Ten questions for new small business owners

So, you’ve done everything above. Now, can you answer the following ten questions? If not you still have a little more work to do before deciding whether the business idea you have will actually have a chance of being successful.

1. Do people need what you are planning to sell?

2. Can you clearly identify the people, or companies that may buy your product? That is,
do you know who they are?

3. Is the market big enough?

4. Do you know how you are going to reach potential buyers?

5. How much will it cost to reach the market and can you afford it, given your profit margin?

6. Do you know who your competitors are, and are they servicing the market need well enough?

7. Do you fully understand your competitors’ strengths and weaknesses?

8. Is your unique selling proposition strong enough to allow you take a share of the market away from the competition?

9. Do you know what price the market will bear?

10. Can you make a large enough profit, based on the information you get from your market research?

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Having a USP for your business

Whatever business you decide to launch, it needs to stand out from the competition. If your business is identical to your competition, then you will be forced to compete on price alone, and that can be a tough fight if they are well established and you
are fighting for market share.

That’s where discovering, or creating your USP (Unique Selling Proposition) is a vital component of your start-up strategic planning. It’s tough to make a go of a new business and establish yourself, but it’s a whole lot tougher if there is nothing to set you
apart from the crowd.

A USP is something that makes you special in the eyes of your customers.For example Bikini Car Wash at Spennah Beach.This gives it a unique marketing edge over its competitors in the market. What you are doing when you create a USP for your company is positioning yourself, it’s a strategic activity and allows you to advertise and promote
your business with a unique message. USPs need to be specific, and are far more than
just words - they are more of a philosophy that underpins your business. It’s not about being the best – it’s about being different

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How to come up with a business idea

Coming up with a business concept is fraught with challenges. In this chapter we’ll look at some basic guidelines, before providing an overview of global business trends. Here are our top ten things to consider when deciding on what business you should start.

1. How knowledgeable are you about the business you are considering opening? What
do you know about the products, services, and market? Look at businesses that you know very well, and not just from a technical perspective, but from a market standpoint.

2. Make sure you have all the necessary skills to run the business (e.g. not just those
required to manufacture the product, or deliver the service). Remember no matter what the business is, you will have to do some selling.

3. How much money do you have to invest? Businesses such as graphic design and
consulting require far less start-up capital, for instance, than opening a retail establishment. Buying a franchise can be a good idea, but do you have enough capital for both the purchase and the initial running costs?

4. Think about what you enjoy doing, and what you are passionate about. You are more likely to stay the course and be successful, if you enjoy what you do. However, be careful that your passion for your hobby doesn’t blind you to the business potential it has. You may be an excellent writer of poetry, but making a living from it is all but impossible.

5. Decide what type of selling might be involved. A retail store for instance allows you to be a little like a spider in its web, waiting for people to come along before interacting with them. Being a consultant on the other hand, means cold calling and attending business mixers. Remember selling is ALWAYS a major part of any business.

6. How competitive is the field you want to enter? You may have worked for many years
as a lube technician and feel that you have what it takes to launch your own business,
but how many other oil and lube businesses are there in your town, and is there enough
business for another? Analyze your market and see how saturated it is. Remember, you will be trying to take market share away from existing businesses, unless your business is the only one of its kind in the locale.

7. Look for where there is a gap in the market - where there is unfulfilled demand. If you are looking at the retail market, is there a product that people currently have to travel a long way to purchase? Consider the example of social media consultants; as the business world started to see the potential for marketing their products via Facebook, Twitter and other sites, there was no one around to tell them how to go about it. The gap was quickly filled by entrepreneurs who saw a need that was at that time unanswered.

8. Look at market trends and see what is becoming increasingly popular, and what
may be coming to the end of its popularity. For instance, now would not be the time to
open a video rental store, or one selling CD’s or DVD’s. If, however, you can develop apps (or perhaps be a reseller) for Smart phones then you’d be in a growing business. In 2010 the industry was worth around $1.7 billion, within the next three years it is predicted to grow to $3.8 billion. Now, that’s a business to get into. Later in the book, we’ll be taking a look at current business trends in more detail.

9. Be wary of going into any business where consumers make their buying decisions
based entirely, or primarily on price alone. As someone new in the market, your competition will have deeper pockets than you and you could watch your profit go down the drain as they undercut your prices. This is where service businesses have the edge, as people don’t choose who they work with solely on price.

