Starting and building a company into a profitable venture requires a good understanding of the business for which the investment is to be made. Firstly, I will research the business and its market on what is to be produced, how it will be produced and who will be the product consumers. Based on this, I will make key decisions about the business goals, missions and structure. The goal may be to grow sales to over US $1billion. The structure will be the form of ownership and the hierarchy of organization. Next is to obtain necessary permit and license to operate.
A critical part of starting a successful business is raising funds to run the business. This requires carefully stating the start-up cost, estimating initial operating cost and the break-even bench mark. Funding may require approaching a lender or raising funds from the capital market.
Business localization entails choosing the right location for the business. Basically, the nearness to market, funding, innovation and/or raw materials are options to be traded in deciding where to locate key branches of the company. Ordinarily, a telecom company should be closer to the market while a manufacturing industry, closer to the raw materials. However, other factors will be considered.
The key strategy will be to offer my customers low-cost but quality products through a well researched supply and marketing alternatives. Basically, the production will target developing nations which according to UN and World Report Institute about 1300 cities in Africa, Asia and Latin America will have a population of 1 million people each by 2015[1]. The advantage of this is access to large “unsaturated” market. These people will offer my company access to over 40 million customers who together will have billions of dollars to spend. Examples include MTN Nigeria that sold over 20million GSM lines in 2 years of incorporation and McKinsey & company in India that sold over 50million cable TV after a decade of introduction.
Achieving sales of US$1 Billion will also require outsourcing some aspect of the business like distribution and leasing equipment in order to focus on the key and core areas of the investment. This will help to cut operational cost and maximize profit. Other benefits include capital efficiency and streamlined supply chain. It will also offer the opportunity to pay attention to distributors’ performance.
Another strategy is to offer unique feature that gives our product leverage and competitive advantage. For instance, Globacom’s introduction of per second billing system in Nigeria telecom market gave the company a big head start over the “earlier comers”.
However, to protect the uniqueness may require copyrights, trademarks and patent right. This will protect the distinguishing feature from copycats and piracy.
Basically, the business model will entail
a. Modeling different classes of customer demand based on customer classification
b. Building high quality products according to these classifications
c. Efficient distribution of products according to the analysis of distributor’s performance
d. Develop and maintain best practices in company’s financial reporting
e. Undertake continuous product R & D
f. Engaging well qualified human capital for the job specifications.
In conclusion, starting a business requires adequate planning, intelligence gathering and flexibility due the dynamic nature of the global market. Points elicited above may not be all that is needed but they are surely critical to a new business’s success.
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