The decision to set up a business of your own may perhaps be one of the most challenging decisions of your life. This is because it may involve you taking full responsibility for your own future particularly in respect of employment and income.

It has been a challenging appeal to many people; the challenge has been taken up by increasing numbers during the recession among retired and retrenched workers who have received their gratuities and other entitlements as well as ex-politicians following the collapse of the second republic.

An important aspect of the decision is that of becoming “your own boss”, working for your livelihood and profit. However before you commit all your resources to this new mission of yours and turn the venture idea into reality, it is pertinent to take realistic stock of yourself and of the business idea.

You need to know yourself more honestly and more objectively than ever before. This important diagnosis should prepare you to face setbacks and disappointments with determination to succeed and sustain long periods of work with probably little reward (the initial stage anyway) and even less free time than hitherto you have been enjoying.

You should also bear in mind that even with the strongest determination you are more likely to fail than to succeed. According to statistics one in every three new businesses within the first year of operation while a staggering four out of the five small businesses fail during the first five years.

This article on setting up a business should provide you with valuable tips for reducing the risk associated with small enterprises so that your own business does not form statistics in an adverse way. Throughout this article, you will be given opportunities to critically examine and say something about yourself.

There Are Four Ways of Owning Business

These include:

• Inheritance – e.g., a business may be willed to an individual from parents, e.g. at death.
• Acquisition – when one buys an existing business
• Launching a new business venture
• Franchise

Starting a new business, buying an existing one, opening a franchise or ownership by inheritance, requires strategizing.

This is essential in that, just as a long journey will take a long period, so would a business which the owner hopes to run for years on end. The owner needs to design strategies of how to achieve the long-term objectives spelled out in its mission statement.

From the foregoing, there is an obvious need to strategize to compete effectively in one’s field and industry as will be contained in chapter six.

Self-Diagnosis

If you are determined to set up your business or continue with an existing one, an objectives self-study need not deter you easily, it should rather assist you in findings out what you have to do if you want to succeed in your business venture(s).

If you find it difficult to assess yourself as objectively as you can it would be helpful to ask a close friend or relation for a frank opinion as to your chances of success as a business owner.

After answering the question “Who Am I” you should try to answer other questions including the followings.

• Are you determined to give up most of your spare time activities if necessary, so that you can devote yourself wholeheartedly to the business?
• Do you have any experience in the line of enterprise you are proposing to start?
• Do you have any experience of management budgeting, cash flow forecasting marketing etc and what have you done to improve your skills and knowledge in these areas?
• Have you received your immediate family support and are they willing to share in your aspirations and frustration? What are their views on the course of action you are planning to take?
• How do you rate your business acumen?
• Will your family be able to survive during the initial lean months when regular income might not be coming in?
• You enjoy good health or will your health allows you to cope with stress, hard work and long hours?

Studies of entrepreneurship in many parts of the world indicate that most successful entrepreneurs are married and that they generally have understanding spouses who provide moral and material support.

You will certainly need the support of your family if any and this should be considered as an important factor.

Basic Factors Related To Business Success

After your self-analysis, you should then consider in more details the basic factors needed to bring about success in your new business involving you becoming ‘self-employed’.

The basic factors that relate to business success are ideas, motivation, resources, and ability, which must be combined through planning and organization.

Working For Ourselves

If we work for ourselves there is no one to tell us what to do, how to do it, when, where or for whom etc. Once we work for ourselves we are not likely to be able to do everything we want to either. We may not be prevented a boss, but because we do not have the necessary equipment, adequate premises, self-confidence or sufficient money, we may not have the necessary skills.

Perhaps, more importantly, we may be prevented from what we really want to do because the customer does not want it and will not, therefore, pay for it.

So successful self-employment depends upon:

• A business which satisfies you, in terms of allowing you to make your own decisions, or make a lot of money or provide you with a job you really like doing.
• Having an idea this will translate into a product or a service which a customer will want and pay for.
• Having the right skills and abilities both technical and managerial to run the business.
• Having or obtaining the resources necessary to produce your product or provide your service. And because customer’s taste and demands change (not only from customer to customer but from time to time), then your business has to adapt to this change if you want to survive, this may involve modifying your original “ideas” re-thinking your own motivation learning or buying in more or different skills and/or acquire more or different resources.

