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Contrary to popular belief, the road to starting a business does not start with a business plan. Here are four challenges entrepreneurs need to tackle before constructing a plan.
There are two types of people: those who’ve most likely had an experience that they found to be quite an inconvenience and thought, “why hasn’t someone created this?” and those who say, “I should create this.”
The difference between the two is that one is a consumer and the other is either a creator or an innovator. Both have a significant role to play in business. Most people get excited about their ideas and think that they’re going to change the world and all they need is a business plan or they impulsively start one without fully grasping what it takes to run a business. Careers Magazine chats with entrepreneur and Group CEO of Tshimong, a skills development and education business, Thami Pooe about what to consider before you decide to become an entrepreneur.
What problem will you be solving?
The purpose of every business is to solve a problem but there are varying degrees of challenges. There are permanent and temporary problems – solutions to both have different shelf lives. “You need to analyse whether the problem is temporary or permanent to determine the longevity of your business in solving this problem. It also determines the rate at which you scale what you’re about to implement”, Pooe says.
What is the solution to the problem?
The solution could be the actual business idea you had in mind. However, the solution needs to be broken down so that it makes business sense. Firstly, consider your value proposition; what value are bringing to a client and/or end-user? Secondly, who are you targeting?
“We often hear about ‘target market’ but who exactly does this solution appeal to? This helps you tailor your solution to your target market because sometimes people want to be everything to everyone and, sometimes, you just need to be something for someone,” Pooe says. It’s very important to understand your audience, their needs, desires and values.
Can you monetise this solution?
Apart from solving a problem, your business needs to generate income to pay for daily operations, salaries, yourself, and still be reinvested into the business for growth purposes. In addition to trying to gauge how financially viable your business is, Pooe says you need to figure out who is going to pay for it. “The money part is, essentially, what we call a business model – what does it look like? Who is your paying customer? What are the revenue generating streams you’re going to use to make money?”
Scaling – how far can you take this business?
This deals with expansion and market reach. The only way to determine how scalable your business is, Pooe says, is by asking yourself what the market opportunity is. What is the size of the market that you’ll be serving? “If you understand your market opportunity, you won‘t only be confident as an entrepreneur – because you’ll have a great incentive to push your business – but you’ll be attractive to your investors because they’ll see that not only is the business destined for greatness, but also their returns on their investment will be satisfactory.”
Once you’re able to answer the above questions, then you’re ready to start working on taking your product to market. The purpose of these questions is to establish if starting your business is worth your while to avoid wasting your time and resources. Pooe says, “as and when the need arises, in my opinion, then delve into the serious admin of registering your business, tax certificates and other traditional types of admin, because they only become necessary as your business grows”.
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