7 Tips to Building a Legacy Startup

Last's week article was on: How to Register a Business in PNG. An intriguing question asked at the end was: "What's next?", This question will be answered in this article. 

So, after you are done registering (IPA certificate, IRC TIN and Bank Account Opening), what is next?

From experience, I see lots of people register business names with PNG IPA but give up on the next stage. For some, they go as far as obtaining IRC TIN and then stop progressing. Some people successfully open their SME bank accounts, and sadly drop their momentum.

And few starters successfully pass the entire process and commence business activities. From the start the momentum is at the peak. Everything looks good; the future is seemingly full of promise. But, after passing 3 to 6 months, sales is slow (or no sales at some point). Marketing is not generating sufficient leads thus number of actual customers is declining. When these happen, operating expenses slowly dry up the decreasing sales revenue. This in turn puts a strain on the cash flow and affects the working capital, and naturally forces the business to cease operation. The sad truth is, most starters give up here.

However, a very handful of them survive through these trying times and thrive. They are now bold and resilient and they know, nothing will stop them. They have indeed learnt a lot over the months/year. They are successful because they use some or all of the following tips. These tips are proven strategies for successful entrepreneurs.

1.   Drive and motivation. They generate so much passion and become motivated. To them, the business is their hobby. It is not a side hustle. Their passion becomes the driving force to thrive, regardless of educational background and skill level. This is the chief success factor! You cannot run a successful business if you are not motivated, or if your business doesn’t form part of you.

2. Understanding the market: They define their niche market - demography, customer preferences, buying habits, income levels and locations. They identify customer problems. They keep abreast to industry trends, evolving customer preferences, and emerging technologies that may impact their business. They know by heart who their competitors are - their weaknesses and strengths. Based on the knowledge, they offer unique and value-added solutions to their target market – this could be in the form of competitive pricing, top customer service, healthy relationship, high quality and smart product/service, discount/packaging, giveaway, loyalty program, membership, timely service, money back guarantee, etc.

3.   Budget and sufficient working capital: They have fixed budget with sufficient equity cash to cover operating cost for the first 3 or 4 months. This is to cushion the operation, in the event sales doesn’t produce projected sales figures. As soon as sales picks up and growth is experienced, it takes care of the operating expenses, and at the same time makes healthy profit. Key: Do not underestimate costs or overestimate sales revenue.

4.     Cash flow management: They stick to budget and do not overspend. They keep 30% or 40% of their revenue in the bank to meet operating expenses and for restocking to keep sales going. They know that mismanaging their cash flow can potentially disrupt their operations and can cause the business to shut down. Making good profit is not the same thing as having sufficient cash in the bank account. You can make profit and still go broke if you don’t manage your revenue wisely.   

5.  Special skills: Some enterprises require special knowledge and skills, e.g., engineering or information and communication technology. These business owners keep researching and continue to upskill themselves with latest developments in the industry. Doing this helps them to be competitive and creative – pushing them ahead of their competitors in their target market.

6.   Setting goal: Successful entrepreneurs set goals. They set very realistic and smart goals – specific, measurable, achievable, relevant and time-bound. These cut out, wastage and ambiguity, and help them stay on top of their game. Setting goals provide direction, motivate actions, and allow them to measure progress.

7.   Business plan: They have well-crafted business plan as a roadmap. The business plan helps define their direction, clarify their business strategies, and navigate challenges along the way. The business plan documents their aims and objectives, product or service, target market, comparative market analysis, unique sales and marketing strategies, operational plan, and financial projections. It is a living document and needs regular review and update as business evolves and circumstances change. You cannot build a house without a plan; similarly, you cannot build a business without a business plan.

Successful starters, be it big or small, depend very much on these key factors. Starters cannot get pass these factors to be successful. Your business is your child. Love it, nurture it, understand it and plan for its growth.

Next article will be on the SME funding.

Author: Willie Mell