The simplest definition of business is the provision of services and solutions to those who are willing to pay a token to access those services and/or solutions.As an entrepreneur or business owner, there are some key things you must do before venturing into any business.
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.
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.
There is no new businesses on earth, what we have is an improvement of an existing business(es). As a business owner, your duty is to identify those who have been in the business and learn a thing or two from their business operations. Your interest should be to know their areas of weakness, and enhance on them.
Estimate your target Market.
If you want to start a laundry service in location A, it means that there ought to be a larger percentage of youths, males more preferably. This is because you have a higher probability of getting patronage from young men than you may get from young ladies.
You need to have a realistic evaluation of who will pay for your service or solutions. Failure to do this will result in colossal failure of your business. What is business without patronage?
Evaluate your Risk Analysis.
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.
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.
So before you venture into that business, what do you know about the business? Who are your competitors? If you set up that business, what percentage of the populace around you will patronize you? What is the risk analysis of your business? Do you have the money to run the business? If yes, then how profitable is the business?
Having an “X” amount of money is not sufficient for you to venture into that business, but you need to evaluate other factors that influences a business to decide whether to invest or not.