10. Come up with several business concepts and test them out. The best thing you can
do to prevent yourself starting a business that simply doesn’t work for you, is to work in it for a while. If, for example, you are considering opening a coffee shop, go and work in one while you are writing your business plan. Experience the business first-hand and you will not only learn a great deal, but you’ll see if you enjoy the environment.

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Survival techniques for small business owners

You can make your small business in Uganda survive its first year with a few survival techniques.

Stick to quality for your goods and services
One of the most important ways which can make a small business survive its first anniversary is to maintain quality. One sure way of retaining and winning new customers is to be appreciated for quality of your goods and services. This is one means of leading you to be the market leader in your line of business if people associate you with quality. In whatever unique small business idea you are involved in try.

Separate your business from your personal life
Those in the formal sector appreciate the fact that a business is a separate entity from the owner. However this is lacking for those involved in small businesses. It is essential that business dealings be separated form personal issues for the good of the business. For example prevent unnecessary personal expenditures which are a loss to the business but may not easily be detected by the owner of the business.

Strict credit control
A strong mechanism has to be put in place to control credit within the business. You need to strong guidelines concerning debtors of the business and creditors. For example a strict period of time has to be put in place for payment of business debts in order to remain in good books of the business creditors.

Avoid underemployment of business assets
It is not good to keep assets which you no longer use in the business. If you have an asset you have taken quite sometime without using in the business, it is better to dispose it off. This is because the longer you keep holding it without utilizing it , the more it depreciates. Thus it is better you dispose it off and get some money which you can re-invest in the business.

Take breakfast at home
Endeavour to first have breakfast before you depart for your workplace, this way you will be saving on the amount for buying it at your work place. Breakfast usually costs not less than 2500 depending on where your place of work is. However you can save a sizeable amount if you leave home after taking breakfast.

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Common problems of small business owners in Kampala

A part form lack of business ideas, Ugandans are bound to face a few problems in the business environment.

Power outbreaks
Business in Kampala is prone to constant power outages either as a normal black out by UMEME or a disconnection due to a default in payment. Some Kampala arcades usually have power disconnections like Majestic Plaza, Energy Center, E.M Plaza. In some arcades, there is power rationing by the landlord. This is a big problem to small business owners since most of them heavily rely on electricity power. For example those dealing in movies, music downloading and uploading, mobile phone repair, secretarial bureaus and computer graphics work. This cost small scale entrepreneurs a lot of money as usually experienced in December.

High rental fees
This is one of the biggest problems encountered while operating any business in Kampala. Landlords charge high rent fees and these are always paid within a given timeframe. Other landlords charge their rent in dollars which is inflated against the shilling. Any failure to beat the rent payment deadline fetches a fine which can be to the tune of 70000 on arcades like Majestic Plaza. Some one can try to cut on the rent cost by sharing a shop with others but some landlords are discouraging this practice.

Unfair tax and licence fees
KCCA makes it mandatory for every trader to pay a trading licence every financial year. However, the business assessment policy to determine the licence is not fair. It is only based on the nature and category of the business not on the amount the business makes. Every retail shop has to pay the same licence regardless of the size which is very unfair to those with little incomes. On top of that a gabbage fee has to be paid for by every shop which is about 9000 shs. Failure to comply with on the licence policy leads to a closure of the business and carries a fine.

Burglary
All arcades have security guards but the security of one’s property is not in the hands of the landlord. One is supposed to vigilant with his property. Many traders lose their valuables to breakages into their shops but the landlord is not liable.

Political unrests
This cannot go unnoticed if one makes a livelihood in Kampala. The city is prone to teargas and running battles between the security organs and opposition politicians. This was remarkable during the infamous Walk-To-Work protests. There fore one has to be steady in case of any outbreak of unrests to close his business premises to avoid loses and injuries.

Competition from foreigners
Some Ugandans endeavor to put into practice their business ideas but are now facing a problem from foreign owned firms. It is now a common sight in Kampala to see locals doing the same business with foreigner regardless of the size. Most notable of this is the dvd selling business in arcades like Zai Plaza where Indians tussle it out with Ugandan youths for business survival. Many Indians, Pakistanis, Eritreans and Chinese among others compete favorably with small scale businesses owned by Ugandans to the chagrin of the locals.

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