By Chika Uwazie
VENTURES AFRICA – Follow your passion and success will follow you. Are you young and passionate? Are you ready to go on to the next steps and start your own business? We are lucky to be born into an economy that has given us the ability to become entrepreneurs. Technology has facilitated this growth, but also more than ever more people want to work for themselves. Sure, entrepreneurship is far from easy, but it can be really rewarding. Before you plunge yourself into the world of entrepreneurship, here are the steps you should take to build your business:
Never just jump into a business idea without thinking all the way through. This should be done before the business plan. You need to make sure that there is a need for your idea in the market. A way to analyze this is through Michael Porter’s 5 forces of analysis. Even though this is an old method, it still is a great way to see how your idea stacks up against the industry and a way to look at consumer’s behavior as well. The best ideas will be something that has low competition currently and a high consumer demand. Why do you think Twitter took the world by storm? It was a need that people wanted and no one else was doing what twitter does for consumers. Take the time to weigh the pros and cons of your ideas. A thorough research will help you see how viable your idea is for the market.
Test your idea in the market
Before you run to investors with your idea, test it out to see if it has potential to grow. It can be a prototype and using people in your local area to see how many actually bought your product. If it is a service idea, gather some customers and test your services with them. Use this time to ask questions about your product. Ask people if they like it and whether they see themselves buying it. Some people test out their product over a trial period for free and monitor the response. You can use this sample to show investors your product or service will grow and eventually will bring money to their pockets.
Build the Team
This step can be before or after you start testing out your product. Every great business has a great team which is an essential asset. The right team member can be right under your nose. It can be someone you went to school with, or a friend that shares the same passion. Make sure your team is diverse and can contribute a different skill to your business. A good business person realizes they cannot be the alpha and omega. The right team will support your idea and turn it into a reality. Team members do not even have to be physically in the same area. There are lots of startups out there where the team members are virtual and eventually they meet in person. If you do decide to go this route, your team must have good lines of communication.
Everyone wants to know where to get money to fund an idea. Realistically Africa does not have enough places to get funding for startups, but it is not impossible. Funding your business idea normally goes in several rounds- in the first round look at your close circle. Pitch your idea to family members; get several people involved in raising funds. After your initial round of funds, look into other methods of investing. When you pitch to an investor you only have one shot. Make sure to be prepared and be ready to answer all questions. Investors want to know how your idea benefits them. If you cannot predict your strategy of growth and an exit strategy, then you are not ready. They want to see the value of the business and when they can get their money back. This is the time to present any sample data you have, and your feedback on the market. Also remember every investor is not for you, do not take a deal if you feel like you are selling your soul away. Make sure whoever you invest with can be a mentor as well. If you have all those answers ready to go, you will have a better leverage with an investor. A great place to start is VC4Africa. This website is a great meeting place for startups and investors. They also have tons of information for you to find the right funding for your company.
Have you tried turning your passion into a business? How was your experience? Share your comment!
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