For the purpose of this article, I shall guide you on what you need to do before opening that shop or investing so much time and money in that business.Research.
Every single business from my definition is a local business. It is a business that hopes to bring solution or service to a community, state or nation.
You must survey the environment, identify what is scarce, what is lacking, what people needs more, and what many people will identify with and patronize over a considerable period of time.
You don’t just wake up and start a business just because Mr A is doing it or because you heard on radio or television or on the internet that the business is good.
Proper research will open your eyes to see beyond your ambition and connect with the need of the people around the location you hope to establish your business.
Identify your Competitors.
Every business is a risky venture, and in any business, you stand 50:50 percent chances of either making profits or incurring great losses. Whether it be an online business or an offline business, every business has its own risk analysis.
This is what differentiates smart business owners from other business owners.
We have a low risk businesses, high risk businesses, and super high risk businesses (my choice of category). Being able to categorize the risk level will definitely guide you in planning your business.Evaluate the Financial Input.
Business doesn’t run on water but on money. This is why you need to calculate the man-hour, and every single financial involvement the business will need to be profitable. In evaluating the financial input, you need to consider how long it may take you to recover your capital, the percentage increase in your anticipated profit, and the effect of inflation on your earning and how that affects your business.
Because money has a time value, you must consider the time value of money at every phase of your business.
Calculate the Profitability of the Business.
Every business is good, but not every business is profitable. Painfully, many entrepreneurs venture into business without calculating the profitability of the business.
How long will it take for you to recover your capital and then make profit? At what rate will you make money from the business on a daily, weekly, monthly, quarterly and yearly basis? What is the percentage profit with respect to the time, manpower requirement, and overall cost of establishing such a business?
You may call this the most important aspect in any business planning, because no matter how exciting a business might appear, if it is not profitable, then it is a waste of resources.