Starting a Small Business in Ghana: The OXYGEN Way
There is a Chinese proverb. It says that: ‘Everyone can open a shop, but not everyone can keep a shop open’. These words of wisdom precipitated the writing of this article in the OXYGEN way. OXYGEN Advisory Limited is an Advisory firm that guides its many different clients to establish many different types of businesses in Ghana depending on the client’s appetite, preferences, expectations and vision. This article is designed to help those who are considering setting up their own business.
Many different authors have provided many definitions of a ‘small business’. The exact characteristics are more relevant to business statisticians than to would-be entrepreneurs and promoters. Anyone who is starting a business will be involved in a small business. By the time the size of the business reaches any of the dimensions commonly used – such as number of employees, turnover, or balance sheet total – the owner’s problems will not be those of starting a business, but those of sustaining its existence and growth as was depicted in the Chinese proverb.
Irrespective of the size of capital, the number of employees, or the location of the business, the promoter or business owners are given the freewill to have control over what they do and how they do it. If the business is established by a sole proprietor, such owners freely achieve self-determination as their ‘own bosses’. The owners gain independence and freedom from the authority of others. They enjoy the satisfaction of making a success of their own endeavours. They use their own energies to promote their personal interests – not those of others.
Do you recall the anonymous story of the three labourers at a construction site? One after the other they were asked why they were undertaking such a ‘hard labour job’ under such harsh conditions? The first respondent said ‘I am married with six kids but have no job for the past three years. This is what I have now.’ The second respondent said ‘I have completed school for the past three years and have no job. This is what I have now.’ The third respondent said ‘I am helping to build a Temple.’ Whether you are a school drop-out, school-drop-in, young graduate or an aspiring leader ask yourself: why do I want to change my status; is it about seeking (alternative) paid employment; do I want to work long, perhaps lonely, hours; do I have the support of my family or partner; do I understand the risks I will be taking; will I be able to – or do I want to – work at and from home, if necessary; which skills do I have that may add value to my products or services; do I have the stamina to keep going in the face of difficulties; do I really do have something to offer which people will like to pay for.
We have explained six things you must do first to kick start a business.
1. List your assets and liabilities
Your business will require capital. Whether you can afford it with or without borrowing will depend on your existing assets. What is the value of your house, life assurance policies, material possessions, shares, savings or any other assets? Similarly, what is the extent of your financial commitments over the next 3-5 years? What overheads do you need to cover and what liabilities need to be accounted for? Can your assets be turned into cash? How much cash can you put on the table? Remember, your assets will feed you whether you work or not and your liabilities will eat you whether you work or not.
2. Ask yourself what you want to get out of your own business
What are you really looking for? Fame? Popularity? Happiness? Freedom? Fortune? A chance to leave the society in which you live behind? Opportunities to travel, to meet people, or to speak with people? Less responsibility? Are your motives positive, i.e. to achieve something, or negative, i.e. to get away from something? Set your requirements down on paper, and be realistic – share it with the OXYGEN Advisory team. Are you really likely to achieve them, or are you ‘pipe-dreaming’? Discuss all this with a friend – OXYGEN Advisory.
3. Consider what type of products or services you intend to deliver
The clearer your focus (follow – one – course – until – successful), the sooner you will be able to start detailed planning. If you don’t have a clear idea, the following pointers may help: Be cautious about becoming ‘a consultant or a model’. Do you have the necessary expertise or brand? Don’t be misled by books purporting to tell you how to make a fortune at it. Find out if there are any local opportunities in agro-business, intermediation, arranging, tourism or leisure. Identify what goods and services large, medium or small companies, local authorities and other public and private bodies buy in from outside the area. Research the possibility of selling goods made by others or connecting excess holders with deficit holders. Consider how you could improve on someone else’s ideas, or go into partnership with them. If you try this approach alone, beware of the law of patents. Monitor the local newspapers or the social media – opportunities arise from the most unexpected and unusual situations.
4. Investigate the market for your product or service
A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. What is your product or service? What unusual goods and services are required locally? Who will buy your product or service? Why should they buy yours and not someone else’s? How many people will buy your product or service? Is it unique or are there many like it? Is the market stable, growing or shrinking? How many competitors would you have? How price-sensitive are products and services like yours?
5. Check your own ability to cope with the pressures of running a business
Stress management refers to the wide spectrum of techniques and psychotherapies aimed at controlling a person’s levels of stress, especially chronic stress, usually for the purpose of improving everyday functioning. Stress produces numerous physical and mental symptoms which vary according to each individual’s situational factors. These can include physical health decline as well as depression. The process of stress management is named as one of the keys to a happy and successful life in modern society. Although life provides numerous demands that can prove difficult to handle, stress management provides a number of ways to manage anxiety and maintain overall well-being. Measure yourself against the following criteria (preferably on a scale of 1-5): I am self-disciplined. I do not let things drift. I have the full support of my family. I can cope under pressure. I am ready to put in seven days a week if necessary. I get on well with people and I can motivate them. I can make quick decisions when they are needed. I persist when the going gets tough. If you do not score well on these criteria (a score of at least 3 on every item), take another look at your reasons for wanting to set up your own business or you risk to recruit stress into your camp.
6. Have a business plan and road map
A business plan is a formal statement of business goals, reasons they are attainable, and a road map for reaching them. It may also contain background information about the business or team attempting to reach those goals. Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their investment return in that timeframe. OXYGEN Advisory provides advice on drawing up business plans.
Many small businesses can be started at a low cost and on a part-time basis, while a person continues a regular job with an employer or provides care for family members in the home. Many small businesses are sole-proprietor operations such as selling produce at home on a table top, at a market stall or preparing hot food to sell on the street, that provide a small income. Adapting to change is crucial in business and particularly small business; not being tied to the bureaucratic inertia associated with large corporates, small businesses can respond to changing marketplace demand more quickly. Small business proprietors tend to be in closer personal contact with their customers and clients than large corporations, as small business owners see their customers in person each day, week and frequently.
It must however be emphasised that, entrepreneurs have to work for very long hours and understand that ultimately their customers are their bosses. Just as in any human endeavour, there are some drawbacks of starting your own business. You will be taking risks with your own, or borrowed, capital. You will be working long hours. The responsibility of success or failure, and for the welfare of those you may employ, will rest with you and you alone. All the functions of the business, such as accounting and taxation, become your responsibility, and you will not enjoy the security of paid employment.