SMEs: Building From Scratch To Finish
SMEs are defined differently across Africa based on the number of employees, assets owned by the company, annual sales, etc. But if you are aiming to build a business that has fewer than 250 employees and its capital and voting rights (25% or more) are not owned by one enterprise or jointly by several enterprises, then you are building an SME.
Business Analysis And Market Research:
When starting an SME in Africa, adequate research has to be carried out to analyse potential customers and their pain points. It’s a way to gather information about businesses already operating in the area and analyzing it to create a competitive edge for your business.
Write Your Business Plan:
The key to any successful business is in the start-up phase. Your business plan is the foundation of your business. It is the map for how to structure, run and grow your new business. You will use what you will use to convince people to work with you or get investors, even to get grants and permits in most African countries.
Your business plan will include your short term and long term plans for your business; the kind of employees you want to work under you, and so on. This may look too much for a simple business plan, but you must put in the necessary structures at the start of the business before it takes off.
Create A Budget:
Your business plan would create an idea of how much money you’ll need to start your business. This is another reason why it is important that your plan is very detailed and puts every variable into consideration. You’ll need to calculate your burn rate, i.e. how much cash you are spending month over month. If you don’t have the amount on hand, you can apply for loans from banks or grants from the government or look for potential investors.
Pick Your Business Location:
Your business location is crucial when starting an SME in Africa. Whether it is a physical store or online store the decision affects the amount of taxes, legal requirements, revenue, and in some African countries where constant electricity and good roads are inadequate your business location really affects the amount of capital required to begin.
Pick A Business Identity:
Generating your business identity includes creating a brand around what you do and giving it a name. The name you pick helps create your brand and communicate with your target audience. The more your business name communicates the less effort you will have to explain what you do. You will also have to find out if the name is available, i.e. if it isn’t already being used by someone else or an already thriving business.
Register Your Business:
Once you have picked out a name, it is advisable to make it legal and protect your idea from being plagiarised. You’ll have to register with the commission in charge depending on the laws of your country. Some countries require SMEs to register with both the State and the Federal Governments.
Apply For Licenses And Permits:
It is important for SMEs to avoid legal issues. To avoid such legal issues and to keep your business up and running, you’ll need to be legally compliant. Most small businesses need both licenses and permits from both federal and state agencies. The requirements and fees vary based on the type of business, location, and government rules in the country where you plan to start a business.
Open A Business Bank Account:
You would need to keep your funds separate from your personal account as it makes balancing your accounts and paying taxes very confusing. It also provides benefits for you, your customers, and employees such as; protection; owning a business bank account offers limited liability protection; if anything happens in your business the liability would only be on your business funds and not your personal account.
Professionalism: Customers would be able to trust that they are making payments into the business account and also be able to issue out checks to your business instead of to your personal account. It would also be easier to put employees in charge of banking tasks on your behalf.
Purchasing power: Most business accounts in banks have more purchasing power than regular personal bank accounts.
It would also be easier to have an organised credit and debit history of your business.
Get A Website:
Today, many SMEs have an online presence via social media. Despite this, having a business website is crucial for having a shop, office, or telephone number. Research has found that 6/10 customers expect brands to have content online about their business. It makes your brand more credible. It also makes it easy for your potential customers to find you anytime and anywhere, even outside your working hours.
Insure Your Business:
This is one thing most small or medium enterprises don’t consider, and it is equally as important. Business insurance protects you from unexpected losses, e.g. fire hazards, natural disasters, and some lawsuits. Business insurance can make sure both your personal and business assets are fully protected from unexpected catastrophes.
Starting SMEs can seem like a daunting feat. But these steps should make the task easier. Success is assured.
