Sajjad Hamid
?We are coming to the end of the year and some of us might be working out our goals for 2016. One of your objectives might be to start a business. You may not know where to start so I have a list of items that could assist in making your dream business come true.
1. All in your mind
The first place to start is with your mind. To be a successful entrepreneur requires a different way of thinking. Entrepreneurs are fundamentally different from employees or the average person. They do not see the world the same way. They approach problem solving and opportunity identification as an important task. Entrepreneurs by nature are creative and innovative. Tenacity is part of their arsenal. When others say there is no solution, they will take the alternate route and find a way out of what looks like an impossible situation.
Of course, being a risk taker is a key trait of an entrepreneur. The level and the approach to risk taking are also different from the average person. Entrepreneurs take not high risks but moderate ones. They also are calculated risk takers; if I take this risk what is the chance of it having a negative outcome? If so is there a way to reduce it or give it to someone else?
2. Business idea
A business starts with an idea but that is just the beginning of a long chain of steps to reaching your final goal of starting your business. Some ideas are just that; a concept in your mind with little value. A solid business idea is one with some commercial potential; it can support a viable business down the road. Some crazy ideas have made it and some have not. There was a person who patented a three legged panty hose or another who invented glue that will not stick. Which one you think made it? A manager at 3M one day got some inspiration from an incident in church when he saw devotees with paper markers falling out of their bibles. He then thought about the value of sticker note as a marker. Who would think about the value of writable book marks? It is US$100 million business based on a half dead adhesive.
3. Niches
Niches are a nice place to start to find opportunities. Entrepreneurs are opportunity driven; where others find pain they find gain. Niches are very small segments of the market; channa punch, breadfruit drink and the likes are niches. It attracts a small but loyal following. Most markets started off as niches. The personal computer in the 1980s, super premium ice cream (Ben & Jerry's), granola bars, etc were niches in the early days. The good thing about niches is that they offer a safe place away from the battle field. If you make breadfruit punch, don't expect Nestle to enter the market with their marketing muscle. You could not possibly take on a giant like that.
Sometimes niches grow into large segments like energy drinks. Red Bull and Monster are dominant players in a fast growing market. When Coca Cola entered the market with Full Throttle, you know that it is no longer a niche but a segment or even a new product category (like canned fish, meats).
4. Bootstrapping
Think cheap! Why risk a whole lot of funds when you are not sure and believe me, you can never be sure that this business idea will fly. Since you are a calculated risk taker, make sure you only invest in the basics, no frills; things that are non essential should be cut out. Some entrepreneurs avoid borrowing at the early stage and use their own funds to ticker with the prototype they have developed.
Some strategies to keep you costs down: work out of home (if that is appropriate), use your existing resources (computer, car), use your credit card (instead of a loan but pay the balance before interest kick in), use free resources on the Internet, etc
5. Business model verification
You may have a good business idea or prototype but will it work as a business? A successful business model should have solid revenue model that pays its costs but, at the same time, manage the risks so the business can be sustainable. This requires some testing and if your idea is to sell a plant applicator that dispenses fertilisers and pesticides, the best way to test your market is to make some and sell it. The idea is to see not how it works (you established that already) but the impact on the farmer's income or yield. You will also want to see how the production process and supply chain works.
6. Rick reduction
So your business model on a small scale works but scaling up is another story. When is the best point to do so? It might be best to look at things from the perspective of cash flow, market demand and economies you might be missing out on. Scaling up has a different set of risks than at start up. One issue is the amount of funds required and if demand is really that large. These uncertainties are froth with risks. Don't be hurry to scale up but, at the same time, word is out there that your idea is working so competition could be ready to enter your newly discovered niche.
7. Learning not profit
One of the big mistakes that budding entrepreneurs make is start off with the objective that they must make money first. At the early stage of the business, the idea is to learn as much as possible. A start up is business experiment and like all experiments you are not sure it will work or why some aspects work or not. But unlike a lab where you can easily control things the real world is much more complicated.
There are many variables and therefore many possibilities (outcomes). Let's say you are trying out your mother's famous bread fruit drink as a small business outside your home. It is healthy since breadfruit is high in fiber but expensive. You live in a rural area with predominantly youths and many people have bread fruit trees (so they should like this innovative punch). Your idea flops badly and you wonder why?
If you had done some research you would have guessed that this product is for health conscious consumers who are time poor. The upper end residential area might have been a better place to test this idea out.
8. Timing
By timing I do not mean when is the best time to start a business is, but when the pieces of your business model can be put together and work as a profitable business. Of course, the best time to start a business is always now; not yesterday or tomorrow.
Sajjad Hamid is an SME consultant. He can be contacted at: entrepreneurtnt@gmail.com; entrepreneurtnt.com