Starting a business is easy
Almost every individual thinks once of twice about owning a business but very limited individuals owns. Here I am sharing simple steps to start any business.
One of my friend Reyan lost was planning to start business just after completing his graduation. Like many other first time entrepreneur, he was facing the many doubts in his mind. During my informal conversation with him, i tried to sum up his doubts as below
- What business will be suitable for him?
- How he can arrange the fund?
- If venture didn’t become successful then?
Market research for new business
I suggested him to do following before starting any business
a. What to sell?
b. Whom to sell?
c. Which market?
d. How do you make your store?
e. How do you get people to store?
f. How do you collect money & deliver product/ service?
g. How you can offer better alternative to customers?
By answering the above points anyone can zero down the best suitable business. Reyan realized that he has interest in fashion industry and as per his analysis garment manufacturing will be good option for him. Now based on his business plan he tried to arrange the funds.
Arranging the capital for business
To arrange fund, I suggested him to choose the options
- Bank Loan -very secure & structured
- Loan from relatives & friends -unstructured with low risk
- Venture capital — very demanding but highly professional
- Partnership- additional responsibility to manage return and relationship
- Advance from customers — time bound production with low profit margin
I advised him, before approaching to investors or lenders try to calculate profit margin as below
PM = (R — C)/R. where
· PM is Profit Margin;
· R is the revenue received which may be calculated in different ways depending on type of PM:
·C is the cost associated with the item sold and may be calculated in different ways depending on the type of PM
If venture didn’t become successful then?
Almost all entrepreneur face the similar question before starting new business. To become successful in any business largely depend upon below four pillars
a. Market research
b. Your execution skills
d. Strategic tie-ups
Somehow I convinced the Reyan to develop business plan based on above four pillars to avoid failure. In three months period Reyan started his garment manufacturing business. Now after two years, he is planning to build his retail brand for kids garments.
I am sharing this story for benefits of other entrepreneurs.