• Startup Capital
Capital is undoubtedly one of the main concerns of a starting business. Most businesses fail to launch because of lack of sufficient capital. To avert this situation, market research is critical. You need to know how much you have available for business and the best possible choice of business activity available for your level of capital.
• Sources of Capital
There are several sources of capital including your personal savings, contributions from friends and relatives, loans from financial institutions. There are numerous micro finance institutions that are available to lend money to entrepreneurs in Kenya. Some are more specific to certain groups such as the Youth Fund which targets youth and the Women Fund or the Kenya Women Finance Trust. A lot of effort has been put in place to help women and youths who in most cases don’t have collateral to guarantee their loans because they don’t usually own property. To secure funding, the prospective entrepreneur has to have a solid business proposal or plan that indicates your knowledge of the market and the returns available. It shows the lender that you know what you are doing and inspires confidence. Some groups require one to join a group where members guarantee each other thereby enabling a business person to be held accountable by group members. One of the popular Kenyan ways of raising capital is joining a merry go round group where members contribute to each other thus enabling them to start their businesses. Venture capital also exist and they offer loans based on the strength of a business plan.
• Barriers to Entry into the Market
There could be several barriers to entry into a market. Apart from high capital requirements, licensing regimes might also be a problem. Intellectual property rights and patent regulations in some industries is also a problem faced by startups.
• The Competition
You need to know your competitors in the market and what they are currently offering. You should note their quality and target market. Analyzing your competition will give you an idea of what you are up against. The research will come in handy when you have to decide on issues such as pricing or creating a niche market. As far as niche marketing goes, the more specific you are the better your prospects of making it in the market.
• Market Size
The size of the market matters when deciding to start a business. You need to find out how big your market is and what the demographics are. By demographics I mean the
Choices and preferences
of your potential customers. This will help you to tailor your products and services to suit more the needs of your customers. A well known mantra in business is ‘Give your customer more of what they want and less of what they don’t want’. It sounds simple but that is the basis of any successful business. Don’t force your own opinions on your customers. Carry out Research on your target customers find out what they want and deliver exactly that.
• Break Even Time
You need to project a break even analysis. This is the amount of time it will take you to recoup your investments and start making profits. You need to be realistic on this point. Projected sales figures based on your research are what you need to arrive at the break even analysis.
The essence of business is making profits. The importance of researching the profitability potential of your business therefore, cannot be overstated. You need to find out how long it will take you to make profits and the level of those profits vis-à-vis your financial needs.
• Cost of Production/Supplies
The cost of production or supplies constitutes the working capital. Other elements that can be included here are rent, power, water, security, etc that are necessary for your day to day running of your business.
• Licenses /By Laws
You need to know what exactly you need in terms of licenses or by laws that govern your business operation before you begin. Find out the cost of the licenses and any other permits that you are required to have.
• Registering your business
While doing your initial research you need to find out what form of business registration is suitable for your. There are several options such as
Limited Liability Company
Thanks to the internet, it is now easier to register your business online. You can register your business online and save yourself the hassle of paperwork as you concentrate on the really important stuff. (link)