8 STEPS TO STARTING A BUSINESS

Previous articles I have published were aimed at encouraging and motivating readers to begin thinking about becoming their own bosses, or to start their own businesses. I provided over 30 reasons why Papua New Guineans should give serious thought to becoming self-employed and minding their own businesses.

During the course of the past 30 weeks I have had readers asking me how they can start businesses after reading one or several of the articles. I have been reluctant to address the question, firstly because I had planned to write on it later. But that is not the main reason why I have not been willing to discuss how to start a business. The real reason is that I wanted to give as many reasons as possible as to why people should start their own businesses, because of the conviction that people need to be convinced first before showing them how.

One of my mentors sent me an email with the following message: “Without a strong why, even the easiest how will be too hard.” In other words, if you don’t have one or several compelling reasons for doing something, what you do will lack power and vitality. You may start off with a bang but lose enthusiasm and focus as you progress. It will be like taking a long journey without adequate fuel in your tank. You start of well but run out of steam along the way as difficulties arise or things do not work out the way you anticipated.

So by discussing reasons first, I intended to put enough fire power in readers’ bellies to get them not only thinking about being their own bosses, but actually taking steps towards that course, and maintaining the momentum once they have started walking down that path.

I hope that I have succeeded in convincing readers that self-employment is a viable alternative to unemployment or even employment. I know from the comments I have received that many Papua New Guineans from all corners of the country have been blessed and inspired by the articles. I also know that some have already starting taking the risk and doing something for themselves. I cannot guarantee success to everyone, but I know that there will be many success stories from readers not many years from now. I look forward to hearing from you if you are one of them. As a book writer, I am in fact thinking of collecting peoples’ personal stories sometime in the future and publishing them in a book to inspire other people in the country. I think it will be a very interesting book.

Starting this week onwards, I will be addressing the question “How do I start a business?” This, as I have said, is a question many people have asked me which I have been reluctant to write about until now. I feel that having discussed why people should start businesses, I am now ready to talk about how to do it.

So the next series of articles will answer the above question. I hope and trust that readers will follow these articles because they will come in sequence.

What is a business?
Let me start by defining what a business is. Students of business may have their own dictionary definitions, but my working definition is as follows: A business is “a system through which a product or service is produced and provided to meet the needs or solve the problems of society.”

If you ponder this statement, you will appreciate that every product or service in existence today was developed or designed to meet the needs of people or organisations. The computer I have used to write this article was manufactured to meet my needs as a writer; the newspaper you are holding in your hands has been published to meet your need for news and information on what is happening in the country and the world. The clothes you have on your body right now were manufactured to satisfy your need for warmth and comfort as well as your emotional need to feel good about yourself. The shopping centre where you buy your food and other products was established to meet your need for a place where you can get your requirements in one place instead of running all over town.

In short, everything was produced to meet needs and solve problems. We can say that needs and problems give rise to the emergence of businesses. Putting it another way, needs and problems actually present money-making opportunities to people who have the eyes to see those opportunities. I will elaborate on this idea in a future article.

The more needs your system meets or problems it solves, the more you earn. And the business can be formal or informal, and you can operate it full-time or on a part-time basis. If you hold a paid job, a part-time informal business would be an appropriate starting point for you. If you are unemployed, you could consider a full-time informal business.

I also think of a business as a “money printing machine”. You put a small amount into the system (your initial capital outlay or investment), and it produces more. Your money gets multiplied as it goes through the system.

Another way of looking at it is this: A business is a pipeline which you build to connect to the big pipeline of the economic and monetary system of the country or world. You build your pipeline with the objective of capturing as much of the money that is flowing through the economy. If your pipeline is well-connected and the pipe is wide, you get more of the money flowing through it to you and to others like your employees who are in turn connected to your pipe.

There are so many needs and problems, and therefore business opportunities in Papua New Guinea. I have mentioned elsewhere that the country has been described as “A businessman’s paradise”. There are so many needs to meet and problems to solve that the only limit is your imagination.

I put it to you that it is only through a business that you can become financially independent and free. Only a business can make you a winner in the game of money.

I am also convinced that if many of our people get into business, we would address the very high level of unemployment in the country. Not only will we have less people looking for jobs, but we will have people who create jobs through their businesses.

The upcoming economic boom brings thousands of opportunities for spin-off business activities. If you can see a need and establish a system to meet that need, you can become a millionaire faster than you think. When I talk about becoming a millionaire, I am not talking in parables. I am talking about becoming a real-life self-made millionaire. Some people inherit millions, while others marry millionaires; other people become millionaires through bribery, fraud and white collar crime; but you can start with nothing and become a millionaire in your life time through old-fashioned hard work and honesty. Only a business gives you that kind of opportunity.

