Business essay

 BUSINESS CLASS 101 

MS. WENDY WRITER

STARTING A BUSINESS

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By WILSON BANDA

INTRODUCTION

Advancements in technology have brought about unprecedented access to information, skills, talent and a lot more products and services than ever before. Each year, more and more people are starting their own businesses, setting their dreams in motion. This has created a more vibrant and competitive business environment.

Before you start 

Before starting your own business, it is a good practice to thoroughly develop your idea, understand your motivation and weigh the pros and cons.

Running your own business 

Do not underestimate the hard work involved in running your own business. As a business owner you will be required to take on multiple responsibilities: providing a service or producing a product, day to day administrative work, selling your idea to potential investors. You will have to endure long working, take more risks and handle the pressure that comes with running your own business.

Pros of running your own business

Opportunity to pursue your dream, greater control and independence plus flexibility to work around other commitments, work at your own pace.

Cons

Responsibility for failures, mistakes as well as successes. Working independently with less human interaction may bring on a sense of isolation. Strain on social life from working long hours. No income if you are sick or on holiday. 

Working for pay

Although the daily grind of going to work at a company may weigh you down over the years, paid employment brings many benefits, whereas running your own business may be stressful and financially risky. Carefully weigh your options.

Pros of paid employment 

Financial security from a monthly paycheck, sense of belonging from working with other people towards a common goal.

Cons of paid employment 

Office politics are frustrating, commuting to and from work everyday takes a toll, lack of flexibility in work hours and conditions can be problematic.

Asses yourself 

From the onset, running your own business will require a wide range of skills and abilities. Identify the skill and abilities you know you have and those that you could develop to help with the running of the business. Among friends and family identify those with skills that may benefit the business. Scrutinize yourself sufficiently to identify areas of weakness, and think of ways to overcome them. You will need to be confident that your interest is strong to see you through the duration of the business. Always remember that running a business is a long term commitment.

Strengths 

Identify strengths you bring to the business, including: 

Personal characteristics, such as temperament, determination, and creativity.

Academic abilities which include technical skills, language, and mathematical abilities.

Professional skills such as negotiating, managing people and clients, and budgeting.

Weaknesses

Identify aspects about yourself that could negatively affect the business.

These include:

Personal traits, including a lack of confidence, impulsiveness and general disorganization.

Inexperience and lack of knowledge, in areas such as managing accounts, hiring people and information technology.

Business Idea 

You have to come up with a viable business plan that either solves a problem or improves an existing product or service. A business idea doesn't have to be new, but it must satisfy a need in order to succeed. Think about a problem you have encountered yourself, bad service, late delivery e.t.c. This experience may be a gap in the market that you could fill with your new business. 

A viable business idea must:

Fill a gap in the market

Stand out from the rest

Innovate

Have a purpose

Operate in a growing market

Scalable 

Market research 

Markets are made of people with common demands, so learning what interests and concerns then is valuable information.

Decide what you want to offer to your customers, products or services. Look at the costs associated with creating a product or putting the necessary logistics in place needed to offer a service and how soon it will start generating profits.

Products based business: if you choose this type of business then you will need to take sufficient time to source or create the goods to be sold. The goods will then need to be sold in sufficient amounts to cover their cost of production before any profits can be made.

Factors to consider 

Products will need to be displayed clearly to help consumers decide what to buy.

Storage facilities will have to be put in place.

Replenish stock regularly.

Do not run out of stock.

Compare your prices with your competitors.

Market you products 

Offering a service 

Few services are unique so competition will be fierce. Maintaining a good reputation with your clients is vital.

You may be required to undergo training regularly to acquire new qualifications to keep with the trends of your industry.

Identifying gaps in the market 

A gap in the market is simply a need that is not currently met either because the product or service does not exist yet or the ones currently provided are of poor quality.

Choosing a business structure 

The business structure you choose will depend on the nature of your business, its complexity, growth potential and the amount of risk you are willing to take.

Sole proprietorship 

Run and managed by the owner.

Pros

Minimum capital required to set up 

Profits are retained by the owner 

Cons

Capacity to raise additional capital is low

Unlimited liability, no distinction between your business and personal assets 

Decision making rests entirely on your shoulders 

Freelancer 

Self-employed sole proprietor who typically works on multiple projects for different clients.

Pros

Flexible working hours 

Low startup costs 

Work from anywhere including home

Choose your own schedule 

Cons

Sense of isolation from working alone 

Work can be sporadic, causing cash flow issues 

Partnership 

Enterprise where two or more people share the ownership of the business.

Pros

Partners bring their expertise, knowledge, capital and other resources to the business.

No need to file any annual accounts.

Cons

Partners expected to file taxes on their own portion of profit

Disagreement between partners may disrupt the flow of the business 

Limited liability company (LLC)

Legally registered business, whose assets belong to the company itself, not the owners.

Pros

Owners not personally liable for business debts 

Can go public to attract more investment 

High growth potential 

Cons

Owners invest their own money and assume le

gal responsibility 

Corporation tax and tax return must be filed and paid annually