Kenya News

Starting a Business

Things First

An opening check list is a great place to start. Remember that airline pilots are required to use a checklist before they take off!

Here are items you should have on your opening checklist. Add additional items that would be appropriate for your own business.

• Do I have a one-year cash flow projection prepared to insure there will be ongoing liquidity?
• Do I have the necessary e-commerce tools in place?
• Are all insurance policies in force?
• If I plan to sell on credit terms, is my credit rating policy in place to avoid taking on customers with poor credit ratings? (The last thing you need is to have customers who don’t pay on time, and good customers will respect you for this policy).
• Is my business plan complete and in written format? Does it include pre-opening, first year and long-range planning? It will play a key role in securing investors and will help uncover any weaknesses in the planning process.
• Have I taken the time to gain practical job experience and learn the basics of my business by first working in the business for someone else? (This is probably the best way to discover if you have made a choice that will be not only successful, but also satisfying to you.)
• Have I budgeted adequately for prototypes, research, sampling and trials?
• Have I successfully test-marketed my product or service? Was the response positive? (If not, you need to re-design, re-work and re-test.)
• Have I focused on selling a great product at a fair price rather than a fair product at a great price? (“Great product” suggests a product or service with pricing power and “fair product” suggests a commodity-type business more susceptible to competition.)
• Do I have all the communication, computer and other business tools in place? Do I have the skills to use them?
• Has my accountant fully explained the difference between hiring independent contractors and employees and the importance of compliance with IRS rules? (While my landscaper may be an independent contractor, in most cases my sales staff will be employees and I must conform to reporting and withholding requirements.)
• Are the following elements of my business structure in place:
  • Is my accounting and bookkeeping system in place? Accountant selected?
  • Are my premises ready? This includes including having a signed lease and my tenant improvements completed.
  • Have all permits and licenses been secured?
  • Has the business name been registered? Check with my attorney.
  • Are computers, telephones, cell phones, fax and utilities operating?
  • Are graphics for advertising and promotional materials ready?
  • Is the website name registered and website on line?
  • Is infrastructure in place for e-business, if appropriate?
  • Are all security systems in place including protection of premises, shrinkage control and internal security?
• Have I selected and trained the number of employees I will need?
• Have I determined my personal work schedule?
• Have I included my requirements for managers, consultants, independent contractors, agents and sales representatives?

Take time to recruit and then train your employees thoroughly in marketing skills.

Finding the good employee.

Most employers agree: the toughest part of being an employer is finding and keeping good employees. Begin your search for the good employee as soon as you decide that you are going to be an entrepreneur.

• Define what you need from an employee.
• List the characteristics you require.
• Network: get the word out that you are looking for help.
• Develop and maintain sources for building your workforce.
• Consider family members, retired workers and students.

Your customers need to feel confident that they are dealing with people who are knowledgeable and helpful. Five characteristics customers like most when dealing with a sales or service person are:

1. Product or service knowledge
2. Presentable appearance
3. Courtesy
4. Honesty
5. Sincerity

To achieve these qualities, look for marketing employees who:

• Like what they do
• Are quick learners who have curiosity to expand their knowledge
• Project a pleasant and positive image
• Like people and relate well to them
• Are helpful to customers as well as to fellow associates
• Are ambitious and hope someday to have your job

Here’s a checklist for hiring and training your marketing team:

• Know who you will need to hire.
• Have a hiring policy in place that includes salary structure, incentive compensation and perks.
• Create job descriptions for everyone (including for yourself), including specific skills required for each employee.
• Maintain a schedule of ongoing staff meetings to discuss product information, sales techniques and customer service.
• Develop policies and procedures on handling customer complaints and concerns. Keep in mind that you will get your best marketing feedback from an unhappy customer.
• Develop clear protocols for handling customers via telephone, fax or e-mail.
• Continuously re-define the skills and requirements needed by new employees.

What and How to Buy

Since products are changing and improving at a more rapid rate, inventory obsolescence has becomes a greater business risk. Many products such as computers can be obsolete the day they are purchased.

Rapid delivery firms (UPS, FedEx) and just-in-time assembly systems are great tools to use to minimize your inventories. These expanding technologies have greatly reduced the need for warehousing as well as the risk of obsolescence. And, the cash you free up can be put to more productive uses.

If you are selling a product, you may want to consider having the item manufactured by an outside source rather than setting up your own production facility. Many start-up entrepreneurs outsource production in order to concentrate on marketing. There may also be cost considerations because other places might be able to provide the same product more cheaply.

