Starting a business can be a daunting prospect, as it’s normal to have doubts and skepticism about the potential outcomes. Questions like “Will my business make money?” or “Will people buy my products or services?” are common concerns. However, while these fears are valid, it’s possible to take steps in the right direction and increase the chances of achieving desired outcomes. By following some fundamental steps, you can mitigate the risks associated with starting a business and increase the probability of success.
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How to start a small business
Starting a business as much as it can be an exciting venture, can also be overwhelming, especially if you are new to entrepreneurship. In order to start on the right foot, there are certain things you need to do, and do well. Here are five steps to help guide you:
Conduct Market Research
Before you jump into any business, you need to research the market. A lot of people make the mistake of basing their research on just a few friends, but that’s not enough. You need to understand the market and the rate at which people are buying the product or service you want to offer. Conduct a proper market research by random sampling, and use the data gathered to determine how many customers you can potentially attract.
Write a Business Plan
A business plan is a vital document that outlines the exact method of executing your business. This plan will help you think through the different possible challenges you might face and create solutions for them. You will not be starting blind, but with a blueprint of what you need to do, and how to do it.
Choose a Location
If you are opening a physical business, choose a location that will be suitable for your business. For an online business, choose the right platform that will be your primary medium of doing business. Ensure that you select a platform where your target audience is likely to be found, and where you can easily market your business.
Register Your Business
Choose a name for your business that represents what you do, and do a quick Google search to ensure there are no similar businesses with the same name. Registering your business with the Corporate Affairs Commission (CAC) is also important, as it opens up a lot of opportunities for your business. CAC registration is cheap and easy to do, so don’t waste your money on agents that will charge you double.
Open a Business Bank Account
Opening a business bank account adds credibility to your business. It also helps you to keep track of your finances, and it makes it easy for your customers to make payments. Having a separate account for your business is also important for tax purposes, as it helps to keep your business finances separate from your personal finances.
How to start a profitable small business
Starting a business is something anyone can do, but making it profitable is a completely different ball game. Many businesses fail due to a lack of profitability, so it’s essential to have a clear strategy for generating income and building a successful business. In this article, we’ll discuss four critical points that can facilitate the profitability of a business: good business model, scalability, diversification, and competitive advantage.
Good Business Model
A good business model is crucial for profitability. A business model is the exact strategy for generating income, and every business has one. For example, a Point of Sale (POS) merchant operates a Business-to-Consumer (B2C) model, which can be challenging to scale due to small margins. However, there are still ways to scale this kind of business, such as using the principle of aggregation. This means getting more people to work for you, like hiring more workers to open additional stores.
Secondly, scalability is one of the most important strategies for building a profitable business. Scalability refers to the ability to increase revenue without incurring an equivalent increase in cost. A good example of a scalable business is Netflix, which can add new subscribers without incurring any additional cost. This is because their business model is technology-based, and technology is infinitely scalable.
Thirdly, diversification is another essential aspect of building a profitable business. After establishing a profitable business, you can think about diversification. Are there things you already do in your business that allow you easy entry into other business frontiers? For example, a pharmacy adding a supermarket, which is not a rule but adds to their margins. The key is to identify opportunities that are relevant to your business and can help generate more revenue.
Finally, every business needs a competitive advantage. You need something that will make your business stand out from the competition. It can be anything from packaging to changing the business model entirely. Tesla is a good example of a company that reimagined the entire business model of selling cars in America, and they are a lot better off for it.
Uber – A case study
Uber is a prime example of a business that has successfully leveraged the principles of scalability and aggregation to become a dominant player in the ride-hailing industry. At its core, Uber is a transportation network company that connects passengers with drivers using a smartphone app. However, the company’s success lies in its ability to apply the principles of aggregation to its business model, which has allowed it to achieve rapid scalability.
Uber’s success can be attributed to its unique business model that allows drivers to work as independent contractors, using their own vehicles to offer rides to passengers. This model not only allows Uber to operate without owning any vehicles, but it also enables the company to scale its operations quickly by onboarding new drivers into its network.
By using a driver-centric business model, Uber was able to aggregate the supply of transportation services, which has allowed the company to provide a seamless and reliable experience for passengers. This is accomplished through a sophisticated algorithm that matches passengers with the nearest available driver, and the use of real-time data to optimize routes and reduce wait times. Additionally, the company’s cashless payment system and in-app rating and review system help to ensure quality and consistency across its network of drivers.
The aggregation of drivers into a single network has also enabled Uber to achieve economies of scale, allowing the company to lower its operating costs and offer more competitive pricing to its customers. This has been achieved by spreading the costs of technology, marketing, and other operational expenses across a large and growing network of drivers.
Furthermore, Uber has been able to diversify its business over time by expanding its service offerings to include food delivery, freight transportation, and even helicopter rides. This diversification has allowed the company to tap into new markets and revenue streams, and is a testament to the flexibility and scalability of its business model.
Ubers Success- Business Model of Scalability and Aggregation
Uber’s success can be attributed to its unique business model that leverages the principles of scalability and aggregation to achieve rapid growth and scalability. By aggregating the supply of drivers into a single network, the company has been able to achieve economies of scale, reduce operating costs, and offer more competitive pricing to its customers. This, combined with its focus on diversification and constant innovation, has allowed Uber to become a dominant player in the ride-hailing industry and beyond.
In conclusion, building a profitable business requires proper execution. Good business models, scalability, diversification, and competitive advantage are all essential elements for building a successful business. It’s important to think differently and identify opportunities that can help you stay competitive and win the market. If you execute these strategies correctly, you’ll get the right results and build a profitable business.