Getting a good match between your skills, talents and experiences, and your business idea may indeed be a good start. But you cannot just as yet put your life savings, loan, parents’ money, inheritance, or retirement fund into the business. Try to have a look at the macro environment affecting your business. This time, limit your choice to the five ideas that got the highest rating in the checklist. Screening will narrow the five choices to just three that will meet your needs, strengths, and business goals. In this screening, you need to find out how profitable the business will be.
This requires you to do some business analysis. Doing so will help you evaluate the chances for survival and eventual growth of your prospective business.
Look at each of the remaining choices of business ideas along the four functional areas, namely, marketing, technical, organization, and finance.
¾ Market assessment. This generally concerns the presence or absence of buyers for your
product or users of your service and how much income you can expect to derive from it. ¾ Technical assessment. This examines your capability to be in the particular business.
You will need to answer such questions as:
• What technology does this business need and how will I acquire it?
• Will I be able to acquire the materials, equipment, and technical skills that the business will require?
¾ Organizational assessment. This measures your familiarity with the type of business how well you know the ins-and-outs. It also concerns your ability to put together all or the resources you will use in the business.
¾ Financial assessment. This gives you an idea of how much it will cost to start the business and keep it going at least until the revenues start coming in. It will test how deep your pockets are as well as your patience in identifying and getting the
necessary financing. Can you withstand periods, particularly following start-up, when little or no revenue will come in?
Now take a closer look at each area.
Knowing the Market for your Product or Service
You have narrowed down your choices in the selection checklist. You can now look around for the business opportunities in your area that match with your choice.
In this phase, you will collect, list down, and examine data that have something to do with selling the goods you will produce or services that you will offer. This process is also known as market research.
¾ Market research will allow you to know more about the following:
• The demand for your product or service; the people who will likely buy or use them, and how many they are; and whether these buyers will likely affect the location of your business.
For example, if your target customers are homeowners, should you be near residential areas?
• The type of people who will buy and continue to buy from you. Consider the following:
o It is almost impossible to make a product or offer a service that will appeal to all kinds of customers all the time.
o In many cases, people who have special interests frequently visit specialized shops. For example, sports buffs would go to a sporting goods store more often than they would go to a department store that sells anything and everything. Scented candles will appeal more to women who fall within certain age and income groups.
o A salon offering a wide range of grooming and body-pampering services would attract a wider variety of clients compared to the traditional beauty parlor of old whose fare is limited to the regular hair, make up, and nail polish services.
• How you will make your product or service known to your likely buyers or users and encourage them to buy from you.
The following are among the more popular ways of promoting a business:
o Putting up an eye-catching mark or sign in your place of business and in other strategic places in the community;
o Advertising in the newspaper, radio, television, billboards, or brochures and flyers, or through the web. Some people insert their flyers in the newspaper.
o Conducting sales promotions such as giving discounts and giveaways; and o Holding product demonstrations in malls, offices, social gatherings, etc.
If you plan to make a product or offer a service that is already in the market, your promotion efforts may focus on the distinct features of your item and what makes it different from the rest.
¾ Financial assessment. This gives you an idea of how much it will cost to start the business and keep it going at least until the revenues start coming in. It will test how deep your pockets are as well as your patience in identifying and getting the
necessary financing. Can you withstand periods, particularly following start-up, when little or no revenue will come in?
Now take a closer look at each area.
Knowing the Market for your Product or Service
You have narrowed down your choices in the selection checklist. You can now look around for the business opportunities in your area that match with your choice.
In this phase, you will collect, list down, and examine data that have something to do with selling the goods you will produce or services that you will offer. This process is also known as market research.
¾ Market research will allow you to know more about the following:
• The demand for your product or service; the people who will likely buy or use them, and how many they are; and whether these buyers will likely affect the location of your business.
For example, if your target customers are homeowners, should you be near residential areas?
• The type of people who will buy and continue to buy from you. Consider the following:
o It is almost impossible to make a product or offer a service that will appeal to all kinds of customers all the time.
o In many cases, people who have special interests frequently visit specialized shops. For example, sports buffs would go to a sporting goods store more often than they would go to a department store that sells anything and everything. Scented candles will appeal more to women who fall within certain age and income groups.
o A salon offering a wide range of grooming and body-pampering services would attract a wider variety of clients compared to the traditional beauty parlor of old whose fare is limited to the regular hair, make up, and nail polish services.