Let me hasten to add here that one of the most important abilities you must possess is risk-taking. If you wallow around your comfort zone (like a full-time job with regular/fixed income), you will miss the real action! But if you take the risk and jump into the deep end of the lake so to speak, you could sink like a stone. That is always a possibility. Remember that success is not guaranteed. But what if you jump in and manage to swim? That’s also a possibility.

Think Big, But Start Small
When I ask people to give me examples of businesses, most of them make reference to shops of all kinds and sizes, PMV trucks, hire cars, etc. In other words, they think of big operations which require large amounts of money to start. When I ask them if small coffee and vegetable farmers, ice block and street sellers are business people, most people think not.

What I normally tell people is that everybody who is engaged in some economic activity from which they earn an income (apart from a salary or wage), is a business person on their own right. As long as their products or services are meeting needs, they are in business. It may not be a large operation with many employees and thousands of Kina in sales revenue, but it is still a business regardless. And it has the potential to become big if the money it generates is well-managed. I therefore tell people to think big, but start small.

I am convinced that if Papua New Guineans are encouraged to think like this, there will be no unemployment in the country. Everybody will be in business for themselves starting with their land or their natural talents. In fact I look forward to the day when there is a shortage of workers in the country because most people (including those that are highly educated and skilled) are self-employed. When that happens, necessity will force employers to offer better terms and conditions to attract people to work for them. I believe that this can happen in Papua New Guinea. I believe the job market can become a seller’s market where the employees have the upper hand in determining and even dictating the terms and conditions of employment.

Eight Steps To Starting A Business From Scratch
Starting a business is a process. You just don’t get up and start one on the spur of the moment. An idea may be your starting point, but there are several steps you have to take. The eight basic steps which I will be sharing in this column are as follows:

Step # 1: Assess yourself to discover your talents, hobbies, skills and knowledge upon which you can build a business.

Step # 2: Develop several business ideas which match the needs and problems of your local community or country at large to your talents, hobbies and skills.

Step # 3: Carry out market research to establish the profit potential for your ideas. Find out how many potential customers there may be for your idea, what they would be willing to pay, how many others are providing similar products or services, etc.

Step # 4: Develop a business, marketing and financial plan.

Step # 5: Seek or raise financing (if necessary).

Step # 6: Register the business (if necessary).

Step # 7: Establish your business premises and systems.

Step # 8: Let as many people as possible know what you are offering.

Obviously there are a lot of issues to cover under each of the steps outlined here. I will therefore be discussing each of these steps in more detail in upcoming articles.

Wealth Creation Under PNG Vision 2050

Below is an article I published in the Sunday Chronicle newspaper.

The Seven Pillars
As readers would know by now, PNG Vision 2050 has seven pillars, which are:

1. Human capital development, gender, youth and people empowerment;
2. Wealth creation;
3. Institutional development and service delivery;
4. Security and international relations;
5. Environment sustainability and climate change;
6. Spiritual, cultural and community development; and
7. Strategic planning, integration and control.

Dr. Musawe Sinebare, a fellow commentator from the National Research Institute and others have discussed at length some of the critical issues related to these pillars in this newspaper. My interest is Pillar Number Two: Wealth Creation.

PNG: Mountain Of Gold, Floating On Sea Of Oil
As all of us know, Papua New Guinea is richly endowed with many natural resources. On the land we have export tree crops such as palm oil, coffee, cocoa, copra, rubber and other exotic fruits and nuts. We also have some of the largest virgin forests with unmeasured timber resources. Several of these large tracts of tropical rainforests will qualify for participation in the trading of carbon credits too.

Under the land we have gold, copper, silver, nickel, diamonds and other precious metals, oil and gas, while in the sea we have many kinds of marine resources of unknown economic potential. We even have gold, oil and gas under the sea! For those who do not know, PNG will be the first country in the world to conduct gold and other minerals prospecting and mining below the sea bed.

Nobody has been able to calculate the total economic value of the country’s resource endowments yet. I guess people have not even attempted to do it, because every time they come up with a figure, it would change, because new findings are being made every day. We are so blessed that we have become the envy of the whole world. Knowledgeable people have actually defined Papua New Guinea as “A mountain of gold floating on a sea of oil and powered by gas.” No other country in the world has been described in such glowing terms.

So Rich, Yet So Poor
For a population of some 6.5 million people, there is enough for everyone to become wealthy. There is enough money around (or in the ground) for all our roads to be sealed, our aid posts, health centres and hospitals to be well-staffed with health workers and well-stocked with medical supplies so that people do not die from preventable diseases, our schools to be staffed with well-paid teachers and equipped with up to date teaching materials so that we produce some of the most academically and professionally competitive people in the world. There is enough for everyone to live in permanent houses with water supply, power, telephone and other services connected right into the remotest parts of the country. And we certainly have enough to provide for a police force that effectively combats lawlessness and maintains a peaceful environment under which ever body has equal opportunity to prosper.

