May 22, 2023
When Deborah started her small business, Keramel Naturals in 2019, it was simply because her friends asked to buy skincare products.
Word got around and soon, the product demand increased. It wasn’t too long before Deborah realised the need to learn how to start and run a small business.
20% of new businesses fail in the first year. This article shares what how to avoid failure, business advice, and practical steps to begin your small business.
1. Things to know before starting a small business
2. Six steps to launch your small business.
- Define your Idea
- Research your market
- Create a business plan
- Assess business capital
- Choose a structure
- Open a business bank account
- Spread the word about your business
- Essential financial tools you’ll need to start your small business.
3. FAQs about launching a small business.
Let's get started!
Things to know before starting a small business
While you're excited about starting your business, getting the right mindset is essential before going ahead. Here are a few things to consider:
1. The 3Cs–Competence. Character. Consistency
Olaoluwa Gbadeyan of Orktave Group says, “Competence is the skills you need to run the business.
Character is the human skill to succeed, and consistency is discipline to keep showing up.”
Starting a small business can be exciting but remember you need staying power, so don’t give up!
2. Never Stop Learning
Four years after starting his small business, Sam of Sobayo Gadgets stated the importance of continuing education as an entrepreneur.
“You never really finish gathering all the information you need. I still learn about gadgets today to answer questions and suggest the right products for my customers,” he said.
He’s right. Learning will save your business, help it adapt to changing market situations, and scale at the right time.
3. Use The Right Tools
For example, you need tools to separate personal and business finance, manage employees, send invoices, and get paid without delay.
With the OurPass business app you can access all these smart business tools you need to succeed.
Six steps to starting your small business.
Now that you've gotten the right mindset, we’ll cover the best ways to start your small business with real-life examples you can use for inspiration.
Let’s dive in!
1. Define your Small Business Idea
Defining your business idea is the most crucial step. Properly define your ‘why,’ assess how realistic and suitable your product is for your market.
These questions will help you define your idea:
- What is your ‘Why’?
Your ‘why’ is a clear statement of purpose. It underlines the mission and vision so that when things are not so profitable, there’ll be a drive to keep going.
- Is the idea realistic?
How do you know if your business idea is realistic? Ask around! Ask your friends, share surveys using social media platforms like Twitter and Instagram polls.
According to Angie Yasulitis, CEO and managing partner at The YaZo Group. “Success happens when you are willing to listen and consider others’ advice. Most good ideas take some tweaking to get to market. Being closed-minded is a business killer.”
Another tip is if your business idea is something people constantly seek your expertise about. For example, people approached Sam for gadget recommendations before he started his business.
When people within your close circle trust you to solve a problem for them, you've gained credibility in that area.
2. Research Your Market
“Research helps you understand your target market, position your business and avoid mistakes.” Chinonso Urum, Founder of Plug Architect.
We agree. Speak to seasoned business owners, read more articles like this. You can also read research reports about your industry. We avoid mistakes by learning from past experiences.
Here are things to look out for when conducting research for your business:
- Competitors: Who are those running the business you wish to start? Why are they successful? The best type of market is a saturated market because it shows there’s a market fit for the product.
- Target Audience: As great as you think your business is, catering to everyone is impossible. Find out those who need your product and specific details—interests, location, likes, and dislikes.
- Market Size & Share: Find out the market size. For example, if an entire market is worth 200 million dollars, you might get a fraction. Calculating this will help you know the capacity of the market. Others, you might end up in a tight market if you don't research this.
The formula for market share: Market Share = Total Company Sales / Total Industry Sales
3. Create a Business Plan
After completing your SWOT analysis, create a plan—a guide to achieve your goal per time. While it’s good to put in a lot of effort , you cannot measure your results without a plan.
Your business plan should contain the following:
- Executive Summary
- Business Description
- Market Analysis and Strategy
- Business Structure
- Financial Needs and Projection
- Marketing Plan Strategy
Check out these free business plan templates from Hubspot to create your business plan.
4. Assess Business Capital
While you can start a business without a lot of capital, proper planning will play a huge role in successfully managing your business.
This way, you know how much your business needs and where the money will come from—personal savings, family and friends' support, or loans.
This survey shows only 11% of 440 SMEs in Africa use external funding options. Take advantage of platforms like OurPass giving businesses access to low-interest
5. Choose a Business Structure
Once you’ve defined your idea, researched your market, created a business plan, and evaluated finances, you must decide how you want to run and manage the business.
This process entails choosing your business structure. Common types of business structures include sole proprietorship, partnership, and limited liability company.
Can the business operations be managed effectively by one person? Should you partner with someone with better expertise in an area you lack?
If you decide to partner with someone, take advantage of the OurPass business app that provides team management tools on one platform.
You don't have to have it all figured out at the beginning. Sam runs his business alone but is open to partnering opportunities. However, Olaoluwa knew that his business depended on social communication, so he partnered with his friend who was better in that area to create a balance.
If your small business needs more than one hand, you can easily plan to onboard and manage a team with the OurPass team management tools.
6. Open a Business Bank Account:
The last step, Business Registration. While you can operate your small businesses without registering, its better than exposing your business to sanctions.
Learn the rules and regulations governing your industry and plan to comply.
Now to the most important step. Once your small business is registered, get a free business bank account in your business name.
You must separate business finances from personal ones to track your profits properly.
And you’re all set! You’ve defined your ‘why’, researched the market and competitors, calculated the cost, registered your business and opened a business bank account.
Starting a business can seem like a daunting task, but we encourage you to just start. You’re more ready than you know, so just go ahead and start!
7. Bonus Step: Plan for Marketing
In this digital era, we cannot underestimate the need for a thorough marketing plan to engage online customers.
Posting randomly on socials might yield some result, but without a plan, you won’t know how to reach the right audience or measure and track marketing performance.
Outsource your marketing strategy if you can, but make sure you include it in your business plan.
Can I start a small business without experience?
Yes. Starting a small business with little experience is possible, but to ensure you succeed, make sure you have a plan.
Set yourself up for success by getting a suite of smart business tools to help you track payments, access loans, and manage your team.
What are the basic steps for starting a small business?
You can start a business in 6 simple steps.
- Define your idea.
- Conduct market research
- Create your business plan
- Evaluate your business’s financial needs
- Choose a business structure
- Register your Business
Bonus: Create a Marketing plan.
What business tools do I need?
Use an all-in-one business banking platform like Ourpass. With OurPass, you can access bank tong, payment, and business management tools to start, grow, and scale.
Here you can access business loans, manage multiple sub-businesses, manage a strong team, and use a free business bank account and various business banking tools.
There you go! We’ve gone through the most critical steps before starting your business.
If you follow through on these steps and get a smart business banking tool, you can launch your business successfully. It may take some time to complete these steps, but you must be patient and resilient to keep up.
We’re rooting for you.