• How you will make your product or service known to your likely buyers or users and encourage them to buy from you.
The following are among the more popular ways of promoting a business:
o Putting up an eye-catching mark or sign in your place of business and in other strategic places in the community;
o Advertising in the newspaper, radio, television, billboards, or brochures and flyers, or through the web. Some people insert their flyers in the newspaper.
o Conducting sales promotions such as giving discounts and giveaways; and o Holding product demonstrations in malls, offices, social gatherings, etc.
If you plan to make a product or offer a service that is already in the market, your promotion efforts may focus on the distinct features of your item and what makes it different from the rest.
• How you are going to reach your customers; how to reach the most number at the least cost.
o Will you put up a storefront in a fixed location?
o Will you use a cart so you can go around?
o Do you plan to go virtual as in selling through the web?
o Will you sell in a tiangge?
o Can you “borrow” a store and let others move your products for you?
• How much you are going to charge for your product or service.
o Do you intend to charge on the high side or on the low side?
o Will you be able to make a profit from your product or service?
• Who your competitors are. Consider also those who are not direct competitors but who might somehow compete against you. For example, if you rent out a
badminton court, you compete not only with other operators of fitness facilities but also against providers of other forms of recreation or leisure, such as billiard halls.
• How you will position your product or service.
o Will you compete with existing businesses head-on or will you try to find your own place in the sun?
o Can you come up with something better or maybe something more practical and useful?
o What will your product or service have that will convince buyers or users to prefer yours?
• Where you will set up your business. This will depend on the business activity you intend to put up.
o The site of your business becomes a critical factor if your product or service depends on a heavy volume of vehicular and people traffic. If this is the case, even the side of the street you are on can make a difference. You can benefit by positioning this type of business close to a “magnet” store, i.e., a bigger store not necessarily in the same business as yours that attracts a large number of customers. This way, their customers may spill over to your store.
o If you are a beverage distributor, reaching out to your customers becomes a question of transportation costs and speed. You will prefer a set-up that is large enough to store your goods and park your vehicles at a low rent.
o Some service entrepreneurs can do business without leaving home. Licensed professionals such as doctors and dentists can set up their clinic in their own residence. Accountants, lawyers, architects can hold office at home too. It is a common practice among sari-sari storeowners to use a portion of their front for the store. Many hardware stores can set up their store at the first floor of their residence.
o There are also some other service businesses that can do away with a physical set-up. These include those services that may be performed at the residence of a customer, such as landscaping, tutorial, salon service, interior designing, or pest control. Client calls on services for special occasions, for example a wedding or a product launch, can also be done either at the home of the client or in some other venue, say, a restaurant.
Knowing your market, who they are, where they are, how to reach them, your price, the competition, and type of operation suitable for your business is not the be-all and end-all of market research. Use the data to get a good estimate of the number of potential buyers or users and, consequently your potential sales figures.
Read more of this aspect in Chapter 5, Determining Your Market and Chapter 6, Marketing Strategies.
Creating your Product or Service
How did you fare in the selection checklist? If you possess the technical know-how you need for the business you intend to go into, your next move will be to find out the process, system or technology that is appropriate for your business. Ask yourself the following questions:
¾ How am I going to make my product or complete my service?
¾ How and where will I know more about the process, materials, and tools and equipment I
need to make the product or service?
¾ Where will I get the materials and tools and equipment?
¾ If I will use machines, how and where will I get people who can operate the units?
• Process. Think about the different steps or stages, materials, and tools necessary to produce the product or render the service. Answer the following:
o Are all the steps necessary?
o Can I eliminate a step or combine several steps?
o What tools and equipment will I need?
o What skills should I look for in a potential worker and how many workers do I need?
• Machines and equipment. Use these things to help you make a product or complete a service in an organized way and with the least cost. The kind of machines to use will depend on the product or service you will offer. If you are in crafts, hand tools and simple machines will do. If you are in trading, you’ll probably need a couple of vehicles to move the goods. If you will open an internet café, your computer needs will differ from one that is intended for personal use. Regardless of whether the process you employ will depend heavily on the workers or on machines, you should be most concerned with getting the most use of the equipment and in drawing out the creativity and potential of your workers.
o Where will I get the equipment? Is it locally available?
o How much will it cost? How many years will it take for me to recover the cost?
