can reasonably afford, and in an amount to at least carry you for 6-9 months with no income. What you will find is that it always takes you longer to get revenues, and that you will experience more expenses than you anticipated.
What are the biggest challenges to starting a business?
- Shortage of capital and cash flow
- Having a good business plan
- Coming up with a great product or service
- Sticking to it
- Working more than you expected
- Getting through the frustrations of being constantly rejected by customers
- Hiring good employees
- Knowing when to fire bad employees
- Having to wear so many hats
- Managing your time
Do I need a business plan?
It’s useful to come up with a business plan to think through what you want to dofor the development of the product or service, marketing, financial projections and more. Then get input from trusted business advisors