Yet, the irony of it is that we are so rich, yet so poor. Many people in other countries are born poor and become rich but we Papua New Guineans have been born rich but have become poor.

All our development indicators, especially on the social front, are among the worst in the world. Latest indications are that PNG ranks 150 out of 177 countries on the United Nation’s Human Development Index (HDI). That makes us the 31st least developed country in the world on the human development front. Lesser endowed countries like Fiji, Vanuatu and Solomon Islands rank better than us. On the other hand, we are perceived to be among the top 30 most corrupt countries in the world. We score top marks for corruption but very low marks for development and improvement in peoples’ living standards. We can only wish that it were the other way around.

The level of unemployment in terms of holding paid jobs is over 90%. For a country with a working age population of some 3 million, less than 400,000 are on salaried jobs. The education system produces drop-outs at a rate of 85% every year. It is not that our young people lack intelligence; it is that the educational facilities lack the capacity to accommodate them all. There are just not enough teachers and lecturers, classrooms, dormitories, laboratories, teachers’ and lecturers’ houses etc.

The gap between the rich and the poor has been widening at an alarming rate, such as to leave future generations with little to look forward to. According to the World Bank, 25% of the people in PNG were assessed to be living below the international poverty line of US$1 per day in 1996. In 2006, ten years later, the proportion of poor people was 37%. Then in 2007, only one year later, it jumped markedly to 53%! (These figures are taken from Vision 2050 page 17).

The conclusion is this: Our people have been consistently progressing towards poverty. They have become poorer. Interestingly, this has happened during the same time as the country experienced some of the best times since independence in terms of economic growth. While the government and multinational investors have been riding upward and forward on the back of several successive commodity booms, the people have been riding in the opposite direction.

According to most social workers and NGOs that deal with the small people on a daily basis, the increase in lawlessness in the country is to a large extent related to poverty. People steal, kill, push drugs and get involved in prostitution etc because they need money to survive. If nothing serious is done to reverse the increasing slide towards poverty and deprivation, social disharmony and law and order problems are going to escalate even further. We will be a rich country with a lot of poor people who make life very difficult for the few well-to-do.

Another frightening development that has taken place, especially since the 1990s, is the rapid domination of business activities by foreigners, especially those from one particular region of the world. We may pat our backs as proud citizens of a country so richly blessed gold, copper, oil and gas, but the fact is that we have been invaded economically and the actual wealth has been siphoned off under our noses without us realising that this has been happening. In fact, while most of us have not seen these things happening, a few of us have actually been aiding the process and betraying our own people to satisfy our greed and selfishness. The way things are going, it will not be long before all our resources are extracted and the money taken by foreign investors, leaving nothing for future generations.

We have further become a nation driven by the hand-out mentality, heavily dependent on foreign aid. We are so desperate for help that we put our hands out to so-called friends of Papua New Guinea every year, not to give, but to receive. And when they give us, we give them headlines in our newspapers and carry them on our shoulders. We even bestow upon them titles which would make our ancestors squirm in their graves because our generation is trading recognition for handouts whereas people fought and earned such titles in their generations.

To add salt to wound, so-called international consultants and experts come in, pick our brains, process the information, and sell it back to us at exorbitant prices. We think we are being served with innovative ideas to take our country forward, but a critical look will actually reveal that they were our ideas in the first place. In the same way that foreigners import our raw materials and sell them back to us in processed form at very high prices, consultants collect raw information from local people, process and package it, and charge us at rip-off rates. And they sell us these ideas in a certain way as to promote their own interests and keep us in both mental and outward suppression and dependency.

There are so many reasons for this state of affairs, and to address them will definitely take a lot of time and effort. Vision 2050 sets the country in the right direction towards addressing and overcoming many of these national issues.

As far as the subject of our discussion is concerned, one part of the solution is the development of an entrepreneurial class in the country. We need more business people in the country, because such people create wealth using their ideas, time, knowledge, skills and money. They also take the risk to multiply wealth through various investments. When they succeed, they contribute to creating jobs which provide a means of living to other people. Entrepreneurs are therefore assets to society. The more of them we have in the country, the better.

At the present time PNG Vision 2050 states that only 10% of businesses are owned by citizens of this country. The majority (90%) are foreign-owned. That is okay as they are making a contribution to developing the country. But it would be much better if an increasing number of businesses (both small and large) were owned and run by the citizens of this country, because at the end of the day the money remains in the country. Foreign businesses do bring new money and skills into the country; and they do create and provide jobs. But the bulk of the wealth they create and multiply in our country using our resources and people is transmitted back to their home countries where the owners live.

Having assessed what I have discussed so far, I am very excited that the Vision 2050 has wealth creation as its second pillar.

