10 Things To Consider Before Starting A Business
Starting a business can be a bit difficult, as there are many things to do before starting a business. However, a good prep can let you know how to go about it. In this post, we will highlight 10 things to consider before starting a business.
As a small business owner, you can go to your office or shop whenever you like. You won’t have to report to any boss or be at your workplace by 9 AM and stay till 5 PM. In your own business, you’re the man in charge!
As sweet as this may sound to your hearing, it’s not as simple as the things you’ve been doing before (assuming you used to be an employee).
As a business owner, some important and challenging decisions have to be taken every step of the way. Business ownership comes with its own obligations as well as risks.
To ensure you’re well prepared for whatever will come, here are 10 things to consider before starting a business.
10 Things To Consider Before Starting A Business
1. Consider the Nature and Significance Before Starting a Business
What needs does your business fill? It can be a product, service, or manufacturing. Your business can be either of these 3 natures.
Merchandising
This type of business is also known as retail, wholesale, trading or distribution. In short, it involves the buying of a product at a particular price and reselling at a higher price.
Common examples of this type of business are grocery and department stores, retail shops, online resellers and lots more.
Service
In this type of business, you can either render a professional service or provide your time and expertise.
Common examples of this business type include digital marketing, IT, traditional marketing, event organizing, web hosting, transportation, hair styling salons, spa and lots more.
Production (or Manufacturing)
This type of business involves preparing a finished product, goods or consumables from raw materials. It usually involves the usage of labour as well as equipment.
Common examples of this business type are what we see every day. This includes businesses in the automobile, gadgets, clothing, daily essentials and other industries.
2. Think of Your Target Customers
Possession of a product or knowledge of a service alone is not enough to make you a dime. If no one patronizes your business, then why is it existing?
If you plan to start a business and you know what to sell, you should study its market as well as its consumer behaviour.
3. Location
Location is very important, especially for businesses that deal in the sale of merchandise. Location is everything, especially for local businesses whose operation is limited to a particular area.
Search for and secure the best location for your business. It should be a place that can be accessible to your target customer without advertising.
4. Consider the Best Business Formation
The next thing to consider is the type of business association that will be of utmost benefit to you. Let’s look at the most common types small business owners go for.
Single Proprietorship
Most people prefer the sole proprietorship type of business. It’s easy to set up and your ownership can’t be challenged in the future.
Partnership
Here you will be dividing the business with another person(s) which you will call partners. You need at least one other person to form a partnership.
It can be a dormant or active partner. An active partner is always involved in the day-to-day activities of the business. On the other hand, a dormant partner only provides financial requirements (like an investor).
5. Don’t Forget the Funding
If you have no money to fund your business ideas, the only way you can get rich is in your dreams. And that’s even if you have good dreams… Smiles.
Startup Costs
If your business requires a physical location, you should estimate what your rent and maintenance costs might be.
You should also think of the shipping costs if your business nature requires you to import goods.
You should also consider how your budget will settle your employees or a third-party business (in the case of outsourcing).
You should also consider other miscellaneous services, like marketing, web hosting, design and advertising.
Asset Requirements
Your asset requirements will also determine how much capital you need to launch your business. If you are starting a freelancing or digital marketing business, you will have to get a laptop and internet bandwidth.
Whatever the nature of your business, list down the assets that you’ll need to operate as well as the current market prices. This may include computers, equipment, furniture, vehicle, buildings, etc
6. Hiring Employees or Outsourcing
Now you’re looking at one of the hardest parts of being a business owner. Unlike other factors, the people working for your business are more complex. This is because they are a human factor themselves and prone to a billion factors.
If you can manage employees very well you can hire them. If you can’t (or if your business doesn’t need them) you can outsource to a third-party business.
7. Register Your Business Name
Although this is not compulsory, you should register your business as a legal entity. That way, you can protect your brand name and secure a reputation for yourself. You can also get more customers through the registration of your business.
To know more about this, read one of our posts below:
Don’t Miss – Benefits And Requirements For Registering A Business Name In Nigeria
8. Fund Management and Financial Accounting
How will you calculate the profitability of your if you don’t have a proper accounting set in place?
Document Every Transaction
You should keep all your daily transactions recorded. Aside from letting you know how profitable your business is, it can also save you from certain issues that come with owning a business. An example is taxing.
Get a Secure and Active Bank Account
If possible, make it a domiciliary account. It will be useful for buying or selling to people using different currencies from yours. A domiciliary bank account can store money under multiple currencies.
Also, make your bank account secure. Don’t share sensitive details with other people, not even your employees.
9. Consider Government Compliance and Business Insurance
These two factors are very important. Consider if the government has any control or sanctions over your industry. If yes, follow the laid down protocols.
Having your own brand, business or company can make you prone to some risks that are common to business owners. That’s why you need insurance for your business, no matter the size.
Even if you offer services via the internet, you still need insurance. To make the best decision on whether your business needs insurance or not, read one of our popular posts below.
Suggested For You – Why Do I Need A Business Insurance?
10. Consider Your Competitors
Your competitors are other businesses and companies that offer the same products or services like yours. Do your market research and find out how they’ve been successful so far.
If they are already operating in your location, you should consider siting your business a little bit further from them. And remember, learn from their mistakes as well.
The Bottom Line
Starting a business can be very exciting, especially for new business owners and ex-employees who are tired of the 9 to 5 job.
This article is written to prepare you for the challenges ahead and the top 10 things to consider before starting your business. We hope this post adds to your knowledge and improves your insights.
Wishing you a successful business. See you at the top!
