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Q&A time!
There’s no perfect way to start a business, the key is to arm yourself with the right knowledge and set the ball rolling. And to help you set the ball rolling, we’ve answered 13 questions we’ve come across over and over again in relation to starting a new business.
1. How do I get funding?
The best way to fund a new business is to bootstrap (from personal savings/funds, family, friends and revenue generated by the business). Pitch your idea to close family and friends, get them to believe in it and fund it.
However some businesses require high startup costs; such businesses cannot be bootstrapped, funds for such businesses can be acquired from investors, banks, crowd funding, grants …
2. What kind of business should I start?
Its always easier to go for something you know about, have talent and passion for.
Find your talent and passion, do your research, this makes it easy to identify the right kind of hustle for you.
3. How should I choose a name?
A good business name can quickly get your brand the right attention it needs. Put some thought into picking a name. Avoid random names or names that restrict you.
Go for a name that won’t confuse people about what your business does. A business name should set you apart and protect it. Search the internet, especially social media platforms to see if the name you pick is available for use.
4. Do I need a business plan?
When you are setting up a business on a low budget, you do not need a business plan. Simply do a lot of research, then put down your mental model for it. Be sure you reconcile this mental model with the bootstrap model as you go along, this will give you a working business model as you scale up.
In the case of a business with high startup cost, a plan is required to create structure; it is important that this plan allows for flexibility as you go along.
5. How do I employ?
For a bootstrapped business, at the beginning of the venture, try as much as you can to involve yourself with the various aspects of the business so you able to determine the skills required when employing. Except you are on the look out for a specialized skill, employ interns and smart inexperienced people, they are usually trainable and eager to learn.
For bigger startups that are run on business plans, you can hire human resource consultants to work out the employment process. To save on costs you can use professional networking sites like LinkedIn to find qualified individual for various job roles.
6. What licenses and/or permits do I require?
This depends.
Find out what permits, licenses or registrations clients/customers look out for in your kind of product or service. For certain businesses you can obtain permits/licenses from local councils at a minimal cost to operate within a particular scope, you can later upgrade the permits/licenses as you go along in business.
7. What do I need to know about book keeping?
Understand financial statements and bookkeeping terms; Balance sheet, income statement and statement of cash flow, net profit, gross profit, revenue, cash investment…..
Keep a close eye on your cash flow, cash investments, net profit and revenue. Software applications like Waveapp can be used for bookkeeping. Also keep record of your business activities.
8. Can I operate my business from home?
Again, this depends. Some businesses require a space where customers can come walk in while others do not.
This is one good way to save on cost as a start-up so except its absolutely necessary, work from home and let the business grow itself to acquire and maintain a work space.
9. Should I operate a franchise or start a business from scratch?
A franchise comes with structure, this reduces the amount of risk involved in setting up a business. On the other hand, a franchise requires a good amount of capital to set up, there are usually many clauses in the agreement and you never really get to build the business structure you want, instead you manage an already existing structure.
Before becoming a franchisee, make sure the model is viable in your choice area, work with a lawyer, make sure its something you are ready for otherwise simply start from scratch.
10. When can I expect to become profitable?
Most new businesses take up to a year to become profitable; Here are a few tips to help you stay afloat during this time
- Keep your expenses low
- Keep a close eye on financials.
- Engage in quick cash transactions/turnover
- Generate extra cash along the way by offering products and services relating to your business, make sure this does not distract you from your main business.
11. How will I cope with competition?
- Always stay aware of what your competition is up to.
- Regularly update your knowledge of what’s going on in the industry you operate.
- Listen closely to customers.
12. How much do I pay myself?
Put yourself on a minimal salary; even if the business cannot pay you yet, keep a record of it, you can later convert it to sweat equity.
13. How do I pick a partner?
A partner can make or break a business, choose them with care. A business partner should complement you in such a way that makes the business stronger. A partner is supposed to bring in something you do not already have.
Have a good knowledge of who your partner is to avoid surprises, make sure you are aware of all the risks involved in partnerships. Make the partnership agreement tidy, involve a lawyer, please do not set up a partnership on a gentleman’s agreement.
Goodluck!