START YOUR BUSINESS

The Start Your Business is designed to help people who want to start their own small business.
It is divided into nine steps.

Step 1 Assess yourself as an entrepreneur

Step 2 Develop your business idea

Step 3 Assess your market and develop a marketing plan

Step 4 Organize your business

Step 5 Cost your products or services

Step 6 Estimate your start-up capital

Step 7 Make financial plans

Step 8 Know your business responsibilities and choose a legal form for your business

Step 9 Assess your information and make an action plan

These nine SYB steps will introduce important new skills and help you to collect the information
that you need to plan for your new business.

STEP 1 ASSESS YOURSELF AS AN ENTREPRENEUR

Before you decide to start a business you need to think about the characteristics and skills you
will need to run your business

In the first step of the SYB you will look closely and honestly at yourself to see if you are suited
to being an entrepreneur. If you find that you have weaknesses in some areas, you will be
encouraged to strengthen these areas before you proceed with starting your own business.
Assess your Personal Characteristics and Skills

Your personal characteristics, situation and skills will greatly affect the success of your business.
The characteristics and skills that you need will vary depending on the type of business you plan
to start.

Personal characteristics and situation

Commitment

To be successful in business, you need to be committed. Commitment means that you are
willing to put your business before almost anything else. It means that you want to stay in
business for a long time and that you are willing to risk your own money in the business. Are
you willing to work hard for long hours?

Motivation

Your business is more likely to succeed if you really want to have your own business. Why do
you want to start your own business? If you start a business because you have to, for example,
if you are unemployed, your chances of success are generally not so good.

Taking risks

There are no absolutely safe business ideas. You always run the risk of failing in your business.
Although the entrepreneur must be willing to take some risks, you should only take well-
considered risks. Are you able to assess which risks to take?

Making decisions

In your own business, you will have to make many decisions. It is important to be able to make
difficult decisions that could have serious consequences for your business.

Family situations

Running your own business will take a lot of your time. It is important to have your family’s
support. Your family should agree with your ideas and be prepared to support your plans to
start a business.

Skills

Technical skills

Technical skills are the practical abilities you need to produce or provide the service of your
business. The technical skills you need will depend on the type of business you are going to
start. For example, to start a tailoring business you need to be able to cut and sew; to start a
garage you need to be able to repair engines.

Business management skills

Business management skills are the abilities you need to run your business. Skills in selling are
perhaps the most important but other types of business skills such as costing and record-
keeping are also necessary.

Knowledge of your line of business

Knowledge of your specific line of business is essential in all businesses. The knowledge you
need depends on the type of business you are going to start. If you have this knowledge you are
more likely to be successful. For example, if you want to start a furniture manufacturing
business, you need to know about wood and how to handle and store it; what types of
furniture people need; the process of making each item; tools and equipment are needed; how
furniture is marketed, etc.

Rate each one as being either a personal strength or weaknesses.

Strengthen Yourself as an Entrepreneur

Many people who become successful business owners do not have all the necessary skills or
right characteristics when they start to plan a new business. Skills can be learned and
characteristics can be developed.

If you are not strong in all the skills and characteristics you need to become a successful
entrepreneur, you can work on your weaknesses and turn them into strengths. Here are some
suggestions for strengthening your entrepreneurial skills and characteristics.

 Talk about these issues with your friends, family, other business people, etc.
 Observe other business people and think about what they do to make their businesses
successful.
 Get training to improve your skills and knowledge. You can, for example, learn how to
do record-keeping and selling.
 Read books on the abilities and subjects you need to learn more about.
 Find out about special incentives, programs, or courses available to special groups, such
as people with disabilities.

Think about the Personal Assessment you have just completed. Which skills and characteristics
did you rate as weakness? What can you do to improve them? For example:
  If you rated technical skills as a weakness you need to decide how you can get those
skills for your business. Maybe you can get training or perhaps you will employ skilled
workers or find a partner who has the right skills.
 If you rated business management skills as a weakness, you can learn more by reading
books about business management. Improve Your Business Basics on marketing, buying,
stock control, costing, record-keeping and business planning can help you.
 If you rated your knowledge of your business as a weakness maybe you should consider
finding a partner with some experience or someone who can give you advice.

Assess your Financial Situation

In addition to your personal characteristics, skills and family situation, your personal financial
situation is very important. It is important in deciding if you can start a business at all, in
deciding what type of business you can start, or in deciding to change your business from an
informal one to a formal one or a corporation. It is unlikely that you will receive a loan from a
bank or another lending institution for the whole amount you need to start your business. You
will have to use your own money at least for a part of the capital. Lending institution may have
negative attitudes to the work capacity and ability to repay of disabled persons.

Some types of businesses need more capital than others and banks consider some types of
businesses more risky than others. If your proposed business needs a lot of capital, you
probably need a lot of personal money to start it. If banks consider your proposed type of
business risky, they will lend you very little or no money and you might have to use only private
money to start.

