- The ability to identify an opportunity that show promise and that you could do yourself.
- The ability to calculate whether the business would make a profit.
- The skills and abilities to run your business.
- People you can rely on for good advice.
- People who can help you get the things you need to run a successful business.
- The ability, if you do not have your own money, to convince others that you have a good business idea, are capable of running the business, and will pay them back if they lend you money.
Let’s look at some of the above in more detail.
The three opportunity factors are:
- Finding the need, want or problem your business will be able to solve.
- Finding people (potential customers) with the ability or willingness to pay.
- That your business will have little competition
Matching yourself to the opportunity
- Do you have the skills to do the work required in the business?
- Will you enjoy doing the work?
- If you need workers in the business will you be manage them?
- Do you have the confidence to negotiate with suppliers, and to sell to strangers?
The ability to calculate whether the business would make a profit
You need to gather information and use it:
- What things would you need to start up the business and what would they cost. These are known as set-up costs. You need to find out where to buy these things at good prices.
- What would you have to pay for every month e.g. rent for premises, telephone costs, wages/salaries and anything you may have hired instead of purchased. These are your monthly fixed costs. You need to keep these at a minimum.
- You need to know how many items (either goods or services) you would need to sell in order to cover your fixed costs AND make a profit. You must make a profit for the business to survive.
Owning a business requires acceptance of:
- Responsibility (you are the boss).
- Initiative and hard work.
- Not taking all of the money made in the business so that you can build up money to buy new and better equipment when you need it and have money for emergencies.
- The need to know people who can help you with information and resources.
The skills and ability to run your business
Can you actually make, fix, sell things or do whatever is necessary in your business.
People you can rely on for advice
We cannot know everything ourselves. It is good to seek advice and ask for information from others. It is not a sign of weakness.
The ability, if you do not have your own money, to convince others that you have a good business idea, are capable of running the business, and will pay them back if they lend you money
If you do not have the money to start a business how can you get people of banks to lend to you? Apart from your own personal qualities and how you present yourself, the key to obtaining finance is well prepared and presented Business Plan. A business plan is a plan that that shows how you are going to start run your business. It must answer all of the questions posed above and include budgets and cash flow forecasts.
I regularly tweet links to articles containing business advice on this blog. I am on Twitter @Mel_BrooksSA If you have any questions post them in the comments section below.