Before you quit your job or while planning to start a business the followings are tips that will help you develop your business idea into a fully-fledged business entity. Before you resign from your present job or before you start a business either as one without any previous business experience or before doing a business outside your current job industry, do the followings:
1. Ask yourself the question: what else can I do within my area of talent, skills, expertise, experience etc., to earn the same amount of money, equivalent to or better than my present salary?
2. Develop your business idea: it is worth noting that having a business idea is not enough to start building a business. There must be a market opportunity. The idea may be wonderful to you but may not fly in the real world. It may just be a fantasy. This is why my advice does not say “have a business idea” rather it says “develop your business idea.” This is because; having a business idea is different from developing a (or the) business idea. Most people have business ideas but not all get to develop the idea.
3. Differentiate between needs and wants: the next
step towards developing your idea is to determine if it is a need or a want
that you are out to meet. Needs are essential and unavoidable
requirements of life while wants are choices and preferences based on
individual’s tastes. The challenge is that most needs already have markets. The
markets are often saturated. So trying to enter into such business will be
challenging. Besides, people do not just pay for something just because it is a
need. They must have to want
it to buy it. Buying decisions are often based on preferences, priorities,
urgencies, emotions etc. What you may have to do is to convert a need into a want. Water, for example, is a need and people do not just
buy water because it is a need. How you provide or package the water will have
to be guided by what people want – that is, how the market wants the water
supplied – the form or format the people want the water. What they want to use
it for will determine the form in which they would want you to supply it.
4. Determine the viability of the idea - spot a business (or market) opportunity: the next step to developing a business idea is to find out if there is a business or market opportunity for the idea. A business opportunity may come out of a personal challenge you were able to eventually solve and in the process discovered that other people are also in such problem and are in need of solutions. Haven solved yours you would want to solve others’ for them and get paid in the process. Or it could be a need you have the skill for or know where to get the skills or solution for. Then go ahead to ask yourself a few questions: Are there enough people who are willing to pay for that solution – that idea? Are the people who are willing to pay for the solution plenty enough to keep the business going? (The market must be large enough; else, it is not yet a viable business opportunity). Is the idea informed by a trend or a fad? (A trend is a new development with a huge growth possibility, e.g. the internet, new media, social media etc. whereas a fad is a momentary craze or a temporary vogue. Trends evolve and develop. Fads often fade and fizzle out). Ensure the demand for the product or service is growing.
5. Recognize and know your customers: to recognize your customers means ability to spot those in need of your product/service. To know your customer, on the other hand, is to know their status, special preferences, tastes, backgrounds and locations etc. Who are your customers? Where are your customers? What are their earning powers or income levels? Will the way you package or present the product or service be acceptable to them? The answers you get to these questions will help you develop your business idea further.
6. Determine how peculiar and enduring the market is: this means that you should research to find out if the market (that is, those who need the solution you are bringing on board) will continue to exist for the long term. The problem must not be a temporal one but one that is a somewhat continuous basic human problem and which will make your business a going concern. This will mean you will need to do due diligence to get workable statistics on the peculiarity and behaviour of the market as well as the nature and the continuity of the needs to be met. This means that you must take care not to build your business on fads and temporal trends, as mentioned before. (Note too, that some trends may not last for so long as superior technology or innovation, belief or culture may come on board and either knock it off or replace it as it evolves or develops. In fact, some trends may grow into something else totally different).
7. Determine the volume of product/service that you will have to provide to get you to a breakeven point: This means that it is not enough that the market is large and also will last, you must know from the beginning how to sustain that business by way of capacity to reach a point of, at least, “no-loss-no-profit” (otherwise called breakeven point) within the first 12 months to 24 months of the business.\
8. Determine your break even units: this means that you should be able to know the quantity/volume of product/service to churn out and sell so as to reach the breakeven point within 12 to 24 months. Your sales forecast would help here.
9. Determine your capital: having known the need you wish to meet (that is, the business idea), the people who have that need (the market and its size and nature) and how to meet the need profitably (the business opportunity), the next thing to do is to determine the capitals to use. Your capital includes human capital (other people’s skills and expertise), intellectual capital (information and knowledge) material capital (equipment, tools, raw materials, power/energy, land/venue and other facilities) and financial capital.
10. Determine your suppliers: who will supply you these capitals – the machine, raw materials, land/business premises, office or factory), power, energy, skills and expertise etc? How do you get them? You must determine from the start how to get these capital and how to keep getting them as the business continues, grows and expands because if the supply stops or reduces the business also regresses or even stops.
11. Determine your internal factors and prepare for your external factors: Every business has both internal and external environments and what happens in these two environments are the factors that directly and indirectly affect how the business fares.
Internal factors include factors that you can control. From the beginning you can begin to design and determine these factors because they will spell the success and future of the business. Examples include:
· Vision and mission of the business (i.e., your target and how to reach it).
· Core values, culture and philosophy of the business.
· Business policies you (rules guiding your operations, transactions etc.).
· Quality of man power (minimum qualification/skills to be employed).
· HR policies (staff motivation, training, rules, penalties, rewards and privileges).
· Etc.
External factors are those you have no control over but which can affect the future of the business. But you can and should prepare for them. Examples are:
· Legal factors (government policies on business and laws that affects businesses).
· Socio-economic factors (e.g. rate of inflations, purchasing power of the people etc.) can cripple or triple the success of the business.
· Technological factors (how new technologies takes over old ones and the likes).
· Socio-cultural factors (social and/or cultural attitudes to or perception of certain products or line of business) can affect the success of the business.
· Educational factors (level of education/exposure of the market could affect how a business or product is received).
· Professional/occupational factors (some product/service may be more viable with people in certain line of occupation or profession).
· Religious factors (certain religion prevalent in a place may not support certain business or products).
· Etc.
12. Acquire skills and/or bankable information around your (intended) business. It could be a business that is within the industry you are presently employed and which you understand well if not, it is better to learn the ropes.
13. Design your business model: this is simply listing your value proposition, market segment, marketing, distribution and sales channels, streams of income, budget etc. The exercise sounds simple, but it can be quiet tasking but rewarding as it will surely open your eyes and your mind and give you further insights on the business idea. [This exercise is done in our classes and is followed by business plan development exercise].
14. Do your business plan: a business plan is a road map or blue print to help you on your way to your goal.
15. Do have the followings in mind:
- · People who have money do not like to give good money to those who do not have money, skill/ expertise or other form of value, even if the money is a free gift.
- · No sane person will part with his money or plan to give it to you without being convinced that you can solve (his) problems and give him value for his money.
- · If you are a hard worker, smart, have a solid and promising plan, money, expertise, skill or the look of any of them, it will be easier for people to give you money. Remember, even a gift is trading currency. Many people give gifts to get into the good books of the receiver which is why beggars are given little. If you have nothing for people to invest in, even gifts will seldom be given to you. The best you get is a “handout”. Be or become an investable asset, then you won’t have to beg.
- · Life is in phases, men are in sizes. Live you size per time. Every phase you pass through increases your size. Maximize every phase.
- · Integrity, honesty and probity are better capital than money, they are tough to build but pay like hard work.
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