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Business idea

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Business idea

"YES, YOU CAN HAVE YOUR OWN BUSINESS"

Business idea

The beginning of it all.

It is probably the "business idea" that begins the whole process. Occasionally someone will actively look for an idea for a small business, but more often than not they first have the idea and then decide to turn it into a business. Your idea may come from previous experience such as work that you already do and now you want to go off on your own, it may be as a result of seeing a similar idea elsewhere or it may be something totally new and innovative. Whatever the case you need to spend a bit of time considering your idea. At first you're likely to think "wow, this is brilliant", but take a week or two to mull it over in your mind.

Consider things such as how much it will cost to set up, do you have the expertise to do it all yourself, how much of your time will it take up, will you need a partner or employees, is someone else already doing the same thing and most importantly - what sacrifices are you prepared to make in order to make this into a success.

Do you have the correct personality? Are you able to motivate yourself or do you need someone to push you? Are your family going to support you through the tough start up times? Take some time to discuss your idea with close friends or relatives. Often an unbiased third party point of view will pick up potential pitfalls that you may not see until it is too late.

Tweaking the idea.

At this stage we are going to assume that you have given your business idea plenty of thought and that you wish to now make it happen. This is the time to do a rough business plan. Make a list of all the setup costs you will need. These are generally one off payments you need to make to get your company started and will include amongst others: company registration fees, computer and peripherals, rental deposit, motor vehicle deposit, brochure design and printing, machinery, and stationery. These all need to be paid before you even make your first sale. The total is your setup cost.

Next make a list of your monthly costs that you expect to have each month and they may include: salaries, rent, electricity, water and sewerage, petrol, motor and machine maintenance, insurance, loan interest, packaging, stationery and bank charges.

Now its time to determine what sales you expect to make each month. Try and estimate good and bad case scenarios and most importantly be realistic (and conservative) in your estimations. In your bad case scenarios take the opinion that it takes you several months longer than you expect to get the sales targets.

You now have budgets for income and expense, subtract the two and you will get your monthly profit or loss. Generally there will be losses in the beginning and this is where it is important for you to have enough cash upfront to provide for your setup costs AND to pay for those initial losses.

The budgets will also get you thinking about your business and its potential problems such as: How are we really going to get the goods to the customer so quickly; what if they place bigger (or smaller) orders than we expect, can we still cope; is security an issue; and how can we add to our product or service.

Its also a good idea to list your strengths and weaknesses as this gives you the opportunity to focus on your strengths and work on improving your weaknesses. Another list to help you during this period is "possible pitfalls". What if your one big customer goes broke? What if you get sick and can't work? What if it takes longer for the business to make a profit?

Still feel your business stands a chance of working? Yes, then great, go for it. If your answer is no, don't give up. Either modify your idea or look for alternatives and come up with new ideas.

New ideas again.

 

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