This post discusses the need to choose an appropriate business idea, to test the business model, to prepare a business plan to source funding and a project management plan to establish the business.
STARTING A BUSINESS IS A PROJECT
Persons often prepare a business plan and start working on starting a business without preparing a project management plan for the business. Many of what we call entrepreneurial failures are really project management failures. The business fails before it starts because of delays, poor decisions, poor workmanship, problems with regulatory agencies and a host of problems that the entrepreneur is ill equipped to solve. Or, you establish the business and find out you are in the wrong business.
In project management there is a pre initiation phase in which you have to ensure that you have chosen the right project. This can be done through a feasibility study, but however it is done, the proper identification and selection of projects are important for project success.
A project is done to resolve a problem, exploit an opportunity, satisfy a need or meet a legal requirement. If the project chosen addresses the symptoms and not the causes of the problem, you may have a project that produces the deliverable, adheres to all its constraints but do not satisfy the objective for which it was chosen. It fails.
So, how do you ensure that you are in the right business? What are the steps before business establishment can take place?
THE QUESTION – WHICH BUSINESS TO GO INTO
While I worked at a certain business services company in Trinidad and Tobago, it was my duty to interface with potential entrepreneurs. Together the client and I would review her ideas about getting started in business and develop a suitable plan to approach lenders. Occasionally someone would approach me, having recently come into substantial funds, and ask what business he/she should get into. On such occasions I often thought of suggesting: “Open a whore house”. That will sure shock them.You see, the decision “What business to get into?” is not one for others to answer. Advisers may help, but the decision is yours in the end. You have to be sure of what business you want to get into, before you plan how. The road map to starting a business is as follows:
COMING UP WITH BUSINESS IDEAS
Deciding on your business idea is a crucial first step on the road to entrepreneurship. If the idea is not decided well, a business plan, however well-constructed, may not deliver the desired results.
- Assess the extent to which you possess the typical characteristics of successful entrepreneurs and how well you’ve developed the skills that they use to start and grow their ventures. Unlike characteristics, skills can be acquired through training or by hiring people who have the ones you lack
- Identify your Strengths –skills & talents, training & experience, business exposure, good products/services, funding, loyal customers, machinery, equipment, location
- Know your Weaknesses – lack of critical skills, poor quality goods, poor customer service, no/limited funding, poor marketing
- Determine what Threatens your success? – competition, increased taxes, crime, etc.
- Recognize the Opportunities for your entry into business– emerging markets, government subsidies.
DESCRIBE EACH PROSPECTIVE BUSINESS
Next, for each idea that is considered, determine/ consider whether the business will be in trading, manufacturing, services or spin –off e.g. modifying/changing existing products. Now write a short and precise description of the proposed business in terms of:
- Which needs will the business attempt to satisfy?
- What products/services will it sell to satisfy those needs?
- Who will be the customers that have the needs that the business will satisfy?
- How does the business propose to sell the products/services to the target customers
Revisit the assessment of strengths and weaknesses as well as the external analysis given the business ideas you have listed. This is important as if you are thinking of establishing a sports store knowledge of sports will be a strength, but if it is a clothing store then an understanding of clothing trends will be a strength.
Given the above prioritize your business ideas.
EVALUATE THE BUSINESS IDEA USING SET CRITERIA
Finally, using the following criteria chose one business idea that is the most promising for:
- –Realism and practicability
- –Marketability of product/service
- –Best fit (into your life/plans/competencies)
- –Risk level
- –Sustainability- can it stand the test of time?
A very important step is that you test your business model with a sample of prospective customers, and refine it based on feedback from them.
When you are satisfied that you have chosen well:
Refine your description of the chosen idea in terms of: Which? What? Who? How?
THE ROAD MAP TO STARTING A BUSINESS-
You are now ready to prepare the business plan.
Revisit the SWOT Analysis- Determine how you will improve on your strengths; rise above and counter your weaknesses; grasp the opportunities you see; defend your business against all threats. Prepare an action plan.
Set realistic time lines for all the steps you must take to get the business started
- –Required training and guidance – Business Management training is available via www.supportbistt.com and project management training can be arranged at this site
- –Business registration
- –Board of Inland Revenue Number (BIR)
- –NIB registration
- – Remember to check for any incentives that may be offered by the government for your activity
- Find out about the legal requirements of employers
Only now, are you ready to prepare your Business Plan and source the necessary funding. Take time to develop a project management plan to establish the business. Follow the plan. See also Are you ready for entrepreneurship in Trinidad and Tobago.
If you need help doing the assessment that will inform the decision of which business to go into or assistance with preparing a project management plan for establishing your business, etc. you can fill out our contact form.