Do Business Well

The number one criteria for starting, buying or running a successful business is that you must truly love it. You must have an absolute passion for it.

So identify what business really turns you on. For Eric, it’s working with people and providing them with the advice that will help them become successful. For Mike, it’s getting people so excited that they motivate themselves to achieve their dreams. What does it for you? Do you have a hobby? Can you make money from your hobby?

In general, though, we would advise you to avoid areas in which you have little or no experience. They may seem exciting from the outside, but once you really become involved in them, you may find them barren.

To get your entrepreneurial juices flowing, here are 15 important questions for you to consider:

1. What business do I want to be in, and are my objectives clearly defined? What is my competitive advantage? Why will I be superior to my competitors in the eyes of my customers?
2. What sales must my business generate, firstly, to break even and, secondly, to give me a satisfactory return on my investment? Sales must be reported both in Rand terms and in standard unit terms.
3. Is the market that I am operating in large enough to sustain my projected growth plans? Will the market growth be sustainable over a long period of time? Is the market seasonable? Who are my competitors? Are my competitors likely to grow?
4. Are my customers accessible and can I distribute my product or service to them easily and economically?
5. How price sensitive is my market? Can my product or service demand a price premium to ensure that I achieve my targeted gross profit?
6. Can I afford all the operating costs needed to manufacture, market, distribute and administer the business and still make my desired return on investment? Do I have enough working capital to operate my business until I move out of the red into the black?
7. Can I afford to employ the best possible staff? What is my optimum staff complement? Where do I find the best staff? How do I keep the best staff?
8. Can I obtain the rights to a unique product or service from offshore companies? As long as this product or service is suited to local conditions, this can be a great competitive edge.
9. What is the legislation relating to my selected category? For instance, the security industry is regulated by a wide variety of associations, some of which are applicable to all security companies and some aimed at specialist categories. Many industries have self-regulating bodies; find out who they are and if they can add value to your business.
10. What can I learn from potential suppliers? Visit and interview your potential suppliers. Companies keen to obtain your business will often be able to give you invaluable information about the market and the industry.
11. Does the potential exist to develop a strong brand name? A brand is more than a marketing gimmick, a strong brand may turn into a substantial value on your balance sheet.
12. Will there be a substantial barrier to entry, i.e. will my concept be easily copied if it proves successful? If this is the case, consider how you can raise those barriers to entry by delivering outstanding service and other unique benefits.
13. Will my required manufacturing plant and raw materials be freely available? Once consumers are excited about your product, you must be able to provide consistent supply.
14. Can I make a better return on my investment than if I had invested my capital in safer ways e.g. unit trusts, fixed deposits, property?
15. Will I be able to sell or exit my business easily? If I need the money, how easy will it be for me to get liquid?

Okay, the preceding 15 questions were just a warm-up. Are you ready for the real thing?

Note: even if you are not seriously considering starting up a business right now, work through each step as if you were. Think of the kind of business you would like to be in and then do the exercise. Think of it as a dress rehearsal for the real thing.

If you are seriously considering your own business right now, please work through each step thoroughly. Do your homework. Do your research. Treat the plan that follows as your lifeline. If you decide to take the ultimate plunge, it could very well be.

By the way, the following business plan outline is as relevant whether you are starting up or buying a business.

A final tip before you start your plan: write your business plan in language that is alive and action oriented. Build conviction and passion into your plan. Anyone reading your plan, including you, should be excited by every word. You see, your business plan is not just a business document, it’s a personal blueprint for success.

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