How to Set-Up an Enterprise
Decision to be an Entrepreneur
It All Begins with an Idea
The overriding reason for anyone to think of establishing a SSI unit can be summarised in one word - opportunity. An opportunity to be your own boss, to provide a product or service, to implement your ideas which can generate sufficient surplus is reason to think of starting up a SSI unit.
Starting a small business takes a lot of courage. To be successful - to stay in business - you need a combination of hard work, skill and perseverance.
Generally, people who start their own businesses can be grouped into two broad categories. The first group consists of people who know exactly what they want to do and are merely looking for the opportunity or resources to do it. These people may have already developed many of the skills necessary to succeed in their chosen field and are also likely to be familiar with industry customs and practices, which can help during the startup phase of a new business.
The second group consists of people who want to start their own business, but don't have any real definite ideas about what they'd like to do. They may have developed skills in the course of their employment or education, but may not be interested in opening a business in the same field of endeavour.
How a person will proceed depends on, mainly, to which group they belong to. To evaluate the aptitude for small business ownership, an entrepreneur needs to:
Understanding the Responsibilities of Ownership.
Before starting a business entrepreneur should know what's involved in owning a business and what are the roles s(he)'ll have to play if they start on their own one? Most important fact to keep in mind is - Owning a small business is not just another job but a lot more than that. You are totally and completely responsible for its growth, development and its future. It's a completely different lifestyle. Entrepreneurs have to ask themselves whether they are ready for a complete commitment to the success of their business.
As a small business owner, entrepreneurs are going to have less time for their personal life and probably be using much of what they own as collateral to raise money for the business. The pros and cons of owning a business are listed below.
- You'll be your own boss and the boss of other people and make the decisions that are crucial to the business' success or failure.
- You'll have the chance to put your ideas into practice.
- You will make money for yourself rather than for someone else.
- You may participate in every aspect of running a business and learn more about every aspect of a business and gain experience in a variety of disciplines.
- You'll have the chance to work directly with your customers.
- You'll have the personal satisfaction of creating and running a successful business.
- You'll be able to work in a field or area that you really enjoy.
- You'll have the chance to build retirement value (for example, by selling the business when you retire).
- Last but not the least no one can fire you.
- You may have to take a large financial risk and will probably have to work long hours and may have fewer opportunities to take vacations.
- You may end up spending a lot of your time attending to the details of running a business and less time on those things you really enjoys.
- You may find that your income is not steady and that there are times when you don't have much income coming in at all.
- You may have to undertake tasks you find unpleasant, such as firing someone or refusing to hire a friend or relative.
- You may have to learn many new disciplines, such as filing and bookkeeping, inventory control, production planning, advertising and promotion, market research, and general management.
Special Pros And Cons Of The Home-Based Business:
- Your startup costs will be lower.
- Your operating costs will be lower than they would if you were renting space and paying utilities.
- Your commute will be shorter.
- If your location is unimportant to your business, you can theoretically live anywhere and still operate your business.
- You may be more flexible in your schedule if your business can be conducted at your convenience or outside "normal" weekday business hours.
- On the other hand, you're much more vulnerable to interruptions from family members, neighbors, and door-to-door salespeople.
- You may have trouble attracting qualified employees.
- You may be less accessible to suppliers.
- You may have an image problem, although with the growing popularity of home businesses, that's less common.
- You may run out of space at home if your business grows.
Ability To Set Your Goals
What do you want from your business? If you want to "succeed," how will you know if you get there? What should be the next goal once you reach the initial goal. Knowing what you want from your business permeates all of the other decisions you'll have to make in starting a new business. It will affect which business you choose, how you evaluate your chances for success, and how you determine if you have the right skills.
Estimate The Impact On Your Everyday Life
Your life will change completely once you start your own business. Try to comprehend the degree to which your life is going to change when you become a business owner? Many of the more "secure" aspects of employee life does not exist/ will vanish once you open up your own business. You might have to be perform more than one function, work at all irregular hours, juggle between business and household demands. You will need to reprioritise your schedule, work and personal life.
Evaluate Your Skills
Evaluate your own skills and make judgments about whether you're ready to own your own business. There are many entrepreneurial quizzes available on the net and with Entrepreneurship Development Institute, which test your entrepreneurial capabilities.
Assessing Your Strengths
Successful small business owners know their own strengths and weaknesses. They build their businesses around their strengths and they compensate for their weaknesses. If you're to succeed, you'll have to be able to identify what you do well and what you don't do so well.
While evaluating yourself, be honest otherwise you'll only hurt yourself if you're not. Also, don't panic if you discover that you have weaknesses. Every one including small business owner has them. The key to success is not so much in having every skill as it is in finding ways to compensate for those weaknesses.
By evaluating yourself, you are making a list of what you like to do and what you don't like to do. Generally, you like to do things you are good at and you don't like doing things you're not good at. It's a simple approach, but it should help you start to focus.
Though the list is not exhaustive it does tell you about the major characteristic of a entrepreneur.
