Business is any activity that seeks profit. Even non-profit businesses seek profit in their own way. We live in the business world, as everything revolves around business: the food we eat, our attire, our healthcare, our pleasure, and our entertainment, among others, are business products.
An everyday business may be a sole proprietorship, normally owned and managed by its owner. The partnership business is co-owned by two or more persons taking part in its management and joint ownership of shares and assets.
A limited liability company is legally separated from its owners, whereas a franchise is about using a specific brand name to sell its product or service in a given location.
Activities of business
Businesses are engaged in the following actions:
- Budgeting for income and expenditure
- Production of value through the provision of goods or services
- Hiring of people with the requisite skill set
- Customer service to attract potential customers as well as retain existing ones
- Investment of profits to guarantee continued existence
How business ideas evolve
Personal and environmental happenings are capable of generating business ideas. It could be from previous work experience, disruptions in the marketplace, an attempt to solve a problem, what people say had existed or the things they don’t like, a gap in the market, and a mindset of ‘I can do it better.’
The mindset of a successful business owner
A successful business owner has an orientation towards innovation and long-term goals. He approaches issues from a cooperative rather than competitive standpoint, knowing the importance of relationship building.
Attention is given to becoming a market leader rather than just becoming a market player by creating a market from an existing market. He has high regard for the customer and shows it to major stakeholders.
Benefits of owning a business
- Freedom to pursue your vision
- Taking charge of your time
- Opportunity to learn and share in many aspects of business endeavours
- Owners reap full rewards
- Sense of pride and fulfilment
- Potential earnings far outweigh salaried employment
- Bequeathing wealth to the next generation
Equally, a global study shows that 85% of the workforce does not like their jobs; people tolerate work for various reasons. Wouldn’t you rather decide to own your own business?
Common Mistakes In Business
Business owners are likely to make certain unhealthy mistakes. It could be in the form of not researching the market and being led by a passion to develop a product or service that may have no commercial value.
Spending so much on furniture or accommodation, hiring the wrong people, believing so much about yesterday’s success, or overdependence on financial resources may add to the list.
These may appear common, but they can wreak havoc on businesses. For instance, exposure to too many or scarce financial sources harms the company differently.
Start-Up Assumptions
Most people intending to start a business always believe the following about business:
- Business takes long hours, and it is stressful
- The future is uncertain compared to paid employment
- Income from business is not steady
- A business needs a lot of money.
- Anyone can do business.
- Businesses collapse and don’t last
- And that the customer is always right
Important Start-up Questions
Some fundamental questions that reflect self-evaluation are necessary before launching into business ownership. The following questions may not exhaust the list, but they are pointers to the most likely questions. There are questions like:
- Can I persevere through tough times?
- Do I have a strong desire to be my boss?
- Would the market accept and buy my ideas?
- Can I answer specific questions about my opinion?
- Do I know how to reach my customers?
- Can I scale my business?
- Do I have sources of the fund?
- Have I taken care of the location, name, and legal issues?
- Can I take responsibility for my success or failure?
What Business must I Do?
This question appears simple, but it isn’t easy to answer. Having a good thought before providing the answer is equally important. Ideas must be passions that need monetization and acceptance in the marketplace.
What may appear to be a brilliant idea may be consumed by the competition in the market. Experience, deep knowledge, self-appraisal, and preparation should guide in answering the question.
And the understanding of the value chain to discover the possible gap would further be helpful. After that, the business name, internet connections or address, regulations, and legal considerations are followed.
Place of the Business Plan
When these important start-up questions are answered in the affirmative, a model of the business can then be created through a business plan.
Just as you cannot, as a football fan, build your choice palace close to the Wembley Stadium in London for easy access to the stadium for weekend matches without authorization, it is highly recommended you don’t start a business without an ‘advisory,’ documented as a business plan.
What is a Business plan?
The business plan is a comprehensive write-up detailing every aspect of the chosen business. It helps the company to look ahead, allocate resources, focus on key indexes, anticipate challenges, and identify opportunities.
It defines the business objectives, identifies the mission and vision, evaluates the product and positioning line, analyses the market, creates regular evaluation mechanisms, includes the course correction process, and defines agreements between partners.
Generally, your plan must be specific, measurable, and achievable and have a time frame. And it is open to changes in the business environment because of uncertainty.
Components of A Business Plan
- Executive summary
Even though this appears on the initial page of the document, it is normally written last when information from other areas would have been distilled and used appropriately. It is concise information detailing the plan on a maximum of two pages.
- Company / Industry Description
Every business belongs to an industry. The hotel business, for instance, belongs to the hospitality industry, just like football belongs to the sports industry.
This section describes your company within the industry: how you will suit your servings, your expected market niche, and your relevance within the general economy.
- Strategy and Implementation
A clear picture of the whole business, including the intended machinery, workings, and technology, should be shown to enable ease of implementation.
- Market analysis
Are you into fashion, for example? What exactly? Sportswear, fashion ornaments, ladies’ or children’s attire? Which class of people do you intend to serve?
Is it the high net worth, low or middle rank? How will your customers reach you? Your product design, pricing, and unique delivery system are discussed here in detail.
- Management team
It is only possible to work with others, hence the need to incorporate key management functionaries alongside their skill sets, reporting standards, and salaries.
- Financial plan
The capital outlay needed to procure and maintain resources in line with the objectives is highlighted in this section. It explains financial statements and cash flow projections, helping to monitor income and expenditure.
The financial plan serves as a road map to success, including calculating the break-even point where the business is expected to start making a profit.
- Risk analysis
Business risks are potential negative occurrences that can impact a business. They may come from the business ecosystem’s political, environmental, legal, economic, or corporate environment.
They can be mitigated through appropriate identification and analysis of the situation. Anticipating and dealing with risks is a proactive response to the image, profit, compliance, and workplace awareness challenges.
- Timelines
One major aspect of checking any plan’s workability is aligning it with timelines. In the business plan, allocating, for instance, three months for the importation and installation of factory fixtures can assess whether that aspect of the project was successfully executed.
Launch The Business
You can now launch your business with great enthusiasm and confidence. The uncertainty in the business environment may deviate from the projections; stay focused. It is normal. The gestation period promises such abnormalities.
Am I Doing Well?
There are indicators to show if the business is doing well or not. Calculating Key Performance Indicators (KPIs) is one such way.
Net profit margin, the reduction of expenses from income, indicates efficiency in managing resources with great promise for the future.
Quick ratio calculation, for instance, measures the ability to repay debts, and inventory turnover measures the number of units sold or used within a particular period.
Other avenues indicative of success include repeat business, customer retention, referrals, meeting internal standards, and a feeling of wellness on the owner’s part while working.
Sustaining A Business Success
Owning a business is highly recommended. However, there are study reports of high global mortality of businesses. For instance, a 2010 JP Morgan study indicated that one-third of new businesses died within their first two years, and 50% exited within their first five years.
One can deliberately refuse to be part of these statistics by committing to constant improvement and market updates, staying focused and motivated, celebrating wins, and always exceeding expectations.
Contributor: podofot@yahoo.com
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