Saturday, 20 February 2016

How to start a small business

Small business could be a sole proprietorship, partnership, joint venture or a franchise.

Small businesses are important to both developing and developed countries. For instance, in the U. S. A, small businesses accounted for 54% of all sales, provides 66% of all new jobs since 1970.

The main source of finance for small businesses are personal savings, fund from family, Grants and corperatives. However, others that has shown some signs of prospect gets funding from Angel investors and venture capitalists.

There is no globally accepted agreement of what make up a small business. However, each countries, regions and trade has their own standerd.

In the U. S, there are about 48 million small businesses(Small business administration) with maximum staff of 500. In Nigeria, there is no clear distinction between small businesses and medium scale enterprises rather the authorities made a clear distinction between SME and micro enterprise- the smes have a maximum staff of 200.

The good thing about a small business is that it is easier to start and manage. Anyone can start a small business.

The search engines, online communities, social media and business cooperatives have  made small business easier to start and manage due to quick access to information and customers.

Small business doesn't requires huge capital to start. However, every business needs reasonable amount of capital to offset operating cost at the start-up phase.

I have came across few people without any business plan  or idea but always complain about start-up capital.

I have also meet people that have start-up capital but doesn't have a business idea.

The third set of people are those that have start-up capital, good business idea but are scared of taking risk.

The truth is that every start-up has it challenges. The duty of an entrepreneur is to find a way to overcome those challenges.

The solution is to start. Yes! Start that business today!!

Those that said they can't start because of start-up capital will never start even if they have enough capital because they never learn how to manage small business.

A small business could be:

A new Idea or an improvement to existing idea
Every successfully business starts with a new and unique idea. New idea requires some energy, strategy and marketing.

Once successful, the brand will become the market leader because the first to start a business always has an advantage.

Another way to start a new business is to make an improvement to existing products, services or business process.

The improvement could be a small packaging which make it different from any other similar products. It could be additional branding. It could al so be an improvement to the quality of the product and delivery channels.

Either new or an improvement to existing business idea, you need:
1. A business plan
A business plan is a document containing the business idea, a detailed plan of action, financial forecast and asset/liabilities.

2. A mission statement
This is a powerful realistic short statement about the scope or coverage of the business operations. It could contain the ethics of the business or something that will inspire the employees.

3. A vision statement
This is a short statement about where the business would be in the future. A small business should has a big but realistic vision statement.

4. A goal and Objectives
Goal is a statement of what the business will achieve in the nearest future.

Objective is how the goals will be achieved.
An objective contains critical success factors(CSF) which there will be key performance indicators(KPI) with a timeline.

Small be can also be:
A partnership
Partnership is another way to start a small business. Partnership is common among professionals like lawyers, accountant and surveyors.

Each partner should bring something unique to the business.

Vital things to do in partnership:
1. There should be a written agreement about the role, capital, profit sharing rate and the typeof business.
2. There should be a written exit agreement.

A Franchise
Joining an already successful business chain or opening your fast growing business to people to own a division is another way of starting a small business.

Franchise and franchisees represents 11% of all businesses  across 295 Industries in the United State according to the 2007 Economic census survey.

According to Geri Stengel, a contributor on Forbes, before considering franchising your business, ask yourself two vital questions:
1. is there a big demand for your product or services?
2. Does your product or service offers something different from what is already in the market?

In franchise, you have to abide strictly to the business rules. That means, you can't have your own mission and vision statement if you are a subscriber to the chain.

Self employed or sole proprietorship
This is a business that is owner by one person.

Mostly common among  vocational skills expert  like photography, welding and hair care and business with small capital.

The easiest way to start a small business is to acquire a vocational skill or learn a trade.

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