Over the years, there have been a couple of factors that have made entrepreneurs succeed or fail. The ones who succeed generally have some components in place before launching their business. First, the need for the product has to clearly be there. Second, you must have the expertise and credibility to launch your business. Third, you must have all the resources you need to get started -- people, production, distribution, and funds. Fourth, you have to have customers who are committed to buying your product. And fifth, your business model must be sound—from pricing and cost of goods to gross margin and profit margin.
Let's go into details, shall we...
1. NEED: Before starting your Business, it's of utmost importance that you carry out a market research and survey. It's one thing for you to think that your business is needed, it's another thing for people to really see the need. Most entrepreneurs are blinded by the thought that their new business idea is "Da bomb" and as such, they do not carry out adequate research on what people really want. That is a recipe for failure. Ensure there is a need for the product or services you want to render before kicking off.
2. SKILLS: To be successful as a business man or woman, you must horn your skills in the area of business you choose to start up. If you do not already have experience probably from your work, school or life events, then you must, as a matter of priority skill up to a reasonable height before flagging off your business. Imagine a lawyer running a health care outfit where He or she has no prior knowledge, the outcome will be disastrous. So, acquire the necessary skills, hire the right workforce where necessary and get set for a business ride of a life time.
3. CAPITAL: Businesses do not run on fresh air, certain elements are required to oil the engine. One of such elements is money. You need to find out how much is required to start your business and run it comfortably till it stands and is able to foot your running cost. Asides money, other necessary elements needed for the business have to be in place. These could be include an office space(Virtual or physical), gadgets, equipment and other specific tools perculiar to the business. In cases where resources are limited, it is worthy to note that one can still start small and grow big. You can choose to leverage on partnerships, attract investors, use your home as your office space, hire equipment instead of buying, get supplies on credit etc.
4. CUSTOMERS: You might be wondering why customers appear on this article. Are we not suppose to have customers only after we have kicked off our business? How do I get customers for a business that is yet to start?
These days, business owner pre-sell their products and services before it's been launched. You can gather interest from potential customers by giving them a preview of what you intend to sell to them and have them book in advance for it. This way, you are sure of having a rich client base even before launching out.
5. BUSINESS MODEL: This ensures you stay in business for a long time. Your business model is the way you’ll make money in your venture. It includes your sources of revenue, pricing, costs of goods sold, gross margin, operating costs, and profit margin -- essentially the elements of an income statement. A good Business Model answers the following questions:
The best businesses have multiple sources of revenue, competitive pricing, a 50 percent or better gross margin, and a 10 to 20 percent profit margin. If your numbers aren’t this attractive, it will be difficult to survive. So make sure all the numbers work before launching your business.
The failure rate of new businesses is very high. It is estimated that 50% of them fail within the first five years and 70% fail within their first ten years. So if you intend to make the remaining 30% that scales through, then you need to have a robost Business Plan that captures all that has been written here and much more.