Entrepreneurs keep themselves physically resilient and in good health. They need to work for extended periods of time, and while they are in the process of building their business, good health is a must.
In small businesses, where generally management resides in hand of 1 or 2 person, the leader must be there. In a new start up entrepreneur cannot afford a support staff to cover all business functions, and therefore he will need to work long hours. At the end of the eight-hour day, when everyone else leaves for home, you have to continue to work into the evening, developing new business ideas, checking out days work and chalk out strategy to deal with challenges and problems.
Most entrepreneurs believe they can do the job better than anyone else and will strive for maximum responsibility and accountability. An entrepreneur needs to maintain his/her calm even in face of adversity. Entrepreneur realises loosing temper won't help the situation.
Entrepreneurs enjoy creating business strategies and thrive on the process of achieving their goals. Once they achieve a goal, they quickly replace it with a greater goal. They strive to exert whatever influence they can over future events. They have a compelling need to do their own thing in their own way. They need the freedom to choose and to act according to their own perception of what actions will result in success.
Entrepreneurs are self-confident and tackle problems immediately with confidence and are persistent in their pursuit of their objectives. Most are at their best in the face of adversity, since they thrive on their own self-confidence. Before anyone else you have to believe in yourself and your product or services. It will show when you will meet your future customer, and suppliers.
Sense of Urgency
Entrepreneurs have a never-ending sense of urgency to develop their ideas. Inactivity makes them impatient, tense, and uneasy. They thrive on activity and are tireless in the pursuit of their goals.
Successful entrepreneurs should have ability to comprehend complex situations that may include planning, making strategic decisions, and working on multiple business ideas simultaneously. They are farsighted and aware of important details, and they will continuously review all possibilities to achieve their business objectives. At the same time, they devote their energy to completing the tasks immediately before them.
Entrepreneurs are realistic, they accept things as they are and deal with them accordingly. They will change their direction when they see that change will improve their prospects for achieving their goals. They will verify any information they receive before they use it in making a decision.
Entrepreneur should possess the ability to identify relationships quickly in the midst of complex situations. They identify problems and begin working on their solution. They are not troubled by ambiguity and uncertainty because they are used to solving problems. Entrepreneurs are natural leaders and are usually the first to identify a problem to be overcome. They quickly identify an alternative problem-solving approach.
Entrepreneurs like the business they have built to be praised. When they need help, they will not hesitate to admit it especially in areas that are outside of their expertise. During tough business periods, entrepreneurs will concentrate their resources and energies on essential business operations. They want to be where the action is and will not stay in the office for extended periods of time.
Entrepreneurs are more concerned with people's accomplishments than with their feelings. They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business.
Entrepreneurs are impatient and drive themselves and everyone around them. They don't have the tolerance or empathy necessary for team building unless it's their team, and they will delegate very few key decisions.
Entrepreneurs need good interpersonal skills to be able to adjust and survive as their organization grows and becomes more structured. Top Emotional Stability
Entrepreneurs should have a considerable amount of self-control and should be able to handle business pressures. They should learn to relax in stress situations and are challenged rather than discouraged by setbacks or failures. Entrepreneurs are uncomfortable when things are going well. They'll frequently find some new activity on which to vent their pent-up energy. They are not content to leave well enough alone. Entrepreneurs tend to handle people problems with action plans without empathy. Their moderate interpersonal skills are often inadequate to provide for stable relationships. However, the divorce rate among entrepreneurs is about average.
You might possess three or more of the characteristic listed above, you don't necessarily need them all use your strengths to compensate for your weaknesses.
Once you've decided that you have the right stuff to be an entrepreneur, check out the following prime considerations for determining if your business idea has a chance to succeed before you pump your life savings into a small business.
- Does the idea fire up your motivation and is it adequate enough to keep you going for next 1-2 years?
- Is it a viable business proposition in your area?
- Does it match the needs of your clientele, local or otherwise?
- Check it out with basic market research.
- Test it out at market place
- Consult with the experts
- Look out for competition in the field
- Is it a sunrise industry?
- Your business opportunity
- Project conceptualisation
In short, ideas need to be filtered through a 5-layer sieve of
- Researching your industry- how can you learn more about your chosen industry and about the resources that are available to help you?
- Market assessment- is there a market for your product or service? If so, how much income can you expect to derive from it?
- Profitability assessment- how much will starting a new business cost you? Can you afford a lengthy "red ink" period following startup, as well as periodic lulls in cash flow? Can you afford to fail?
- Financing assessment- will you be able to obtain the necessary financing for your business? If so, from where?
- Legal assessment- what potential legal liabilities are you exposing yourself to by starting a new business? Are the costs of protecting yourself worth the trouble?
Once the ideas are screened and a viable business opportunity emerges the project has to be conceptualised in all its dimensions. The 4 P's of Project Conception are:
- Product (Shape, Size and Nature)
- Process (Technology to produce the product)
- Place (Location of Plant)
- Partner (Technological or Financial Collaborator)
Having a business plan will help you in defining these 4 P's and chalking out the strategy for future of your business. It will help you establish goals, targets and identify the strengths and weaknesses.