So you want to start a business

Perhaps you have a friend who is doing well in his own business and you want to be similarly if not more successful. Not so fast amigo !

Business Is Not Easy

If you think starting a business is as simple as buying products and selling them at a profit, you might be unprepared to tackle the quick sand of entrepreneurship. There are many elements that contribute to whether you make it or break it in the biz world. Take a look at this (incomplete) list if they bring your feet back into reality:

1. Customer Relationship
2. Supplier Relationship
3. Cashflow Management
4. Marketing / Promotion
5. Supply vs Demand Reflex

Customer / Supplier Relationship

I am sure many shares the same belief that you can start a business without a shop. More important than having a shop is to establish a good network of relationship before one even starts a business. A supportive network of friends will bring effective word-of-mouth marketing for your business at no cost. If your friends are also your customers, that is even better. Have you heard that existing clients make the best prospect ?

So before you throw that bundle of cash for a major shop renovation and advertising material, make sure that you have done your homework at building the right network. This also applies to handling suppliers and sourcing of your products.

Cashflow Management

You need money to make money. You can't make more money if you keep losing money, unless there is an indication that your business is starting to have a grip on the customer base. Thus it is very important that the flow of cash is carefully managed so that you may have the holding power to survive a slowdown period to flourish later during the boom period.

Some entrepreneur choose to take up a bank loan to jump start the business. In my opinion there is nothing wrong with taking up debt as long as you already have demand for your product. It is also of utmost important that you already know the nature of your business well before exposing yourself to more risk. If you still can't tell whether your business will profitable if the price of raw material A decrease by 20 cents, then you are not ready to apply for a bank loan.

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