SEVEN STEPS TO STARTING A BUSINESS

Use this document as a reference tool when beginning to talk to an    individual or a group in your community about starting a business. It is designed to get introspection and to begin to test the feasibility of the business idea.

Step 1:                        Prepare for the adventure

ü  Do you have the motivation to be a business person?

ü  Do you have physical health, mental health, endurance, perseverance and a can-do attitude?

Step 2:                        Find your big idea

ü  Whether your idea is innovative or not, you’ll need and idea that reflects your interests and uses your skills

ü  You need to ask and answer, “Will my customers be interested in my business?”

ü  Observe others  in your industry (your potential competition), as a good source of information

ü  Take a look at your potential market (their needs, their interests)

ü  If you find a bank or financier willing to help you, don’t hesitate to speak with them

ü  Protect your idea by registering it with your government

Step 3:                        Do your market research and analysis

ü  Ask yourself eight questions:  what, to whom, how, where, when, why, how many, at what price

ü  Your analysis will allow you to identify the key success factors for your business (it might be price, delivery/distribution or service)

ü  By doing your research you may be able to identify other real needs (and thus, you may alter your original idea)

ü  While doing your research, you might identify potential customers and business partners (networking)

Step 4:                        Prepare your feasibility study

ü  Your plan should cover no less than three years

ü  Your plan should include items from steps 1, 2 and 3

ü  Who will run your business and what are their backgrounds, their anticipated salaries, their roles in your business, etc?

ü  You’ll need to figure out how much money you’ll need to open your business and when you’ll be needing it

ü  You’ll need to do a cash flow analysis. Consider financing. Look at how long, at what rate when you’ll be at breakeven and when you’ll be making a profit

Step 5:                        Getting financing

ü  A) From the informal sector:  family, friends, neighbors, your own savings, or other community groups

ü  B) From the formal sector:  micro finance institutions which come in three categories (and may or may not require collateral)

o   MFIs that work exclusively with their members

o   MFIs that work with anyone 

o   MFIs that give out loans but do not handle savings

ü  C) The formal classical banking sector made up of commercial banks (which will require collateral)

Step 6:      Deciding on the legal structure

ü  Will you be a sole proprietor, or a Pty Ltd. 

      Step 7:      Documentation

ü  The legal structure you select will require differing government fees and documentation. Your local Chamber of Commerce can be of assistance or speak to a local accountant.