How to Know and Chose the Business That Is Right for You and the Business Medium

Entrepreneurship has played a critical role in the economic development of countries such as the United States where 60 % of new employment opportunities are created by small business enterprises. In Nigeria, it is becoming difficult for university graduates to get employment opportunities. Recent figures by the Education ministry showed that at least 70 % of university graduates and those from tertiary colleges are finding it hard to get employment upon graduation. With the high poverty levels and unemployment rate currently at 6% and growing, entrepreneurship is seen as the only key that will transform Nigeria into an economic powerhouse and help the country achieve its vision2020.

* High Business Failure Rate

Many talented individuals who get into entrepreneurship for the first time fail to make an impact because they lack the necessary skills and are often unprepared to face the challenges they encounter in their operations. Statistics show that the business failure rate in Nigeria for new businesses is between 75% and 90% in their first 10 years. For the case of dot com enterprises, only one in every 10 ventures makes it to the third year. This high rate of business failure can be reduced or eliminated if we take time and do a thorough research prior to going into business.

* Know the Right Business

The purpose and goal of every entrepreneur is all about being independent and providing competitive products or services that are not offered in the market. Even if those services are already being offered, as an entrepreneur, you should strive to offer that service in a better and efficient way compared to the already existing businesses. There are many questions that Nigerian entrepreneurs must answer when deciding which business to form. Should you turn your hobbies into moneymaking ventures? Buy existing businesses or start from scratch? Buy a Franchise and benefit from the franchisors well-known brand? Selecting the right business is a life changing decision one that has long-term effects and thus careful planning must be taken into account.

* Well-Suited Ventures

A large portion of Micro, Small and Medium Enterprises (MSMEs) are born out of passion. One costly mistake made by emerging entrepreneurs is that they tend to replicate what other established businesses are providing without first knowing what they are good at. Those entrepreneurs who do not have a clear passion or do not enjoy what they are doing are likely to give up when challenges start to arise. Even if entrepreneurs are certain about what they love or want to do, finding the appropriate business that fully utilizes their skills and abilities must be carefully considered. For instance, if one has a passion for art, there are wide varieties of businesses that they can choose. They can decide to be artists, open an art school or do restorations among other options. The essential key is for MSMEs to choose ventures they are well- suited for and that will fully utilize their abilities.

* Write Clear Personal Goals

All Nigerian entrepreneurs need more than just passion or talent if they want their businesses to succeed. One major reason that many small enterprises in Nigeria fail is because they lack clearly defined goals. For start up businesses, we should direct more effort towards short-term goals since new business ventures must always pass through a time of research and development before their long-term profitability can be predicted accurately. A businesses short-term goal should be between 6 to 12 months, while its long-term goals can be for a period of 2 to 5 years.

* Create a niche for the Business

Small and medium enterprises tend to copy each other and provide the same services offered by existing businesses. This has the effect of overcrowding the market and is the number one major reason why new ventures find it hard to survive. For emerging MSMEs to guarantee their survival, we have to develop policies capable of helping our entrepreneurs create a niche for themselves by offering products and services that are unique and that enable them to take advantage of the market. Studies done indicate that most businesses get 80 % of their sales from just 20 % of their clients. By clear identification of the target market, we can be able to direct most of their energy and time to customers who are important.

Though most of our entrepreneurs set up their own businesses from scratch, those who find it hard to build their own businesses can opt to buy already existing ones. Such entrepreneurs benefit from the already existing record of accomplishment of the company and not much time is spent on market research since the business already has a dependable customer base. The other alternative to business ownership can be franchising. Statistics indicate that more than 50% of retail sales in the United States are generated by franchise chains, which in total employ more than 7.1 million workers. This is seen as an indication of the potential of such businesses in Nigeria.

* Success of Franchises

Compared to other business models, a franchise has many benefits besides being cheaper to set up. A franchise has a good track record and is easier to set up since it has an existing business model, brand name and has established and working guidelines on how to run the business. In addition to all these benefits, the failure rate of franchises is lower compared to new businesses. For instance, the rate of failure of franchises is less than 5% making them more suitable for emerging entrepreneurs. Over the last couple of years, Nigeria has seen an increase in the number of franchises being set up mostly by South African investors in retail, food and environment sectors. This is a clear indication of the benefits that can be gained through franchising.

Nigeria’s ambition of being an industrialized country by the year 2020 can only be achieved with the help of the private sector. We need to diversify from our reliance on oil, which accounts for more than 65 % its budgetary revenues and more than 85% of foreign exchange earnings. For this to become a reality, our entrepreneurs need to have the necessary skills and knowledge needed to run successful businesses and transform Nigeria towards economic development.

Peter Osalor is a multi-skilled director, chairman of trusts, proprietor and consultant. Peter Osalor has been a successful entrepreneur since 1992 when he formed Peter Osalor & Co and which has since grown to a very large client base with a turnover of millions. He is currently a fellow of the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in Nigeria (ICAN). Peter is also a member of the Chartered Tax Advisors and the Chartered Institute of Taxation in Nigeria (CITN).

Steps to Starting a Small Business

When most of us think about starting a small business, we think it is a fairly straightforward process. We believe that we go from idea to business in a blur of activity, and that we suddenly wake up owning our own company. That is not strictly true however, and no matter what type of business you plan to start, there are several steps to starting a small business that you should bear in mind.

The very first step, for most, is the idea. Whether your small business will be a completely new and innovative venture, or a franchise, you still have to have the idea to start it before anything else can happen.

Next, usually, there is a period of weighing the pros and cons. This is a critical step, as it allows you to decide whether you are truly passionate about your business, and if you are, gives you the reason to carry on with what is sometimes an arduous process.

