| How to become an entrepreneur: Part two |
|
|
|
|
From ideas to reality - in the concluding part of his inspirational series, Anver Versi examines what’s needed to turn your business ideas into successful ventures.
In the first part of this series (LiME 2) we looked at the mental preparation required to help you get over the hump of going into business for yourself. We saw how total commitment to your chosen venture was of vital importance – including a belief in yourself and a desire to succeed. In Part Two we get down to the nitty-gritty essentials of turning your ideas into concrete business ventures. There are hundreds of thousands of different businesses one can go into and each requires specific skills and knowledge, but obviously we cannot examine all of them. Instead we’ll take a close look at some business principles that are common to practically all commercial activity and which can be applied to any venture – whether this involves selling items from a kiosk or setting up a new low-cost airline – both of which have been done in the past by people with little or no previous direct business experience. In order to answer the most commonly asked questions that people setting up a business need or want to know, I referred to my own business guru – one of the most successful businessmen I have known; a man who started out from scratch and made millions. I asked him to answer the following questions: Q How do I know that I am ready to enter the world of business? If you think you can – you can. We all have phobias we have inherited from the past. These phobias, and your upbringing, may tell you that you cannot do this or that for all sorts of vague reasons. You have to recognise your phobias and get over them. To be a great sportsman, or artist or writer you perhaps need special talents. Not so in business. No special talent is required – which is why there are so many businesses and so many different types of businesspeople. What you need is determination and a very clear head. Q What sort of business would you advise someone to go into? Go where you have a competitive advantage. Ask yourself what you have to offer. Ideas? Enthusiasm? Knowledge? Energy? Contacts? What do you enjoy doing? If you enjoy your business you will succeed, otherwise it will become a chore and you are likely to fail. Do you enjoy working with people? Do you love new products? Do you get a thrill out of the import and export of products or do you like to make things? Does selling give you a buzz? Find what it is that makes life worth living for you (apart from your family and friends) and you are likely to discover your area of activity. Q How can I get started? This, the first step, is the most difficult one. We are always going to start something new tomorrow – and tomorrow never comes. By nature we are conservative – we prefer to be on ground that is safe and which we know. This is natural. But progress only comes from taking calculated risks. So the first step is not registering a business, but taking the decision, a solemn decision, to change your life. If you are happy with everything about your life, you are very lucky and there is no need to continue reading. But if you think you are not making the most of your talents and knowledge and have a strong desire to make your dreams come true, then read on… Business, like other aspects of life, is making dreams come true. First you must dream – but dream realistically, don’t get lost in a fantasy world. How and where would you like to live? Picture the life you want – don’t be afraid to aim high. What did all the medallists at the recent Olympics say? ‘I believed in myself’... ‘this was my dream.’ Just as being an Olympic medallist doesn’t happen by chance, you don’t become a success in business by chance either. You may stumble into a business, but not into success. First get the dream. Nowadays, they call this ‘life planning’ and there are professionals who help you sort out your dreams – but you don’t need that. Just see yourself in your new role; the more detailed the better – and you will have started on your journey. Q I’ve seen an idea that works. Will it work for me too? Firstly, ask yourself if the business environment can support your business and enable you to live off the takings. There is no point opening an expensive dress shop in an area where people can hardly afford second-hand clothes, simply because the rent is cheap! You will be surprised how many people do just that and then blame bad luck for their failure. Avoid going into an area that is over-competitive. People are herd animals and tend to follow the leader. A successful venture attracts lots of businesses and often there is a great deal of imitation. Avoid joining the herd – you will only get bruised. Because the new pizza shop down the road is drawing big crowds, it does not mean that you will draw big crowds if you also open a pizza shop down the same road. But the crowds show you that people have developed a taste for pizza – so look at sites where there should be a pizza shop, but isn’t. Q What business might be right for me? When searching for opportunities, look for something that should be there (goods or a service) but isn’t. This is often the clue. Listen to people – especially when they say, ‘Why doesn’t somebody do this or that?’ As a businessperson, you are the one who should be doing whatever the people want. And if you can bring something new to the market – for example, cheaper mobile handsets backed up with a repairs and service section, you could be onto a winner. When you have your idea, the next step is to decide what area of activity you will get involved in and what you can bring to that area. Will you go into distributing what other people have made (wholesale, import, export and retail)? Will you make your products and either distribute them yourself or through outlets? You may alternatively decide to set yourself up as an agent, connecting buyers and sellers – goods, services, insurance, mortgages, finance. The list is endless. Q After I have sorted out my area of activity, what do I do next? This is critical. Draw up a business plan before you do anything else. Don’t listen to people who dismiss this essential step. Everybody who is in business has a business plan – some have it written out with charts and diagrams, some have it in their heads – but they all have business plans. Going into business without a business plan is like setting off in a ship without a destination in mind and with no maps or charts to guide you. Unless you have a clear business plan, you will never see the opportunities that abound. Q How do I put together a plan? Your business plan is your chart in the open ocean. You define your own destination and where possible, chart your