Start Your Business Right
“When you are still trying to prove yourself in any career or line of business, you spend most of your time trying to make people understand what you are all about. However, when you have made it, people make it their business to understand you” Jacob Malatji
Regardless of whether you are currently a white-collar professional, a business graduate or a drop-out looking to start your own business, or someone bored with their current job, or currently unemployed, starting a business could be a great option.
If you are still thinking of starting a business, then understanding the fundamentals for entrepreneurs, small businesses and start-ups will be a great resource for you. It will guide you through the process of business idea formulation and other critical requirements for starting your business. However if you are ready to start and want to avoid the mistakes that others have made by learning from their experiences then avoiding mistakes that most entrepreneurs make can prove to be a valuable resource you just needed. You also need to have the basic financial understanding to help you navigate the maize field of financial jargon that often inhibits the success and growth of businesses.
We live in an era in which we witness a faster pace of technological development but even with that there will always be a need for knowing and understanding concepts of business management and growth. So, basic understanding of business conceptualization on the side of entrepreneurs and potential business owners becomes critical in making sure that the foundations of the potential business ventures they envisage are solid. This basic understanding on the part of the entrepreneurs and emerging business owners determines the success and failure of their ventures long before they start. It entails understanding the stages of the business process, from formulating profitable business ideas (ideation) to testing it (conceptualization) to making money out of it (operationalization).
There are many factors that entrepreneurs and start-ups must consider before they start that determine the business concept’s potential for growth beyond the small business stage. These factors can easily be identified through the planning/conceptualization phase which is made up of the Value Proposition and the Business Model. Truth be told, there can never be effective business planning without great Value Propositions and Business Models. These two processes are critical foundational determinants that determine the success, profitability and continuity of the business long before it started. Failure to consider these two critical planning processes is a recipe for disaster.
Why start a business?
There are many advantages for starting your own business. Firstly, you wake up every morning doing what you have always wanted to do. Fulfilment is the first reward. Secondly, you have the opportunity to change lives and the world. This is accomplished by offering products and services that are intended to make other peoples’ lives better. The opportunity to impact lives is the second reward. Thirdly, you have an opportunity to make a profit. The opportunity to create wealth is the third and final reward.
Steps to starting sustainably profitable businesses
This is not a one size fit all process. I have deliberately listed only four steps that I believe are critical to the process of establishing a business from scratch and are relevant to this article.
1) Check out your passion and align it to your skill set.
Check your skill set in relation to your passion. This is important more especially if you want to be in it for a long haul. This you can do through performing your own SWOT (strengths, weaknesses, opportunities and threats) relating to the type of business you wish to be involved in. Your passion and skill set will be your anchor during the initial trying times when your business starts to take off which is what every business go through. Solving a problem and making a profit in the process is what responsible entrepreneurs do. This approach to establishing a business ensures sustainability through happy customers.
2) Figure out your market/niche (ideation)
Research societal, environmental and business problems to determine which one you can be able to address in relation to your passion and skill set determined in step 1 above. The criteria for idea choice should be desirability, feasibility, viability, and profitability. You have to test the validity of the business idea by conducting a short survey from the identified market. Entrepreneurs and Start-Ups: The Fundamental Truths is a relevant resource to help with the understanding of this step and more.
3) Understand the pain points of that market/niche (business planning)
This is the business planning stage of the process of establishing a business. The best tool to use for this purpose is the Value Proposition. The value proposition will help you determine the most urgent problems and needs of your target market and if you will be providing a product or service. Small businesses, start-ups and their failures are well documented facts. There is a long list of variables and factors that are identified as the root causes of the alarming failure of start-ups (80% plus) in their first 48 months of operation.
Value Propositions are mechanisms for evaluating businesses to check if they reflect what customers value most. They form the core of your company’s competitive strategy by differentiating it from competitors. A value proposition describes the benefits customers can expect from your product or service. Your value proposition is the primary reason a prospective customer will use your product or service. Understanding the problem you are solving for your customers is undoubtedly the biggest challenge you will face when you are starting a business or seeking to grow it. Customers need to want what you are selling and your product needs to solve a real problem (important and urgent). Proper market problem identification and diagnosis ensure market fit solution design resulting in happy customers and sustainably increased business revenue.
4) Figure out the mechanisms for proving solutions to your market/niche
The best tool to use for this purpose is the Business Model. Business models will help you determine your business blueprint to deliver value to customers and make money in the process.
A Business Model is a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. A business model is a blueprint for small businesses and start-ups success – your business’ roadmap for success. It is not a business plan. However, there can never be an effective business planning without a great Business Model and there can never be an effective Business Model without a great Value Proposition.
Properly crafted, designed and modelled businesses warrant desirability, feasibility, viability, and profitability of the business project resulting in business success. Great Business Models are crucial for the profitability, success and sustainability of any business organization. Business Models impact three areas of the business:
- Everything it takes to make something - design, raw materials, stock, labour, and so on (planning).
- Everything it takes to sell that thing – marketing and promotions, distribution (channels), delivering a service, and processing the sale (systems and processes).
- How and what the customer pays - pricing strategy, payment methods, payment timing, and so on (revenue streams).
The above steps apply to both offline and online businesses. Each business type has processes that need unbundling for ease of understanding. Most businesses fail long before they started. Like anything else, starting a business has to be built on the right strong foundation if it is to survive and succeed.
© 2021 Jacob Malatji