| Setting Up A Business: Points to Consider |
Introduction
The following lists contain questions to ask oneself before starting a business and before writing up a business plan. This was written in response to a lot of people asking for information on actually setting up a business. Unfortunately it would be too lengthy and complicated to go into each method for every country from which people can access SBR. Hence it was decided that general questions would be asked to help with the background thinking processes. The questions are also useful for managers of going concerns to enhance their business practices. (For information on setting up a small business in your country, see your local library or bookstore where you can find a wealth of relevant information; banks may also have useful information as most provide banking services to business customers as well as members of the public.)
The Business Environment
This involves looking at the background to the business, aspects over which you may have little control, but which will greatly influence any business decisions that you make.
- What is going on in the industry that you will be entering (products, market size, competition, prices and so on)?
- In what sort of environment will the business be operating (social/demographic/technological trends,
public attitudes, relevant laws and so on)?
Thinking About Aims and Targets
It is necessary to have a clear idea of where you want the business to be in the future and what you want to get out of the business. It is also necessary to align your aims with those of your business partners.
- What do you define to be the mission, vision and values of the business?
- What have you defined as the long-term goal for the new business?
- What are the milestones that are to be used to measure the degree of success?
- How does this fit in with the ideas of the other participants in the
business?
Reviewing The Market
To compete effectively, one must gain an appreciation of what is going on in the market and then decide what is the best way of trading within a given industry.
- What is the structure of the market with regard to users, distributors, competitors and so on?
- Are there any trends (eg seasonal)?
- Why should a prospective customer buy from you?
- What is your pricing strategy (how do your prices compare to your competitors')?
- How will you sell your goods?
- Who will do the selling and to which geographical locations?
- What medium will be used to sell the goods?
- How will you promote the products/services?
- How will the product be packaged and presented?
- How much investment will be geared towards promotion of the product?
- How big do you realistically expect your sales forecast to be compared to the overall market over
the next five years?
Production Methods
It is necessary to assess how a product or service is to be created and whether the business as it stands has the right skill set.
- What sort of premises will you need to use?
- Are you fully aware of the processes involved and if not, how will you
cover these areas?
- What processes will be carried out in-house and which will be
outsourced?
- Which processes will act as bottlenecks and how will you minimise their
effect on the overall process?
- What will be done to provide a continuous supply of components?
- What quality controls will be in place?
- What sort of stock control will be in place?
The Personnel Make-up
Today's management theories tell us that the people who are involved in the business are one of the most important parts of the business itself. If you cannot get the right staff or the staff are unable to carry out essential tasks it will be difficult to compete effectively with other business.
- What are the qualifications of each person involved in the new business?
- Who will be required, how available are they and at what cost?
- Where and how will you get the right employees?
- How easily will you find the employees?
- What training is needed?
- How will they be trained and controlled?
Management of Financial Elements
Although for most businesses, effort is not concentrated on the financial aspects of a business, it is nevertheless an important area and must not be overlooked. The finances of a business are not just concerned with how much profit is being made, but they can be used to control and monitor business performance, and have many other uses and influences on other aspects of the business.
- What sort of finance is available and how will it be allocated in the
business?
- What form of security is there for the investors?
- How will weaknesses that are revealed through the financial details be strengthened?
- Who will be responsible for looking after the finance side?
- What financial details will be recorded?
- What financial processes are to be involved?
- What financial controls will be implemented?
Summary
It is important at the planning stage of a business to look at many aspects of the business and think about how each area will be managed and organised. Only after the details of a prospective business have been thought out carefully and it is clear in your mind how various aspects should be organised, will it be reasonable to expect a business proposal to be taken seriously and to be able to compete healthily in the industry to be penetrated!Note that the above lists are not exhaustive and there may be many more questions that you will need to consider that are relevant to your business.
Copyright (C) 1996 IRL