By Rogers Wanambwa
KIU, Main Campus – A few days back, I got into a heated argument with a couple of family members on what things one should consider before starting a business. Most of them were of the view that the first thing needed is money and the rest can come along the way. I begged to differ and this is where the disagreement and consequently the argument stemmed from.
But what should one consider before starting a business? Well, there are several things to consider according to some research and entrepreneurship classes I took. Let’s delve deeper into the topic;
First of all, a business is defined as a specific commercial enterprise or establishment. It is also defined as a person’s work, occupation, or trade. Now, from this definition, we see that the main objective of starting up and operating a business is to acquire a profit. Profit, after all, is the pay an entrepreneur or business person gets for doing business.
Therefore, from these definitions, let’s look at around eight things one needs to consider before starting a business:
1) The first thing is to choose what type of business you’ll do. This requires doing some research and thereafter choosing the business you’ll do.
2) Looking at the factors of production: These include among others; land, labour, and capital. Yes, all these need money to acquire but some may be in your long-term plan, for example, acquiring land (one can always start by renting). But all this must be planned out.
3) Aids to trade: You need to look at what incentives are provided by different groups like the government or other venture capitalists for that field of business you’re venturing into. If there are any, you need to take advantage of them. Aids to trade also include:
(i) Insurance: although most businesses and people in Africa and Uganda do not consider this important, you need to make sure you have a good insurance plan, it never hurts to be secured.
(ii) Banking system: you need to find a bank that will be able to support your kind of business and avail you of financial services like quick loans, financial advice among others.
(iii) Warehousing: if you are mass producing, you need to think about warehouses to safeguard your products from harsh weather and generally to stock.
(iv) Advertisement: which types of advertisement will you use and how much are you willing to spend on this.
(v) Transport: there are many problems associated with poor transportation systems especially in developing countries. You need to factor this in before you start the business. You need to consider how it will affect your time schedules on delivery amongst other things.
(vi) Government policy: This is towards the business you want to venture into. Does it have government support, won’t it be closed down along the way and you make considerable losses. You need to look at this too.
4) What makes people love what you are offering? Is there any need or lack of the same? These two questions answer the question of whether you’ll get customers once you start. You need to avail yourself with information about the needs of your target market so that you can meet them. This is what makes for a successful business in the long term.
5) Competitors: you need to look at how your competitors are doing business and devise means of doing better, how many they are and how different you can pan out your products(it makes a difference and this will attract customers to you since they’re always looking for a new and unique experience in products).
6) What problems affect the kind of business you’re venturing into? Generally, different business nichés are affected by the same problems worldwide. You need to find these out. For example, bars worldwide are affected by bad publicity caused by fights in them, drug use, and the like. You need to see how you’ll prevent these from being associated with your business.
7) What problems affect the kind of business you’re venturing into in your country? There are always unique problems faced by business people in a particular niché in a specific country. You need to find these out before you venture into it and see how you’ll handle them promptly.
8) Money: Although this is generally considered as the number one priority, sometimes it in itself is not enough without considering all the above. However, it is needed to solve most of them. You need enough money to kick-start and maintain your business over a long period.
You should be aware that sometimes, a profit will not be realized for a certain amount of time and hence you should be ready to inject in considerable resources without earning back. Sometimes, even re-ploughing back all the earnings.
In conclusion, even after all this careful planning, sometimes things just don’t go as intended. This shouldn’t derail you from starting businesses or venturing into entrepreneurship.
The writer is pursuing a Master's Degree in Business Administration, majoring in Finance and Banking at Kampala International University.