By Njoki Waigwa
The first and most important part in starting and running a business is to pick your area of interest. To achieve this, you need to identify your business niche. This is a segmented area of the marketplace that you can profitably serve.
It involves identifying existing gaps in the economy that are underserved or unmet. These are goods, services and solutions that people need and are willing to a pay a price for.
It has to be something that you are good at, or something that you can hire someone to do. This will eventually give you competitive edge. It is great if it is something you like doing. Building a business is extremely hard and if you detest waking up every day to go do that thing, you will make minimal progress on the job.
Here you can do the research yourself, you can speak to colleagues and friends, read newspapers and journals, use social media. You can also follow people in other countries and see what goods and services exist there, that you can provide in your own country.
The next stage after identifying the potential market is to determine your target customer. Positioning yourself as the go to provider for a specific group of customers establishes credibility over competitors who are generalists.
This will determine issues like age, buying power, individual vs corporate, population, religious beliefs and technology advancement. Attitudes, behaviors, trends, and literacy levels are other factors that will also help refine the target customer.
Exploring on the niche and target customer that one can serve profitably is key in determining the area of operation. It will help determine if the business will be based in a rural, urban or industrial centers. In the era of technological advancement, it is possible to run operations in various counties or countries, from a business hub or from your house.
For physical location businesses, key considerations here are access to power, internet, good roads and infrastructure, access to labor, or ease of access by employees, to and from work, possibility of walk in customers or customer traffic in the area, safety and security.
Legal and regulatory concerns
It is imperative to understand the business registration, operation and compliance requirements in your chosen business niche. This may include industry specific licenses, operational licenses, county and country permits, employee work permits, if proposing to set up in a different jurisdiction and tax compliance.
It is advisable to hire or speak to a professional, government representative or office holders to have a good understanding of the expected requirements. This helps to start business on the right note.
This considers the acceptable business registration requirements. Do you intend to operate as a sole proprietorship, partnership or Limited Liability company (LLc)? These considerations are important.
In the Kenyan context, a sole proprietor cannot have a Kenya Revenue Authority Tax registration (PIN). It follows that it cannot also have a bank account. Where one would like to run an independent business, this option may not be viable.
Partnership includes having 2 or more people running a business together. There is need for a partnership deed dictating terms of engagement as partners. If you decide to follow this path, please have in place all documentation. In practice, partners tend to skip this stage, and it ends up creating wrangles.
The Kenyan Law does allow for the creation of a LLc with one director. This gives a solo owner some form of independence from the company. A company with a solo director can have a KRA PIN and open a bank account. Limited liability companies have annual compliance requirements.
It is advisable to speak to a professional in your circles, to decide the most appropriate structure for your brand.
Get a name
What is in a name? It can be fancy. It can be plain. It can have meaning, it can even be meaningless. However, it will introduce your business and brand to the world. It will be your identity. Therefore, need to put some thought into it.
A name should speak the company’s business. It makes it easier to sell, easier to advertise, easier to be seen in the market place. Customer concentration span is too short, you need them to see your content or adverts once and in a few seconds make a mental note that you exist in the marketplace.
An interesting note is that some of the most successful brands do not have names related to their business. For example, Nike clicks because it is a big brand, Safaricom, is (only) known as a communication and technology company since it is an established brand. If anything, one would think Safaricom is a travel company, from the word safari.
The name should be easy to pronounce. It is advisable to keep the business name from two to four syllables. It makes it easier to remember.
Technology has enabled companies and individuals to do business globally. Therefore, it is important to have a diverse name, that is not too location centric. This is in anticipation that sooner or later, the business will go global and you need not change the name again.
Have fun at getting a name, and get creative. While at it coin a beautiful story about your business inspiration, that you will give to masses and audiences when your business finally becomes successful.
Company logo and colors
In the market place, choice of color and logo can make a brand stand out. Colors are emotive and they do influence customer psychology, thus buying decisions. Think about how you want your customers to think and feel when they interact with your brand. Do some research on colors, meaning and emotions they evoke. You can come up with two or three choices and discuss with peers, then make a decision.
You will notice that the financial investment considerations come in at a later stage, once you have validated the business idea you have.
