HOW TO START A BUSINESS by Dr. Emeka Ikenga Dennis,MNIM,FIPDM--Integrated Business School, Nigeria. ibsbestrack.nig LEARNING OUTCOMES At the end of this chapter, you should be able to: i. Understand the meaning and importance of business ii. Know the functions of business iii. Know the features of micro/small businesses iv. Discuss procedures for starting a micro/small business v. Know how to choose the right business vi. Know a vision and a mission. vii. Discuss the various stages of stages of business cycle MEANING AND IMPORTANCE OF BUSINESS A business is any legitimate economic activity that seeks profit by providing goods and services to others. Business provides us with necessaries of life such as food, clothing, shelter, medicare as well as many other things that improve our standard of living and quality of life. Business also provides people with the opportunity to be wealth person. With wealthy person, a businessperson creates employment opportunities. Both the businessperson and his employees pay taxes to the government for building Hospitals, schools, roads, and other social facilities. With businesses creating more and more wealth, individuals are empowered to the extent that they can afford the prices of goods and services. The quality of life refers to the general well being of a society in terms of freedom, clean environment, education, healthcare, safety, free time and everything else that brings about satisfaction and happiness. Being empowered to afford the prices of goods and services, an individual will think of leisure, recreation and having more time with family members. This is development in practice. FUNCTIONS OF BUSINESS i. To make profits ii. To create employment iii. To provide goods and services iv. To train and retrain workers. v. To conduct research vi. To generate income for owners, employees and government MICRO/SMALL SCALE ENTERPRISES Setting up a business is a very easy task. But, it is not what anyone can wake up to go into without adequate preparations. One must do thorough groundwork and must devote time to it. Our primary concern is a Micro/Small scale enterprise. A small scale enterprise is defined in the Nigerian Industrial Policy as ‘those with a total investment between N1,000 and N2 (exclusive of land but including working capital). It could be a sole owner, joint venture/partnership, or Government owned. FEATURES OF MICRO/SMALL BUSINESSES i. The amount of space utilized by a Micro small firm is usually small. ii. The size of the workforce. The number of staff is always low, say, between one and ten. This does not mean that a small business cannot employ more than such numbers. iii. The value of capital assets of the firm. The net worth of the assets of the firm should not exceed N500,000. However, there is no hard and fast rule about this. iv. The presence of only a manager who is the only senior person in charge of the entire business. v. Limited market for the goods or services in office. vi. The personal involvement. There is always a personal contact between workers and the manager, owner and between staff and customers/clients. STARTING A BUSINESS Let it be said again that starting a businessperson is never a day’s job. It requires a lot of planning, in-depth ground work that could lead to worthwhile decisions. This preliminary is very important and must be handled carefully, in that, any attempt at slipshod approach will spell doom to the businessman. The prospective businessman must identify what he enjoys doing, his interests. Things that make him happy and things he can do for other people without charging a fee. He should study his environment and make an economic assessment of it. He may discover an appealing trend that he could take advantage of. According to Chukwujama (2005) a prospective business man will have to master the following ways of getting good business ideas (idea generation stage). . i. Decision or resolution to get a great business idea. ii. Attention to self, others and to his environment iii. Ability to treat every idea with respect iv. Protect those ideas v. Look for the potentials in them vi. Record them in a book (documentation) vii. Be grateful for all the received ideas viii. Nurture and develop them ix. Use them After the idea generation stage, he advances into a stage that involves taking crucial decisions. One of the decisions a small investor must make is whether to start a new business or to buy an existing one. A DECISION ON BUYING AN EXISTING BUSINESS: In deciding to buy an existing business, the investor must satisfy himself that: i. The business has well established customer base ii. The business has a good track profit record. iii. It has well established lines of supply and credit iv. The existing worker are well trained. v. The physical facilities can be leased rather than outright acquisition. This will reduce the depletion of the capital. vi. The reason for selling the business are really true. A business may be sold when: a. It is losing money; it has established ill-will to the stakeholders (Customers) suppliers, creditors, government etc. b. It has undesirable workers that are difficult to get rid of because of a strong backing by their union. c. The business is wrongly located. HOW TO CHOOSE YOUR BUSINESS Business is like a hot frying pan. If you jump into it without preparation, you