SEVEN STEPS TO STARTING A BUSINESS

April 17, 2013 |
 
SEVEN STEPS TO STARTING A BUSINESS SEVEN STEPS TO STARTING A BUSINESSUse this document as a reference tool when beginning to talk to an    individual or a group in your community about starting a business. It is designed to get introspection and to begin to test the feasibility of the business idea.
 
 
 
Step 1:                        Prepare for the adventure
ü  Do you have the motivation to be a business person?
ü  Do you have physical health, mental health, endurance, perseverance and a can-do attitude?
Step 2:                        Find your big idea
ü  Whether your idea is innovative or not, you’ll need and idea that reflects your interests and uses your skills
ü  You need to ask and answer, “Will my customers be interested in my business?”
ü  Observe others  in your industry (your potential competition), as a good source of information
ü  Take a look at your potential market (their needs, their interests)
ü  If you find a bank or financier willing to help you, don’t hesitate to speak with them
ü  Protect your idea by registering it with your government
Step 3:                        Do your market research and analysis
ü  Ask yourself eight questions:  what, to whom, how, where, when, why, how many, at what price
ü  Your analysis will allow you to identify the key success factors for your business (it might be price, delivery/distribution or service)
ü  By doing your research you may be able to identify other real needs (and thus, you may alter your original idea)
ü  While doing your research, you might identify potential customers and business partners (networking)
Step 4:                        Prepare your feasibility study
ü  Your plan should cover no less than three years
ü  Your plan should include items from steps 1, 2 and 3
ü  Who will run your business and what are their backgrounds, their anticipated salaries, their roles in your business, etc?
ü  You’ll need to figure out how much money you’ll need to open your business and when you’ll be needing it
ü  You’ll need to do a cash flow analysis. Consider financing. Look at how long, at what rate when you’ll be at breakeven and when you’ll be making a profit
Step 5:                        Getting financing
ü  A) From the informal sector:  family, friends, neighbors, your own savings, or other community groups
ü  B) From the formal sector:  micro finance institutions which come in three categories (and may or may not require collateral)
o   MFIs that work exclusively with their members
o   MFIs that work with anyone
o   MFIs that give out loans but do not handle savings
ü  C) The formal classical banking sector made up of commercial banks (which will require collateral)
Step 6:      Deciding on the legal structure
ü  Will you be a sole proprietor, or a Pty Ltd.
      Step 7:      Documentation
ü  The legal structure you select will require differing government fees and documentation. Your local Chamber of Commerce can be of assistance or speak to a local accountant.

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