Keys to starting a successful business

The reason why people respect successful entrepreneurs, the Sudhirs and Wavamunnos of this world, is because they know starting a new business is risky and success is to be admired. And they also know that most new businesses fail.

There are many personal reasons why businesses fail but the main reason is because the entrepreneur did not do his homework, and if he did, then he got it all wrong. Businesses start off as dreams and dreams are always pleasant. But enthusiasm and passion don’t count for much, making the dream become a reality requires research. The litmus test for any business idea is to make sure that what you want to do will make you money. This is never easy.

Start off by looking at the competition. If there is no competition why? If there is a lot of competition, is there room for more? And if there is room for you, what are you going to do different that the current market players are not doing? What is your unique selling point and what deficiencies do you see on the market that you intend to take aantage of?

Before you go into business you must be aware of your strong points based not only on the weakness of your competitors but by the ingenuity of how you intend to run your business. There is no more fatal assumption for entrepreneurs than that you will run existing competitors out of the market via offering better services. You might be able to do so in the long run but by then the damage to your own business might be too severe that you might also have to close business because of the accumulated losses.

Basically it is very possible for a new business to outcompete itself out of business in the name of gaining market share. It is for this reason that many snazzy, stylish, idealistic establishments boom overnight then go bust almost as fast under the weight of losses leaving behind the old, drab conservative competitors they’d intended drown out who are then only too glad to pick themselves up with the lessons learnt from the cutthroat competition, improve their service, re-entrench themselves and flourish more than ever before as they take on your stranded clientele now that they can offer a comparative level of service without the pressure of fierce competition.

The prize goes not to the pacesetter but the guy who persists to the crossing line. You don’t want to be your industry’s pacesetter only to fail under the weight of the standards you set that future entrants use you as a case study.

The dissimilar fortunes of Wina Classic and Select Garments are a case in point. Figure in the proliferation of smaller, cheaper downtown clones of the latter and you will realize its failure was inevitable. There is always something the upstart entrant doesn’t know that the old hand knows by experience— talk of the old broom knowing all the corners.

A healthy market should be able to allow co-existence with current players and an allowance for future entrants. Talk to people in the business. Learn as much as you can. Then, make a business plan. Any business built with the assumption of market dominance will ultimately fail. In a liberalised economy such as Uganda’s, no barrier to entry is too high the fact is any industry with fat profits will attract new participants. No niche stays so for too long. Only guarantee for longevity and relevance if you are first, be the best.

A well -thought- out business plan is therefore the most effective tool to prove to yourself (as well as others) that your business will be a success. Good planning is key in envisaging what challenges lay ahead and how to overcome them. A business plan brings your idea and vision to life in concrete terms that are accessible to others. In other words, it is the business person’s most important communication tool.

SOURCE: Daily Monitor

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