Normally, you cannot use all your private money to start your business. If your family has not
other source of income all private costs must be paid from savings until your business can
support your family. You can prepare a summary of your personal financial institution by
making a Personal Cash Flow Plan. It will show you how much money you will receive from now
until your new business can support you and your family. It will also show you how much
money you will need for yourself and your family during the same time. The money that is left
after you have deducted what you need spend from the money that will come in, is what you
can invest in your business.

For example, a potential entrepreneur has honestly assessed how much money will come in
and how much money she needs to spend. She will resign from her job one month from now
and will start her business two months from now. The first three months in business, she plans
to draw a salary from her new business that covers half her costs of living. After three months
in business, she believes that she will be able to draw a salary that covers all her costs of living.
PERSONAL CASH PLAN
A. Money available now Php 50,000
B. Money in during next 5 months
- Last salary from old job + 6,000
- 3 months half salary from new business + 9,000
C. Total money available (A+B) = 65,000
D. Money out for personal needs during the
next 5 months
- Rent - 10,000
- Food - 8,000
- Others - 4,000
= 22,000
E. Money to invest in the business = Php 43,000

A. Money available now

This should include cash on hand, bank, savings and any other assets that can easily be turned
into cash and that you can consider using for your business, for example shares and bonds.

B. Money in during …. Months

Fill in the number of months from now until the time when you think your business will be able
to fully support you and your family. Include all money coming in. Remember that this is only
private money, money going to you personally, not all the money that will come into your
business.

C. Total money available

This is the sum of A and B

D. Money out during next…. Months

Fill in the number of months yourself. It must be the same number of months as in B. Include all
the money you need for yourself and your family, but not the money you need for your
business.

E. Money to invest in the business

This is C- D and shows you how much money you have available to invest in your new business.
Maybe you do not want to risk all of it on your business. Maybe you need to save some of it as
a reserve if your business should fail or if you have to pay unexpected.
STEP 2 DEVELOP YOUR BUSINESS IDEA

A successful business starts from a good business idea. Before you can plan your business you
need a detailed description of what your business will do and how it will operate. This
description is the starting point for your Business Plans. As you prepare your plans you will be
able to see if there are any weaknesses in your business idea.

From SYB Step 1 you should have a real understanding of your personal characteristics, skills
and financial situation. If you have decided that you are suited to running your own business,
the next step is to check that you have a good business idea. If your idea is basically bad, your
business may fail, not matter how much time and money you spend. A good business idea is
essential to avoid later disappointment and the loss of your money.

In SYB Step 2, you will learn about the different types of business people start and prepare a
short and precise description of your business idea.

Types of Business you could start

There are many types of business but most can be classified as being either retail, a wholesale,
a manufacturing, a service business, or agriculture, forestry and fishing business.

 A retail business buys goods from wholesaler or manufacturers and sells them to
customers. All shopkeepers are retailers. Retailers usually buy goods from a number of
different sources. For example, a hardware store, a grocery shop and a bookshop are all
retail businesses.
 A wholesale business buys goods from a manufacturing business and sells them to retail
business. For example, if you are thinking of buying large quantities of nails, picks and
spades from a metal foundry and selling them in smaller quantities to several hardware
stores, you will have a wholesale business.
 A manufacturing business makes things. If you are thinking of going into a business
making bricks, furniture or cosmetics, or any other type of product, then you will have a
manufacturing business.
 A service business does not sell any goods or make products. A service business
provides either expert advice or labor. Some examples of service business include
garage mechanics, hairdressers, electricians, carpenters, windows cleaners, word
processing.
 Agriculture, Forestry and Fishing primarily involve extracting raw materials by farming,
logging, and harvesting of land and water resources and selling it.

You will find that some businesses do not fit exactly into the types of business that we have
described. For example, if you want to run a garage business, you will have a service business
because your job will be providing labor to service and repair cars. However, your garage will
also probably sell oil, tires and spare parts which mean that you will also have a retail business.

Describe your Business Idea

Every business starts with an idea. You probably already have a general idea for your new
business. Now you need to prepare a detailed written description of your business idea. This
will help you to think clearly about all the different aspects of your idea. A written description
of your business should say:

 WHAT products or service your business will sell

WHAT products or services your business will sell

Every business sells products or services. Think through exactly what your business will sell. Is it
many different kinds of products or services or only one? Is your product something completely
new? Do you have the technical skills needed to provide these products or services? Will you
employ other people to make there products or provide these services?

WHO is going to buy your products or services

People who buy your products or services are your customers. They can be private people or
other businesses. They may all be within a small area or they can be spread over a large area,
maybe the whole country. It is important to clearly describe who your customers will be.

WHY your customers are going to buy your products or services

If you do not provide customers with the services or products they want they will not buy from
your business. Therefore, knowing what your customers need is very important when
developing your business idea. It is important to describe why your customers are going to buy
your products or services.

HOW your business is going to sell its products or services

The way you plan to sell your products or services is very important. If you plan to open a shop
this is clear, but a manufacturer can, sell either direct to customers or different ways. A
manufacturer can, for example, sell either direct to customers or to retailers. On a smaller
scale, there are home sales, meaning selling from home, or on the internet (e-commerce), or
delivering a service to customers in their homes.