• Materials. You will certainly need materials to make the product or run the service.
Where and how will you get your materials? Can you use alternative materials?
You cannot open a laundry service without adequate running water and a stable source of power. If you opt to be a furniture manufacturer, you will depend on suppliers mostly coming from the provinces to provide you with the wood and
Knowing your market, who they are, where they are, how to reach them, your price, the competition, and type of operation suitable for your business is not the be-all and end-all of market research. Use the data to get a good estimate of the number of potential buyers or users and, consequently your potential sales figures.
Read more of this aspect in Chapter 5, Determining Your Market and Chapter 6, Marketing Strategies.
Creating your Product or Service
How did you fare in the selection checklist? If you possess the technical know-how you need for the business you intend to go into, your next move will be to find out the process, system or technology that is appropriate for your business. Ask yourself the following questions:
¾ How am I going to make my product or complete my service?
¾ How and where will I know more about the process, materials, and tools and equipment I
need to make the product or service?
¾ Where will I get the materials and tools and equipment?
¾ If I will use machines, how and where will I get people who can operate the units?
• Process. Think about the different steps or stages, materials, and tools necessary to produce the product or render the service. Answer the following:
o Are all the steps necessary?
o Can I eliminate a step or combine several steps?
o What tools and equipment will I need?
o What skills should I look for in a potential worker and how many workers do I need?
• Machines and equipment. Use these things to help you make a product or complete a service in an organized way and with the least cost. The kind of machines to use will depend on the product or service you will offer. If you are in crafts, hand tools and simple machines will do. If you are in trading, you’ll probably need a couple of vehicles to move the goods. If you will open an internet café, your computer needs will differ from one that is intended for personal use. Regardless of whether the process you employ will depend heavily on the workers or on machines, you should be most concerned with getting the most use of the equipment and in drawing out the creativity and potential of your workers.
o Where will I get the equipment? Is it locally available?
o How much will it cost? How many years will it take for me to recover the cost?
• Materials. You will certainly need materials to make the product or run the service.
Where and how will you get your materials? Can you use alternative materials?
You cannot open a laundry service without adequate running water and a stable source of power. If you opt to be a furniture manufacturer, you will depend on suppliers mostly coming from the provinces to provide you with the wood and
other natural materials you will need to create and sell your goods. Your location and access to highways and transport can affect how quickly you will receive your materials. If your sources are far and there are not enough transport facilities serving your place, your costs will increase which, when passed along to your customers, will also certainly affect your price. Besides, having suppliers far from your plant can also result in production delays.
• Workers. As a new small business owner, one of the first decisions you will have to make is whether to hire someone to help you out in making the product or in completing the service.
o Do you need a full-time or a part-time worker?
o What type of skills do you need?
o How much will you pay your worker? What will be the terms? Will it be on a per item or service completed, by the hour, or by the day?
Learn more of this aspect in Chapter 7, Making Your Product and Completing Your Service.
Putting your Business Together
Now you already have a tentative product or service in mind. You have also identified your potential buyers or users and discovered how you are going to make your product or complete your service. Your next move is to put up the business itself.
¾ Start by defining your purpose for putting up the business and setting the goals and objectives that will lead you to achieve this purpose.
¾ Give your business a legal personality. This basically means registering your business with the appropriate agencies of government.
¾ Let these questions guide you:
• Why am I setting up this business? How do I want my business to be five years from now? What should my business achieve on the first year, on the second year, etc.?
• Will my business be a single proprietorship, will I get partners, or will I incorporate? What are the advantages and disadvantages of each type?
• What are the laws and regulations that can affect and influence my business?
• Will I need people at the outset? How many will I need? What qualities will I look out for in them?
• Where should I go for information and guidance?
You can ask for assistance from any SME counselor at the DTI SME Center nearest your place.
Read more of this aspect in Chapter 8, Organizing Your Business.
Looking at your Finances
Regardless of the manner that you will start a business (an entirely independent business, an existing one, or a franchise) and type of activity (manufacturing, service, or trading) that you will go into, you will need money to put up a business and keep it going at least until the business starts to generate revenues. Your next move is to find out how much you
Regardless of the manner that you will start a business (an entirely independent business, an existing one, or a franchise) and type of activity (manufacturing, service, or trading) that you will go into, you will need money to put up a business and keep it going at least until the business starts to generate revenues. Your next move is to find out how much you