Every small scale business starts as a big idea, but you have to be able to execute the plan into action. The execution phase is what gets most entrepreneurs overwhelmed, and some even give up before it starts. With a little dedication, getting started is easier than you think.
Breaking your big idea into smaller tasks will help you tackle most of the challenges in getting started. Here are five ways to break down such a process and get started with your business.
How to Start a Small-Scale Business
1. Have a Business Plan
Your passion for something mostly triggers your big idea in most cases. But it all begins with a plan in your head. However, your passion would mean nothing if you don’t have a plan on how you intend to run the business.
It doesn’t matter how great your business plan is, the most important thing is making sure it captures your intended actions over some time.
A business plan is crucial because it allows you to demonstrate the strategies for your business on paper before you start applying them in reality.
2. Have a Budget
It is highly recommended you keep your costs at the barest minimum. However, you’ll still need a budget to determine how much you’ll be needing to spend to start the business. If you’re funding your business yourself, be realistic about your costs and whatever anticipation you expect from your budget. Setting aside an additional 25 per cent on your budget for miscellaneous and overhead is a realistic average amount that can save your burn rate process.
The burn rate is the money you’re spending every month. Its essential you determine how long you can stay in business before you need to make a profit.
3. Have a Business Name
A business name gives your business an identity. It is one of the ways to show yourself committed to the business. Registering your business with a name gives you the opportunity to enjoy some perks like loans, grants, and so on. you can refer to this post for a step-by-step guide on how to register a business name in Nigeria.
4. Determine How The Business will Generate Profit
Making a profit is, after all, the ultimate objective of any prospective small business. While revenue is a prerequisite of making a profit, it is not the ultimate objective goal of any business.
You should study your business’ expenses (rent, materials, employee compensation, etc.) and then figure out how much sales you need to cover the costs and start making a profit.
Determining the revenue model for your business sets you up for getting business grants and investors.
5. Start With Your Money
Even with so much availability of platforms where you can access a loan in Nigeria, It is not so advisable to cover the cost of starting a business entirely through loans. This is because you are already spending your profits before even realizing it.
Many small business entrepreneurs cover the cost of starting-up through loans, intending to pay back the loans from the profits from the new business. Many new companies can take months or years to start making a profit.
If you can save up most of your start-up capital yourself before starting your business, ensure that loans won’t drown the new company. If you can come up with as much of the start-up money as possible, it will save the business from spending future profits today. If you’re thinking of a great small business idea, you can check out this post on mini importation.
6. Do Enough Test Running
The world is fast becoming a small global village, and it has made test running a new business less stressful and less costly. Once you have enough to start testing some sales by spreading the word in different ways. If your business is product-based, test the viability of your product by driving traffic to your website for sales or set up ads on any of the social media platforms.
Most small businesses are created in the form of sole proprietorships or partnerships. These types of businesses are easy to form, but they expose their owners to liability for business debts. Follow the Lean Startup approach to help your business scale and avoid debt.
Having an insurance policy can help save the owners and the business from severe liability in the future. However, business owners can also choose to form a limited liability company in the future. This is to enable the owners of the business to shield themselves from company debts as an individual.
These guidelines aren’t a one-size-fits-all model, but anyone can follow even if you’re starting out your business as a student.