Due to the liquidity crunch that continues to ravage this economy, many people have been confined to the ever-growing cluster of unemployed people. Therefore, many people are resorting to establishing small businesses so as to eek out a living. The reality is starting a small business won’t necessarily be easy, given the tough economy. Credit markets are extremely tight; thus, start-up funding is scarce. My advice is to never rush to get a loan to start your small business. There is a high level of risk involved owing to the unstable economy plus you might actually experience a still birth before even taking off. Not forgetting that you also risk losing the collateral you would have attached for the loan application.
I would posit to you that it would be more expedient to take the route of raising capital from personal savings, family or friends. Your working principle as you endeavour to build your business is to be very thorough, empirical, alert and dynamic. Zimbabwe is currently a rapidly changing environment so be on the lookout; you can’t afford to be ambushed by circumstances, unprepared. Have contingencies & contingencies to contingencies.
Starting a small business in the local context may be considered foolish given the ailing economy. However, one can effectively make the best out of a bad situation & realize profits. Here are some key things to consider:
Do thorough research before starting the business
You need to be brutally honest to & with yourself as you ask yourself certain fundamental questions. Ask yourself what exactly it is you have in mind (the business idea), whether or not there is a need for the product/service, do you have enough information on that field, who are your competitors, what’s your target market etc. All this must be mused on thoroughly & ultimately detailed in the business plan.
You must ensure you come up with a comprehensive business plan. Let it not just be a formality, it must be detailed, down to the tiniest details. Your cash flows & cash flow projections must be honestly & accurately worked out. This obviously means you must employ a workable pricing strategy as that helps you anticipate your cash flow forecasts. Your business is as good as its plan so give thorough attention to research before taking off.
Carefully Consider Your Financing Options
Angel investors & financiers are almost impossible to find in Zimbabwe when you are looking to starting a small business. The liquidity crisis makes people hesitant to finance small businesses as they consider that high risk. So consider dipping into your personal finances or asking for capital from friends or family. Even if you manage to get capital from friends & family, ensure you have enough personal money to buffer your operational costs for at least 6 months (back-up plan). Don’t just recklessly jump off the cliff; be certain the financial aspects are in order before starting.
Start Reasonably Small
You must bite off only what you can easily chew. Start very small, then you gradually review & in turn, strategically diversify, expand or downsize as the business performance dictates. Figure out ways to limit your overhead costs from the onset. Operate within your means and don’t force things that can backfire later on.
Have A Solid, Strategic & Diversified Marketing Approach
Due to many people scrambling for market share, the competition is fierce & calls for one to be creative in how they market their products. Know your consumer demographics well, figure out how you will effectively reach them & institute pricing strategies that lure them. I would advise segmenting your target market so that you appeal to each segment with respect to characteristics specific to them. It’s also wise to think of ways to broaden your product or service portfolio so that you get more consumers but at the same time keeping overheads costs at bay. Suppose you are doing a hairdressing business initially, you could add selling cosmetic products, providing barber services, etc so as to grow your target market.
Don’t Necessarily Think Of Coming Up With A Novel Business Idea
At times people have a tendency of thinking that business success is premised only on coming up with a novel (original/new) business idea. Some people can brainstorm and fail to come up with something completely new then they think they shouldn’t do business. However, business is mostly about taking new & innovative approaches to existing business ideas. Therefore the trick is to bring innovation & creativity into the mix, for instance, taking a traditionally brick & mortar business idea online can do wonders for you.
Leverage On Technology
Seriously consider using virtual options for marketing your products or services & even running the business altogether. You can also acquire a lot of business knowledge online from sites like this one. If you end up getting a site developed for your e-commerce initiatives ensure it’s configured for SEO (search engine optimization) so that it pops up on top during online searches. Technology will significantly reduce your overhead & operational costs once you leverage on it well.
Always Explore Cost-Cutting Measures
Use the present economic situation to negotiate low prices for overhead & operational costs. Be wary not to become overly indulgent in this though as that may subsequently compromise product or service quality. The basic idea is that you must always be on lookout for ways to minimize costs so that your profit margin widens.
Be Widely Networked
Business success is inseparable from building or being part of an ever-growing broad network of individuals, groups, companies, institutions etc, that are strategic to KPIs (key performance indicators) for your business. Involve your business in community development initiatives & also attend events, workshops, conferences etc. This will boost your business reputation & also grow your consumer base.
The environment may be harsh; however, new businesses are not only being born but succeeding in Zimbabwe. Approached correctly, yours could be the next story we celebrate of finding success in our tough economic environment.