Many people dream of starting their own business and becoming their own boss. VRT News spoke with the financial expert Chris Sugira, who provided some invaluable tips for those planning to set up their own firm. Preparation and a strong business plan are of the essence so that you know what you are getting into and how much cash you will need.
A strong business plan
Chris Sugira says that a business plan is indispensable if you want to start your own business. “It helps you get a clear idea of exactly what you intend to do and how you will go about it. An effective business plan consists of two parts: a qualitative and a quantitative part.”
“The plan should start with a mission statement and outline a vision for the new business. You need to formulate answers to questions such as: what do I want to achieve? Who is my target audience? And where do I want to be in five years' time? Answering these questions will give you a clear picture of what you want and who you are doing it for. In addition to this, it is a good idea to think about what sets your company apart from the competition”.
Know your competitor
Once you have a clear idea about what kind of company you want to set up, it’s time to do some market research. “This involves a survey that will give you an insight into who your target customer base is, where these customers are and what their habits are. It also helps you analyse the competition. How are other companies doing in the sector? What are their strengths and weaknesses? And, perhaps most importantly: how can you stand out?”
Another important part of market research is choosing the right location for your business. “Is your location easily accessible for your customers and affordable for you? This can often be the difference between success and failure. It is also crucial to carefully select your suppliers. Choose suppliers that offer the best value for money and are reliable”.
The figures need to tally
Chris Sugira adds that a financial plan is an essential part of any business plan. It helps you determine whether your business idea is financially viable. “Calculate what your fixed, variable and one-off costs are, such as rent, electricity, staff and marketing costs. On the basis of this you can then calculate how much you will need to sell to cover your costs and make a profit. A financial plan is also a powerful tool to convince investors or the banks, especially if you don't have enough capital of your own to set up the business”.
"These days, you don't always have to have a lot of start-up capital. Many people start as consultants, for example, using mainly their knowledge and skills and having few expenses."
Investments and crowd funding
But what if you need additional capital? This can be raised in various ways. “You can choose to attract co-owners or investors by selling part of your business in exchange for capital. Crowdfunding is also an option. Here you raise money from a wider group of investors that believes in your project. Of course you can always go to the bank and ask for a loan. A strong business plan will help win them over.”
There is also the so-called “a win-win loan” whereby family or friends lend you money to build up your business and benefit from a tax break for their trouble.
Chris Sugira concludes by saying that "With a carefully thought-out business plan and the right financial backing you can make you dream of owning your own business become a reality”.