What Makes A Successful Business

1. The Idea

• Are there any potential customers or just a few?
• Are they local or widely scattered?
• Does the idea work?
• Can you do it/make/provide it?
• Is there a need for the product or service?
• Is it better/cheaper/more readily available than others?
• Who will buy it?
• Who produces/ provides it now?
• How do you reach the customer?

2. The Motivation

• What do you want to get out of it?
• Why do you want to be self-employed?
• Do you want to earn a lot of money independence power, and position to do a job you really enjoy or to do a job rather than do nothing?
• What does your family think about it?

3. Ability

• What skills have you got?
• Technical i.e., can you make/design any product or do you know anything about providing the service?.
• Managerially can you organize or pool resources together i.e human, material information, finance etc. do you have a good working knowledge of the business world etc?
• Have you any other help to tap from family, brother, friend or anywhere?

4. Resources

• What resources do you need to translate your idea into a business
• Premises, equipment raw materials, labor etc.
• How much of these do you need?
• Where can you get them and in what quality and quantity?
• Which of these resources have you got now and in what quantity?

5. The Plan (Setting Up A Business)

• How much is it going to cost to produce the product/service i.e what is the local cost of the inputs (premises equipment, raw materials, labor etc?.
• At what price do you make the product/service available?
• How much of sales do you need to make in order to survive in business ^
• What profits can you forecast?
• What level of sales can you forecast?.
• How much cash will you need overtime?

6. Organization (Running The Business)

• What type of business organization do you want limited liability, sole proprietorship partnership etc?
• Which profession do you need?
• What records must be kept?
• Do you know about employing people?
• What are your statutory obligations?
• How do you manage the people you employ?
• How do you control the business?

Basic Resources Needed To Start a Business

Every business (industrial or service) requires some basic needs for its operation. For example, a butcher would need knife, cutlass, axe and of course the animal to slaughter to satisfy his customers. And in the case of projects where materials such soya beans have to be processed certain basic needs have to be acquired to be able to operate effectively.

These basic needs whether in commerce, service or manufacturing are called resources. These are things which will assist in the achievement of what we plan to do.

The following are some of the basic resources.

• Land Premises or Building.
• Plant and Machines Equipment for factory and office furniture, vehicles etc.
• Materials or goods to use.
• Cash

How Can We Get These Resources?

• Cash: Money is needed in all aspects of the business. To build factories and offices, to buy machines and equipment, to purchase raw materials and other goods. To hire the services of skilled semi-skilled and unskilled labor that will assist in production, managing the business selling our product and keeping our records.
• Labour/Skill: We need the support of others to be able to produce. We need the skill or assistance of other people to operate our machines, drive our vehicles, maintain our machines, pack our goods, sell our goods, keep records of what we buy and sell keep the factory clean watch over the goods and materials in the factory. For these services, we need the assistance of competent hands.
• Land Premises or Building: We can hire any of these resources or buy them if we have our own cash; otherwise we have to borrow money from the bank to buy them.
• Materials or Goods to Use: Depending on your area of production, you will need the materials to enable you to produce.
• Plant and Machines Equipment: We can buy these items with our own money or borrow from friends or banks to buy them.

When we use these resources in business, we pay for their use. What we pay for their use is the cost of the resources to the business.

Now we will examine the cost of using each of the resources we have mentioned.

Cash: It will be observed that the cost of the use of each to a business is the interest paid on the amount of money borrowed either from individuals or the bank.

Labor: There are two categories of workers. The management staff that stays in the offices to manage the business. The cost of this category of workers to the business is the salary and other financial benefits paid to them for their services. The other group is the semi-skilled and unskilled labor that works in the factory. The cost of using their services is the wages paid to them at the end of each day or month.

Land and Building (Premises): We can buy land and building with our money when we do this, we can no longer put the money in the bank to yield interest; the cost of the use of the building is the interest we can no longer earn in the bank. When costing our product, we must add the value of the interest as the cost of using the factory. On the other hand, we can let the business hire the building.

In this case, the business has to pay rent for the use of the building either monthly or annually. If we have no money to build our factory we on the money borrowed. The interest on the loan is a cost to the business. If we have no money of our own and we cannot get money to borrow from the bank, we can hire a building as a factory. In this case, we can pay rent to the landlord for the use of his building. Rent is also a cost to the business.

Plant and Machinery: The cost of use of this is the interest on the loan.

Raw Materials: The use of raw materials has a cost and this cost is the value of its purchase.

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