You cannot start a business based on gut feel. It’s brutal out there, as data from the U.S. Bureau of Labor Statistics indicate. To wit, one in every five businesses fail in the first year, and only about five in 10 make it past the five-year mark.
It’s not much different in the United Arab Emirates. Data from the Organisation for Economic Co-operation and Development (OECD) reveal approximately 20%, 30%, and 50% of service businesses fail after one, two, and three years of operations, respectively.
It’s critical to seek the advice of business consultants in the UAE when setting up a business. At this point, you have a long road full of unknown perils ahead of you. Someone starting a business without business advisory and professional guidance is akin to an inexperienced driver driving a manual-transmission vehicle blindfolded, in the rain, on an unfamiliar cliff road.
For startups, business consultants provide critical help on two things: assessing the feasibility of a business idea and writing a business plan.
Assessing the Feasibility of Your Business Idea
A business is worth doing only if it’s feasible — i.e., it can be done conveniently and cost-effectively. Thus, a mining company could refuse to exercise its mining rights on a specific location if doing so would cost them more than they could make.
Thinking you have an excellent business idea doesn’t make it so. Many variables determine the feasibility of a business, and you must consider all of them before you commit your time, money, and effort to making it work.
Business consultants know what these variables are, and they can conduct a feasibility study to test the viability of your business idea.
The following are some of the questions a feasibility study can answer:
Do you have (or can you get) the equipment and capacity you need to produce your product or provide your service? Is it possible to manufacture your product or deliver your service at spec?
How much will it cost you to set up your business? Where are you getting the funds to operationalize your business idea? How will you generate revenue, at what rate will you make it, and what will the return on investment (ROI) be like?
What legal form will your business take? Are there legal obstacles to your business idea? Perhaps some laws operating the business will violate.
How do you plan to produce value? How and where will the business source its raw materials and resource requirements? Are the proposed operational processes feasible?
Who is the market, and how large is it? How fast is the market growing, what’s the competition like, and what’s your competitors’ market share?
Is your schedule realistic? Are your objectives attainable in the time you plan to achieve them?
Ultimately, business consultants can tell you whether you should go ahead or put your idea aside.
Business consultants can also make practical recommendations. If your timeline is not feasible as it is, your planned plant location is not suitable, or your business model is not operationally sound, they can suggest alternatives.
Finally, a feasibility study can also be instrumental in unearthing opportunities you may have overlooked. Your business consultants’ analysis may lead to a pivot in your direction and focus.
Writing Your Business Plan
If you have the resources to fund your business, great. Otherwise, you will need to seek funding from investors or lenders.
Investors want to know they’ll get a return on their investment, while public and private lenders must be confident you can pay back their money plus interest. A business plan can provide the assurance that investors and lenders seek.
What Is a Business Plan?
A business plan lays down in no uncertain terms what a business is, what its goals are, and how it plans to accomplish its objectives.
It answers these questions, among others:
- What is the business going to look and be like in a few years?
- How is it going to make a profit?
- How will it grow and by how much?
A business plan shows you what success looks like in a particular timeframe (usually one to two years). It provides guidance on how it will market its products and services, how it plans to operate, and how it will finance its activities.
The Business Plan as a Tool
A business plan is also a tool.
For a business, it is a map; the business goals are the destination, and the specified business activities are the steps it will take to reach this destination.
For the executives of a business, it is manifest. It lets key players align their efforts so everyone can work toward a common goal. It is also a compass that guides them so they’ll know how to correct their course when the business deviates from the plan.
For investors and lenders, it is an assessment device to evaluate whether a business can be profitable and is a sound investment.
Types of Business Plans
Business plans vary according to purpose. The following are common types:
- Startup business plans
- Internal business plans
- Strategic business plans
- Operations business plans
- Growth business plans
Business Plan Components
The specific parts of a business plan will vary depending on your type of plan. Generally, however, business plans have the following components:
- Executive summary
- Business description
- Market analysis and strategy
- Marketing and sales plan
- Management and organization
- Products and services
- Competitive analysis
- Operating plan
- Financial projections
Start Your Business Right
You can never take starting a business lightly unless you have unlimited capital. The chances of failure are high, as one in two companies fail within five years of business setup.
Business consultants, therefore, play a crucial role in startups. Their help is particularly invaluable in assessing the feasibility of a business idea and preparing a business plan for funding.