Starting and running a business is one of the most common goals across the globe due to the perceived flexibility of working hours, the need to be self employed, the availability of a unique business idea, the need to gain control over the direction of one’s career or just as a conduit to generate income. However, a high percentage of these goals remain unrealized over the years. In addition, over 90% of those who start their own businesses fail within the first five years of operation. What sets apart those businesses that succeed from those that do not? The starting point is to ask yourself; How to start a business? And how to run a business profitably?
Starting a business
The first step into starting a business is to carry out in depth market analysis and intelligence. Gear this towards understanding the:
- real need for your products and services,
- the market dynamics likely to affect the business,
- the legislation in the sector,
- the licenses required, competition
- and labor laws among others.
Market intelligence gives you the information required to come up with a detailed business plan, which is the second step.
The business plan can be equated to the business blue print. It should guide operations as you establish the business and seek to grow it into a profitable entity. The business plan should include a summary of the idea, the resources required to establish and run it for a few months, a financial plan, how the business will acquire clients and the talent acquisition strategy. The business plan could be a simple one page document or it could be several pages based on the complexity of the operations and whether the business intends to raise capital externally.
Implementation of the business plan
The third and vital step is the implementation of the business plan. To this end, the business structure is put in place, the finances and other resources mobilized to commence operations. As the business owner and founder, you must ensure that all employees understand the business vision, the strategy in place to achieve the goals as well as their role in achieving success. Follow the business plan but also keep it open to changes. Iteration is a necessary step in the implementation phase since it ensures that the business can adopt new technology, processes and procedures as they come up to enhance efficiency. A rigid plan may lead to business losses if outdated technology and skills are used.
The implementation phase is where the business is registered, all permits and licenses acquired, the business location is secured, all necessary machinery is purchased, patents are registered and all vital business partnerships established. The business should aim at becoming operational as opposed to achieving perfection which is a blatant waste of energy and resources. Continuous improvement of products, services, processes, structures and partnerships should then ensue after the business becomes operational.
How to run a business profitably
The dream of every founder is to build a Profitable Business. While some ideas become profitable within a few months, most usually take longer. There are different approaches that businesses can adopt in pursuit of profitability but the underlying factors that determine how soon the business becomes profitable cut across all industries and sectors. We take a look at these factors.
The caliber of employees hired in the first few months is extremely important in growing the business into a profitable entity. Hire skilled, experienced and passionate employees. If the business does not have the resources to hire full time experts for all departments, it is advisable to outsource the work to consultants. The employees must also be open to learning and change since the startup business environment is one of the most dynamic environments.
Successful businesses seek to build long term relationships with clients over time. Happy and engaged clients are loyal. And they are more likely to refer their family members and friends to your business- generating additional revenue for you. But how do you create happy and engaged clients? By striking a balance between your marketing efforts and showing clients that you care about their welfare over and above your business interest in them. Another way is to prioritize quality of products and services over the quantity of sales.
The financial health of the startup
The financial health of the startup has a great effect on its short term and long term success. Business owners must separate business finances from personal finances and ensure diligent use of all resources. For example, instead of investing in high end offices and furniture, the business could operate from a modest but cheap location and divert the extra funds into client acquisition. This way, the business finances do not run out before it becomes profitable.
The pursuit of profitability is a continuous effort in all businesses. However, tough times are imminent and unpredictable and all business owners must be prepared for them. Remember that young business encounter storms each day and the strategy employed in weathering these storms will determine overall success. Business requires mental agility and toughness. Thus, business owners and founders should strive to enhance their agility and toughness every single day.
Now that you’ve learnt how to run a business profitably, we wish you luck.