Getting into business is one of the wisest decisions you can ever make. Not that it’s a quicker and easier way to make a living – but rather because entrepreneurship is the only way to free up our economy from a culture of dependence and job seeking. But before you get started in the path of business there are a few issues that you need to reflect deeply upon.
We have picked up 6 of these issues and provided our basic advice on the same. So grab a cup of coffee and enjoy learning.
(1)Do I start alone or with partners?
Each one of these two options (i.e. sole-proprietorship and partnership) has its own merits and demerits. For instance, starting alone has the benefit of giving you total freedom and allowing you 100% access to your businesses’ profits.
On the flipside, though, it means you have to absorb 100% of losses should the unfortunate happen to your enterprise. In addition, you may not have all the required skills for performing particular duties that may be of great importance to your company's growth.
Partnering on the other hand allows you to tap into a wider skill-base and enables you to share risks should the unexpected happen. However, it requires partners to share profits realized therefore reducing potential income per investor. At the same time decision-making in such an arrangement may prove to be quite a hassle.
Tip: Weigh your current needs, expectations, skills and ability to take risks. And make up your mind on whether you really need to bring a partner on board or not.
(2)Do I have to register my business?
Another issue that confronts potential entrepreneurs is whether to go into business as a registered entity or not. In most small business scenarios, especially here in Kenya, it is not compulsory to get registered prior to starting.
However, if you have a dream of expanding your business and marketing to a professional clientele, then you will find that a registered business will give you an advantage as compared to an unregistered one. Businesses with no certificates of registration are usually not considered as serious – and for this reason they are viewed as less attractive to customers.
Tip: It takes 5 minutes to begin the process of registering your business. You can learn more about this process in >>this article
(3)How do I fund my business?
Before you enter into business you need to figure out how much capital you need and where to get it from. As Kuza Biashara, we highly recommend starting with own savings rather than borrowing from scratch.
You can seek employment for some time and save some capital. Or you can sell some of your assets e.g. plots of shares to raise some money. Whichever the case, do your best not to start a new business using borrowed funds.
You can always borrow a loan later as your business expands. There are various sources of funds including SACCOs, bank loans or venture capital offers.
Tip: No one will fund your business if you have not even set up its foundation. In other words, you have to start first then borrow funds later – not the other way round.
(4)Which is the best location, city, estate, county or country to open my business?
If your business depends on walk-in customers (i.e. customers who pass by the streets) then your most ideal location is a ground-floor stall on a busy street. For those in Nairobi, streets like Tom Mboya, Moi Avenue, River Road, Latema Road and Luthuli are highly recommended.
On the other hand, if you are entering the manufacturing sector, then you can always seek a location in a less densely populated town out of the city center. If you are offering online services, you can even start from your own home, although with time you may need to rent an office to boost your credibility.
Tip: Nowadays you can even co-hire an office with other like-minded businessmen in order to save on cost of operation as your business grows. Talk to your commercial agent on this possibility.
(5)What about licensing and permits?
Different businesses require different licenses and permits to operate. Some require more licenses and permits than others. For instance, a restaurant requires: County business permit, public health clearance certification, MCSK license, fire prevention clearance, advertising license to name but a few.
But an IT firm may only require a county business permit and fire prevention clearance certificate only. Make sure you ascertain what licenses and permits are required for your business in advance so that you can plan accordingly.
Tip: You can always consult your county government on this. Better still, you can talk to someone who operates a similar business to yours but in a different geographical location to get an idea of what’s required.
(6)Do I need a business plan?
Although it is not a legal requirement to have a business plan, operating a business without one is equivalent to walking along Thika Road blindly and without a guide. You’ll surely never make it to town!
A business plan ensures a systematic approach to planning, marketing, launching new products, hiring and even expanding your business. You will have a difficult time making key decisions in your business without it and this might expose you to a greater degree of failure.
Tip: Did you know that most financial institutions and partners require you to have a business plan prior to funding your business?
It is always advisable to test the waters before swimming across the river (it’s not an act of cowardice but rather an act of wisdom). Likewise, you should ensure that any aspects that may affect your business are well thought out and planned for in good time.
What other issues do you think an entrepreneur who is just starting should think about? Share your thoughts with us through the comment box.