own course, but make sure you follow your chart if you wish to reach your destination. Your business strategy is the master-plan of how to arrive at your destination. If the strategy does not work – for any number of reasons – you can change it, but your destination must not change. Make the plan as detailed as possible. For example, say you have decided that there is a big demand for private nursery schools in your town. You want to set one up and run it. Your plan must include all costs – rent for the premises, salaries for teachers, upgrading and fitting costs, meals for the children, insurance, transport, energy, water, rates and so on. This will provide you with basic expenditure. How much can you afford to charge per child? How many children can you enrol without sacrificing quality and safety? How many parents will be willing to pay for the facility? What are they paying now and what do they get for their money? The figures on your piece of paper will tell you immediately if your plan is workable or not. With all the information in front of you, you can juggle numbers to see how many children you need to enrol to make a profit, bearing in mind the additional costs incurred for each additional child. The figures show you what is feasible – in an ideal world. The reality may be more difficult or even better. Next, list all your resources. Your own experience and organising ability, cash savings, assets such as property, shares, bonds – or a rich father-in-law! Q How do I deal with customers? There are two sides to running a business. You can on one side be very neat and tidy, with a polished business plan, profit projections, targets and timelines. But the other side, the actual business, may be rather messier – because it’s real and people are involved! Ultimately, all business is about life and people – and part of the pleasure of doing business is to be able to deal with a diverse range of human beings! People, however, do not always behave in ways that you want or expect them to. They sometimes do the most astonishing things. So be ready for setbacks and don’t expect anybody to be anywhere near as enthusiastic as you are about your project. Everybody has their own agenda and their own priorities – remember that each person, no matter how humble, is the star of his or her own life. Serve them and you cannot lose in business. One type of business may go out of fashion, or a better version may emerge, but if you learn to serve the person, you will always have a business. Q How do I sort out my finances? All businesses need financing. Even the street vendor who cooks his jerk chicken at home needs to purchase the ingredients before he can cook them and sell them. Finance includes credit from suppliers as well as cash to pay workers and make purchases. There are a number of national, international and private schemes which help small and medium businesses obtain access to finance. Too many potential good business ventures crash because the entrepreneur has not learned to distinguish between his personal and business expenses. You must get this distinction right. Banks now issue special debit and credit cards which you can use only to make business transactions. All business expenses must go towards business ends. Your salary usually comes from the profit but goes down as an expense. While you are building your business, you may have to pay yourself a small salary and plough back the profits into the business. Money is an expensive item when you borrow it – at times it can be the most expensive item on your balance sheet. Try to keep your borrowing down. Consider taking an equity partner – 60% of a thriving partnership is far better than 0% of sole ownership. Ask an accountant friend for the pros and cons of registering your business, either as a limited company, a partnership or as a sole trader. There are other variations, but most don’t apply to small businesses. Q What else do I need to know? Business is about people and processes. To learn about people, learn about yourself. In other words, you must learn to step into other people’s shoes and see the world – including yourself from their viewpoint. Study yourself. How do you respond to other people and situations, what emotions do you undergo – are you in control of your thoughts and feelings? If you know yourself, you can know other people and this is crucial. Q How critical is business process? Process is at the heart of business – the steps along the way that lead to providing the need that satisfies the customer. Your business process is, in fact, your business. Everything that you do in your business, every step, should lead to making a profitable sale. Whatever line you are involved in, whether providing goods and services directly to customers or to other businesses or agencies, the processes you set in motion define your business. Making progress in business may often simply require a change in processes. The actual transactions are millennia old – we make, buy and sell the same types of products and services – the essentials and some luxuries. What has changed are the processes. As technology advances, the processes change. Consider how the mobile phone has changed the process of communication, just for starters. So work out your process in minute detail. While you are doing so, you might discover a better, or more efficient, way of doing the activity. Study processes at every opportunity – when you visit a factory, a shop, a restaurant, a cinema. What is the business process involved? What are the resources needed? How do the employees fit into the process? The danger with processes is that sometimes the overall objective gets lost – people forget that the aim of the process is to deliver satisfaction to the customer and make a sale. Sometimes people get so hooked up on the processes that they lose sight of the overall picture. This is often the biggest headache you find in state-owned or large companies where the customers’ needs come last. Once you have a grip on the processes involved and are ready to put them into operation, you are ready to enter business. With a good business plan and a well-worked and thought-through process, you might also be able to find additional finance from specialised banks, venture capitalists or friends and associates. But don’t rely on this – depend on your own resources initially. Once you prove yourself, the money will come looking for you. Q Where are the opportunities? In terms of opportunities, the Caribbean is king. The region is behind others in terms of consumer goods, infrastructure and services, so demand is almost infinite. Fifteen years ago, China was in a similar position. Then it decided to change the course of its history and go into business. |
| < Prev | Next > |
|---|