The document makes many good statements of intent. Several statements relevant to wealth creation and economic growth are that the government intends to:

• Empower and positively discriminate in favour of indigenous citizens in business start-ups and expansions;
• Strengthen the capacity of institutions responsible for entrepreneurial training;
• Establish an Entrepreneurship Incubator Scheme; and
• Ensure that 50 per cent of our citizens become self-employed entrepreneurs.

As readers know by now, the last statement is my personal dream. But my dream covers all the people who are not able to get paid jobs, not just 50%. I look forward to the day when everybody who cannot be employed becomes self-employed so that we do not have any unemployed people in the country. As I stated in last week’s article, the answer to unemployment in Papua New Guinea is not employment but self-employment.

Here are some of the significant statements in the Vision 2050 document in relation to wealth creation:

• “Only ten percent of business activities are owned by Papua New Guineans. Entrepreneurial capacity development and skills training are non-existent and income generation is mainly concentrated in the non-renewable resources sector.” (page 36)

• “Opportunities must be created for citizens to start-up businesses and to expand existing businesses. This can be possible through tax relief, technical and financial support, the establishment of an entrepreneurial incubator scheme and other incentives.” (page 37)

• “The State must establish or task an existing entity with the development of the indigenous business sector whose role will be to identify, encourage, fund and grow the sector to enable our people to compete with foreigners in the country.” (page 37)

• “Lack of education and skills development has contributed to a lax attitude and dependency mentality among the population. This has resulted in our people being unable to enter into small business opportunities which are currently dominated by foreigners...The future development focus under Vision 2050 will shift from a poverty reduction mentality to a positive wealth creation mind-set...It is essential that a rigorous program in entrepreneurial skills development is established, and that communities are arranged into cooperative societies or nucleus estates for collective economic growth.” (page 51)

From the responses I have been receiving from readers of this column, it is evident that Papua New Guineans are generally enterprising people. They aspire to start businesses, shake off the shackles of poverty and become the wealthy people they were born to be. Now that the government intends to make it its business to help the people make a shift in their thinking from poverty consciousness to a positive wealth creation mindset, I can say that at least in this instance the desires of the people and their government are alike. The people desire to get into business, and the government desires to help them do it. That is both comforting and exciting.

I truly hope that the PNG Development Strategic Plan 2030 has captured the country’s aspirations under Vision 2050 and translated them into definite strategies and programs aimed at empowering our people to create and multiply wealth. I am also hopeful that adequate resources will be allocated to the Vision, and the strategies and program will be implemented with commitment and dedication on the part of the public servants and other partners, so that at least for once we get our country heading in the right direction of becoming one that is Smart, Wise, Fair, Healthy and Happy by the year 2050.

To people who pray for our country, here is one prayer point: Pray that the God who has uniquely blessed us with abundant natural resources also give us leaders with vision and integrity of heart and managers that are prudent so that we can stand tall among the nations of the world as a rich and powerful country.

Briefing at Vision 2050 Centre

I had the privilege of being briefed in detail on Papua New Guinea's Vision 2050 at the Vision Centre within the Department of Prime Minister and National Executive Council along with Mr. Cyril Gare, a Wewak-based freelance journalist.

PNG V2050 is about setting PNG on the right course towards becoming a smart, wise, fair, healthy and happy society by the year 2050. It is the first time since independence that such a long-term vision has been set. It is made up of 7 pillars and is consistent with the country's National Goals and Directive Principles which are enshrined in the Constitution, and the Eight Point Plan which was launched at independence.

The seven pillars of PNGV2050 are:

1. Human capital development, gender, youth and people empowerment;
2. Wealth creation;
3. Institutional deveolopment and service delivery;
4. Security and international relations;
5. Environmental sustainability and climate change;
6. Spiritual, cultural and community development; and
7. Strategic planning, integration and control.

The vision is backed up by the PNG Strategic Development Plan 2030, which is a 20-year rolling plan which seeks to make Vision 2050 become a reality.

Both PNGV2050 and the PNGSDP 2030 are home-grown, and have been written after wide consultation with stakeholders, especially people in the country's 89 districts.

I came away with the very strong impression that at least we now have a sense of direction as a country. But what also became clear is that there is a great need for visionary political leadership and prudent management to make a dream of a smart, wise, fair, happy and healthy society become a reality.

I also came away with the strong impression that the 2012 National Elections will be very crucial to the country. It is essential that the right people get into Parliament. With the expected large amounts of money from the LNG and other resource projects, PNG has the opportunity of becoming the kind of society envisaged by Vision 2050, but only if we have people with the political will and administrative prudence to get things right for once.

Computer and Modem Problems

Hi friends,

I have not been able to update this blog for the past 5 months due to problems with my computer, then with the modem. I have rectified both problems so will publish some articles shortly.