Monday, June 28, 2010

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.