How to Buy Checklist

• Buy only what you think you can sell.
• Never place an order without knowing price and terms.
• Purchase orders must be in writing.
• Have complete specifications.
• Buy subject to your contingencies.
• Have backup sources.
• Be loyal to good suppliers.
• Have promises and extras verified in writing.
• Get price protection.
• Try to award to the lowest bidder.
• Don’t be hesitant to repeatedly contact suppliers to expedite needed merchandise. “The squeaky wheels get the grease.”
• Communicate complaints.
• Use internal controls for ordering and receiving.
• Count and inspect everything as received.
• Use an inventory control system.
• Ask for and take term discounts.
• Pay on time.
• Pay only after verification.
• Watch your cash flow.
• Consider suppliers as a source of financing.
• It is better to pull suppliers your way, not push them. Be nice.

Marketing Tools

Your business name will announce who you are and what you stand for. A memorable logo also adds to your marketability. It will establish your name and brand recognition. It will enhance the image you wish to create. Your logo can be used on all company materials including stationery, business cards, brochures, website, gift boxes and shipping containers. A good name is:

• Easy to remember
• Simple to spell and pronounce
• Clearly says what you do
• Stirs customer interest
• Doesn’t confuse you with a similar business
• Has a positive ring to it
• Evokes a visual image
• Doesn’t limit you to a geographical location or to a product

A memorable logo also adds to your marketability. It will establish your name and brand recognition and enhance the image you wish to create. Your logo should be used on all of your company’s materials including brochures, stationery, business cards, website, shipping containers and documents.

E-Commerce

You may want to include the Internet in your Marketing Plan. Please refer to

Advertising: Getting the Right Message to the Right Audience Via the Right Media

Your advertising plan becomes your blueprint for marketing. It will include your objectives, budget, media plan and creative approach. A basic rule in promotion and advertising is, “Do what you do best, and hire for what you don’t.”

Discuss your advertising plan with your vendors. They may provide you with co-op money if you follow their rules and make proper application for the money. Even the smallest advertiser can get up to half of their advertising costs reimbursed.

There are many types of paid media to deliver your message. A few of the most commonly used are:

• Print (newspapers, magazines and newsletters)
• Radio
• Television, including cable
• Internet
• Yellow Pages
• Direct mail
• Trade shows

Every entrepreneur learns through experience that there is a most efficient way to spend advertising dollars. This can be hit-or-miss for the beginner and very costly. So, once again, learn from the previous mistakes of your competitors. Find out and follow how your most successful competitors advertise and promote their products or services.

Whatever advertising media you decide to use, become knowledgeable regarding the do’s and don’ts of advertising in that particular medium. For example, if direct mail works best for you, there are books in your library devoted to this subject. They will provide huge insights that can save you from wasting advertising dollars.

Media publicity is free and helps to create a positive image for you business. Newspapers could be interested in writing a feature story about you because of the widespread interest in entrepreneurship and the fact that you are a successful start-up. Local newspapers, even the free ones, are very effective. Your “press release” must have news value that can be turned into a bit more of a feature story, as opposed to an announcement. This will make it more interesting and relevant to the reader. Editorial space is much more valuable to you than display space…and it’s free!

Mailing Lists

Now, before your start your business, is the right time to begin developing a database of future customers you wish to target. This list can be used for direct mail, invitations and newsletters. Your database could include specific individuals, companies and groups by location. Begin now to:

• Join the Chamber of Commerce.
• Collect business cards.
• Collect names or mailing lists from your church, school, organizations and community groups.
• Get involved in your industry and community affairs.

Most Common Mistakes Made in Opening A Business: Your Checklist to Avoid Pitfalls.

• Haste
• Lack of focus: specialize, specialize, specialize
• Lack of on-the-job experience
• Inadequate research and testing: test market first
• Lack of a well thought-out business plan
• Lack of working capital
• Unprofessional decor, theme, logo, stationery, attire, packaging, ads and website
• Not opening quietly to work out the shortcomings
• Poor signs: signs should be big, clear and readable – simple is good
• Untrained staff
• Poor relationship with vendors
• Unfocused marketing plan
• Not using the advertising media that works best for your specific business
• Skimping on insurance
• Ignoring possible problems
• Not recognizing your limitations

Suggested Activities

• Develop a mailing list NOW.
• Watch for growth possibilities and plan growth direction.
• Join your trade association and subscribe to trade magazines (stay current).
• Continue to review, develop and update your business plan, stating how you will market your product or service.
• Continue to develop your budget including proposed expenses for displays, signs, advertising, promotions and website marketing.
• Begin a file for merchandising and marketing ideas.
• Take seminars and classes.
• Read current trade magazines, papers and books, attend openings and promotions of businesses like yours.
• Develop and maintain an employee handbook.
• Talk to anyone and everyone in your field and collect business cards.
• Prepare a plan for growth possibilities.
• List potential problems and possible solutions.
• Become personally involved in selling your product or service.
• Keep your skills and knowledge current.
• Keep a journal to include your dreams of having your own business.

Adapted From Small Business Toolkit(IFC)