The next step in starting a small business is to learn. Even if you know the business you are starting intimately as an employee, there is still a lot to learn about running a business, and it is usually a good idea to get some sort of training.

Next, as you are working through the steps to starting a small business, you will have to craft a business plan. This need not be a complicated or difficult to create document, but it helps you to collect your thoughts, and get them all on paper, so that you have a clear plan to get from where you are now, to where you want to be. It also helps you to figure out how much money you will need to start your business, and during the first months of your start up phase, when you are unlikely to be earning a large amount.

This brings us to the next of the steps in starting a small business – finding funding. Unless you have the money to invest in your business yourself, you will have to find financing somewhere, whether it is a bank loan or an angel investor who funds your start up.

There are several other things you will have to do before you can open your small business’s doors. You will need to legally register the business, if you need to. You will need bank accounts and other administrative registrations and facilities. You will need to find premises if you need them, and secure deals with your suppliers. You will also need to register for tax, and if you are going to need to have specific permits, you will need to apply for them. Then there are things like interviewing and hiring staff, if you will need them, buying furniture and equipment, setting up your company website and developing marketing materials.

All in all, when you consider the steps to starting a small business, you will probably find that you are as busy during the pre start up phase as you would be once your company is running, and this is a good thing! It helps you to get a feel for your business, and builds the excitement you are undoubtedly feeling at the prospect of being your own boss! It also helps to ensure that you are really ready for business – this can be a somewhat thankless phase of your business, and if you are willing to put the effort into your company now, you are far more likely to have the staying power you will need during the gruelling first months of your business!

It is clear, when you look at the steps to starting a small business in this context, that there is a lot that happens between your big idea, and the day that your doors first open for business!

The good news is that this process is one of the most valuable assets to a small business owner. Working through the process steps to starting a small business gives you the time and the hands on experience, to switch from an employee mindset to that of a business owner.

Writing down your plans, and indeed, working through the red tape and other hurdles that often face the small business owner also allows you to clarify what it means to be a business owner in your mind, and to realise that while business is rewarding, it’s often not as simple as you’d like to think.

Some of the most successful businesses I know of did not happen overnight. Their owners took time and energy to make sure that when they did open their doors, they had a clear plan to succeed, and the tools, capital and systems they needed to get to that point of success.

So if you are ready to take the leap, and go from employee to business owner, remember that the steps to starting a small business are not something that should frustrate you, or cause you to ‘throw in the towel.’ Think of them as a challenge – they will test your resolve, but they will also ensure that you are ready to hit the ground running when you do open your doors for the first time. Do not cut corners. Address everything that needs to be addressed now, before you’re so busy running your business that you don’t have the time and energy, and give yourself the very best chance of success!

Small Business Loan – How Important Is Accepting Credit/Debit Cards

To secure a small business loan for your company how important is accepting Credit/Debit Cards?

The ability to secure “Working Capital” when we need it is one of the greatest challenges facing business owners today! Getting cash advances or cash in advance for businesses is becoming more difficult even for businesses with long-term banking relationships.

Is there any additional benefit to the issue of accepting credit cards as payment for your good/services when it comes to small business loans and funding?

Credit cards, just about everybody today uses them and those who don’t (because of less than perfect credit) will usually have a debit card. In other words, more people today use “plastic” instead of “paper money or checks” than ever before. So what does this mean to you, the merchant? It means as far as you doing business – there is literally no option except that you HAVE to accept credit cards as payment, whether you like it or not.

In most small businesses “plastic” accounts for as much as 75% of their business so if they did not take credit cards they probably would not stay in business long. While true that many entrepreneurs and business owners don’t like the processing fees associated with taking credit cards, they really don’t have a choice. In fact there are petitions in Congress to regulate or stop the overcharges associated with Interchange fees, also known as “swipe fees”. Even with that, businesses still must take credit cards as payment.

The fact is credit card processing is essential for all businesses for a number of reasons. For instance:

The ease of use and simplicity for customers makes it advisable for all companies to accept credit and debit cards. When there is a dispute that could result from a lost or misplaced check then that issue can be resolved with the credit card statement or through the credit card issuer.

Payment processing by credit cards is faster and easier. There is no delay and the business providing products/services receives the payment instantly.

Paying for goods/services when placing orders by phones involves ease for the customer and additional business for the merchants without the need for face-to-face transaction or being present to give cash or checks. Business can and is being transacted globally and can be conducted by the consumer from anywhere in the world.

Processing can be provided via a virtual terminal for the credit card payments to be made enabling companies operating via the Internet to receive payments from customers around the world instantly.

But for small business loans there is one tremendous benefit when it comes to financing business growth for companies that have accepted credit cards. And that brings us to the topic of this article: How important is accepting Credit/Debit Cards to securing a small business loan for your business?

For many small business owners the first few years in business are usually the most difficult. Most owners have poured their savings, maybe even mortgaged their home to fund the business often having to rob Peter-to-pay-Paul and credit ratings take a hit, so banks are not willing to lend to businesses in the first 2-3 years. So to get a cash advance or business line of credit where does a “growing” business turn for short-term “working capital”?

For small business owners that accept credit cards as payment here is good news. Merchant Cash Advance, Credit Card Receivable Financing or Business Cash Advance is a great and readily available resource.

The growing increase in credit card use has spurned a segment of the financial and lending industry that funds businesses based on their “Credit Card Sales History”. For Cash Advances and cash in advance or cash in advance for business, there are solutions. Not unlike, “Accounts Receivable Financing” of “Purchase Order Financing” small businesses that accept credit cards can benefit from “CREDIT CARD RECEIVABLE FINANCING”, which is a loan against future Visa/MC sales or another form of funding that has been used for a longer period of time called Merchant Cash Advance (or Business Cash Advance or Cash Advances). The business only needs: