- Research your market
- Check out your source of materials/supplies, their availability and cost
- Look at production requirements – premises, machinery and labour
- Work out your total fixed and variable costs
- Estimate your selling price
- Plan how to achieve sales
- Decide the best legal framework for the business
- Check out legislation that might affect you
- Estimate your total financial requirements and where you might raise the money
- Produce a business plan
1. Research your market
What is the extent of the market for your product or service?
Who are your customers?
Who are your competitors?
2. Check out your source of materials/supplies, their availability and cost
Where can the raw materials be purchased?
Have you got quotations from a number of potential suppliers?
3. Look at production requirements – premises, machinery and labour
Where will the enterprise be located?
What considerations are important in the choice of premises?
What machinery is required?
Will employees require additional training prior to commencing work?
4. Work out your total fixed and variable costs
What costs are involved in the purchase of capital equipment and premises?
What is the cost involved in production? Include such costs as labour, materials, insurance and any other costs that will be incurred by the business.
5. Estimate your selling price
Taking the above factors into consideration estimate your selling price.
Look at your competition and determine how you want to position yourself in the market in terms of price.
6. Plan how to achieve sales
Who is your target market (local, national or export)?
How will you promote your business?
What channels of distribution will be used?
7. Decide the best legal framework for the business
What business structure will suit you best – sole trader, partnership or limited company?
Have you registered the business name?
Have you registered with the tax office as self employed?
8. Check out legislation that might affect you
Are you familiar with your obligations as an employer?
Are you familiar with your tax obligations (income tax & VAT)?
9. Estimate your total financial requirements and where you might raise the money
What are your investment requirements?
How will you fund the project (personal investment, bank or other loans, grant assistance)?
10. Produce a business plan
Put all relevant information on paper – be realistic and set targets based on the research carried out. Don’t forget to include projected cash flows for at least two years.