This will include business registration expenses, set up expenses, rent, salaries and wages, professional fees for website set up, logo and branding material design… It also includes any equipment that you could need for business operations and initial marketing and advertising budget.
Here, it is advisable to have the capital investment in phases. Phase 1 should be a test phase to test run the business.
Sources of capital
Sources of capital include personal savings, loans, grants and donations from friends and family. To start and run a business, it is advisable to start and test on a debt free slate. Starting and running a business is a gamble. You get into the market to test run. Sometimes it works, sometimes it fails. If it fails and you have debt, it can be overwhelming.
Over time, with the business pushing growth, it is possible to use debt to build and grow the business. With greater business growth, the business can accept funding from investors.
Scale of operations
Always start small – the business should push growth. This is a key lesson. Most entrepreneurs are usually on adrenaline when starting. They want everything done in an extra manner, big office, prime location, many employees, high advertising budget, and launch party (just) to make an impression.
Starting small gives the business management an opportunity to learn the market, set up processes and progressively improve operations to scale. Once the strategic growth path is established, then the management can pump in capital investment, in tranches.
Most businesses will ideally start with a single idea owner. With business growth, it is critical to hire the right people for the job.
As an entrepreneur, learn to delegate early. The earlier it happens, the better it is, to enable you exit day to day operations and chase strategic growth and decisions.
It is advisable to hire a professional HR to assist with setting up HR policies, creating job descriptions and conducting interviews. As a startup owner, you may want to take short cuts to save costs, please do not .Look for your fellow start up owners who will charge you a friendly cost.
Invest in new knowledge and skills acquisition for your staff, pay on time, motivate them and give timely feedback.
Employees are a core part of business success. Invest time and money to understand and efficiently run this function
In the market place, a brand must be seen and heard, in order to thrive.
This means, an entrepreneur has to sell. Selling is the most important skill a startup owner should have. It influences buying decisions. It influences cash flow to the business. Cash flow is the lifeline of the business as it impacts operations and profitability.
Once you have the service and product offering ready, it is time to go to the target market. This includes creating a website, setting up social media pages, visiting customers, painting and opening physical shops and offices
It involves telling our friends, family and colleagues we are in the market, press calls, newspaper and magazine adverts. Recently, people use social media influencers to shout about their businesses. It also involves sending out business proposals.
How you carry yourself and your brand is very important in helping the customer make the buy decision.
Your energy should inspire the customer. It should be comfortable, confident and trusting.
Critical to business success is visibility on the company numbers. It is imperative to put in place proper record keeping systems and procedures.
Records feed into the compliance and finance functions of the business.
On a regular basis, say weekly, the entrepreneur should check the sales and the expenses. Spending time with the financials helps to identify patterns and make decisions at the earliest.
Financial records are also important at later months or years, when accessing credit from financial institutions, as well as when engaging potential debt or equity investors.
The key goal of a business is to make profit while continuing to be in business, Record keeping is the only way we get to have visibility on company profitability and solvency
Your business will not operate and thrive in a vacuum. You will operate and find success in a community. It is important to create the necessary contacts and networks. This can be sellers and service providers in same space, business support groups, regulators, customers etc.
Invest in customer appreciation. Sending flowers, gifts and showing up when your customers have special events, like shop or business launch, sharing or reposting their products, can accelerate your growth and market positioning.
In business, what you give, is what you get. Consistently investing in the business is what makes the business remain running in the long run.
The energy you put into your business, if it is not confident, deliberate action, it is not going to come off as such to your customers.
We dream of starting and running businesses. For most of us, that is as far as the dream goes.
It is possible to launch and break the market with overwhelming orders and great market reception.
After all the hard work building a startup, an entrepreneur must be prepared to live a success reality. It includes building knowledge, skills, expertise and capacity to tap into growth opportunities. It also having the right teams, community and financial capacity to scale.
It really is possible for any aspiring entrepreneur to build and grow a business to success. The idea is to start, do not take short cuts, build slowly but surely, be informed and do the work.
Ms. Waigwa, a finance, tax and strategy professional, is the proprietor of Haraka Delivery Services