There is more to starting a business than having money

Kayibanda has been saving money for the past four years to fulfill his dream of starting up a tech firm. The IT graduate insists that until he raises Rwf8 million startup capital, his business idea will stay on paper. He is adamant that someone else might beat him to same venture as he is saving for the project, putting all the time of waiting to waste. Kayibanda, like many other would be entrepreneurs, has fallen into the ‘old trap’ where one thinks they must always first save huge sums of money to set up a business venture. However, development and business experts disagree with this approach, arguing that it has more often than not ‘killed’ good business ideas as would entrepreneurs fail to raise what they consider the right amount of startup capital. Experts add that having a lot of startup cash does not guarantee business success, advising enterprising people to start small instead. Money usually comes second after other factors, they argue. So what are the others key ‘must haves/considerations’ before starting a business? Do research John Bosco Kanyanguga, a business expert at Trade and Development Links, a business consultancy firm in Kigali, says one has to identify profitable and unique opportunities, where they can leverage a comparative advantage. “Market research is a necessary tool for a person who plans to venture into any business, small or big. This will guide you and help avoid investing in a saturated sector,” Kanyanguga advises. Find out more about the would-be clientele or market for your services or goods, and the prices for similar goods or services. “The location of a business contributes greatly to its success, therefore, one should set up shop where there is easy access for customers. Also, check out many areas before deciding on where to set up the enterprise,” he says. He notes that if you have doubt about a location, go to where you think you can do better or rental charges are manageable. It is also important to venture into a business you are passionate about. “This should be complemented by your competence and ability in the area of your interest.” Plan for your business Business planning is a must for anyone that wants to start up an enterprise, small or big. “There is no shortcut, you need to invest time and plan for it from inception, creating a clear road map for it. “If you can’t do it yourself, hire an expert. Either way, have a plan in place before you open the enterprise. This will help you avoid unnecessary hiccups since you will be prepared for any eventualities,” he says. “The old way, where people wake up one morning and start business on impulse, with no plans or prior research is not tenable anymore.” Understanding the regulatory framework For anyone to start a business in Rwanda, they are required to first register with the Rwanda Development Board (RDB). After all the paperwork is done, then you can go ahead and implement your project after paying operational and other necessary taxes to Rwanda Revenue Authority and the local authorities. “As a new business, remember to file tax returns in time. If the business doesn’t make any profit in the initial stages, you can declare ‘nil’ to show you have made no profit…this is allowed and legal,” advises Kanyanguga. It is advisable to always find out which taxes you are supposed to pay to Rwanda Revenue Authority; and other decentralised taxes before hand to avoid inconveniences. Kanyanguga argues that for one to succeed in business, they must observe the law, including paying of all taxes, as well as any other obligations that are required of them include such things as cleanliness and noise pollution case of night clubs and bars. Mobilising resources If you have no savings, you can acquire a bank loan or borrow from friends and relatives. Kanyanguga says one can also get credit from suppliers in form of goods to facilities to kick-start their enterprise. “Whatever the source of financing, you should manage it and implement the venture according to the business plan to avoid losses and unnecessary purchases,” he says. Beware of loans that attract high interest rates as it can be detrimental to the young business. Kanyanguga advises aspiring entrepreneurs and business people to secure interest free loans from friends and family as their startup capital “because they are ideal for startups’. Always avoid big loans. Jean de Dieu Habimana, an airtime vendor in Kimironko, says he started his now two-year-old business with Rwf100,000. He says he did not get a loan because he was not sure he would be able to repay it. “So I decided to continue saving part of the money I earned as a bicycle taxi rider until my savings accummulated to Rwf100,000,” he says. He argues that a loan can cripple a business. “I am happy that my venture has grown despite the little money I started with. I can now take care of myself and my siblings. I even plan to marry next year,” Habimana says. On human resources, it is advisable to decide before opening the business whether you will run it alone or hire assistants and salespeople. “Avoid bringing many people on board at the initial stage of the business because you might fail to pay them,” Kanyanguga counsels. Marketing There is a always misconception about marketing, with many people thinking that big organisations and big businesses like telecom companies are the only ones that need to advertise their services or products. Kanyanguga says every business should make its services known to the public to attract customers. And this (marketing) doesn’t have to be expensive. “Choose the most appropriate and affordable approach that suits your needs. Remember marketing should help the enterprise make more money, but not to drain the little you have,” he says. The bottom line for startups and anyone intending to open an enterprise is to start small, and expand gradually, putting in mind that whatever savings you have can help you achieve your entrepreneurship dream. business@newtimes.co.rw

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There is more to starting a business than having money