will definitely jump out or perish. It is better to draw a roadmap of what you want. You must have a reason(s) why you want to go into that line of business. It is personal and financial satisfaction or not? There must be a selfish motive, any other thing is secondary. The first step is to look for a business that allows you to do what you love. Such a business must conform to what customers want and are willing to pay for. Having passion for what you are doing creates the zeal, the enthusiasm to forge ahead even in perilous times. For instance, a man who loves writing will do well as a publisher. But it is one thing to have passion for writing and another thing to write what people love to read. To be successful, the two must synchronize so as to create high demand from readers. Answers to some of the following questions could help you to identify your passions. i. What would you like to be written in your obituary or funeral oration? This may appear strange and terrifying. ii. What activities can you do or talk about or study over a long time without losing interest. iii. What would you do to change the world? iv. Who is your role model? v. What do you admire most in him? vi. What do you do better than others? When all these questions are answered objectively, you can now generate as many business ideas as you can identify and hold on to your strengths. Some people seem to be ignorant of their strengths and even when they are not, they tend to emphasize their weaknesses. Ask yourself, what do I do better than most people? Plato once defined justice as doing what one is suited for, not busy body. Also B. F. Skinner defined happiness as doing what you are good at. The idea is for us to over look our weaknesses, becauseconcentrating on our weaknesses tend to hinder our performances. Again, consider the experience you garnered while in the service of another person. It could be the key to your successful business life. Sometimes people who know best can say some positive things about your strengths. Assess such talks and utilize them. Your talent, therefore is a resource that must be identified and harnessed for a successful life. Endeavour to create value: Think of how to create a market for your product or service to enable customers pay for them without remorse. Leboeuf (2002) says that customers exchange money for something they believe will satisfy them more than the money they have to pay for it. A man went to a bookshop and saw two different books addressing the same issue. One of the books was big (three times the size of the other book). Though the small book was costlier than the big book, the man still bought the smaller book. Why? The reason is that he may have gone through the contents of the two books and saw something of value in the small book. The small book may have captivating captions and attractive finishing. Whatever your choice of business, your basic job is to offer a product/service and convince customers /client that it is worth more than the money it costs. People will pay you for the benefits they will derive from your product and this is dependent on; i. What you do ii. How you will do it iii. How difficult it will It is better for you (the entrepreneur) to understand that the more people want what you offer, the more money you make. This is immutable principle. For instance any firm that has a patent to produce and sell cheaper and quality fuel will definitely throw NNPC out of business. Choose one business from the list of businesses you had drawn and do a thorough and objective investigation into it before committing yourself. Read and learn all you can about the business. Talk to people who are already in it to know the profit potential, the capital outlay, the gestation period, the nature of the market, the long term outlook for the business etc. Choose to be focused even without a business plan. Select one business and concentrate your efforts on making it successful, attempting to run many businesses at a time is counter-productive. Do not diversify unless your core business is strongly established. Again, develop a mission statement to describe the purpose of your business. The questions in your mission statement might look like. i. What kind of business am I involved in? ii. Who are my customers? iii. How do I create value for them? For instance, as a writer, my mission is to give as much information as possible to people to improve their lives. In addition, you must have a vision to keep you focused. While the mission defines why your business exists, the vision describes an ideal picture of how you propose to carry out that mission and what you hope to achieve by it within a period of time. ACTIVITIES i. What do you understand as a business and what are its functions? ii. Enumerate the feature of Micro /Small businesses iii. Discuss the steps for starting a small business iv. How can an intending businessman choose the right business? v. What factors will you consider before buying an existing business? vi. What reason could be advanced for selling a business? vii. Write short notes on: (a) Vision (b) Mission (c) Mission statement viii. What is a Business Cycle? ix. Discuss the various activities and funding pattern in each of the stages
Posted on: Thu, 19 Sep 2013 08:06:26 +0000
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