According to recent reports from the Bureau of Labour Statistics, 20% of new businesses fail within the first two years, 45% of them don’t even survive the fifth year and generally, 65% of all new startups fail during the first ten years. The question is, what is the major reason for this failure? Little or lack of capital to continue running their business.
If the major cause of business failure is lack of capital and you’re about to start a business in Ghana with little capital, it means the odds are heavily against you. Well then, how do you plan, launch, and start a business in Ghana with little capital that will flourish and thrive? Consider the following five keys.
1) Conduct a Thorough Market Research Before Starting
One of the mistakes new startups make in Ghana is that they build their business on wrong assumptions which are not validated by market data. Your market is the target group of people that you will be selling to. Before venturing into your business, you need to understand the needs and problems of the target audience.
You also have to understand your competitors, their pricing, their competitive advantages, and all others. You must get factual data from the grounds, access that information, and then develop a marketing plan to capture your target market. You should also consider picking a business that doesn’t involve so much start-up capital to start with.
2) Analyze Your Business’ Revenue Model
Cash flow is king. To thrive in business, you need to develop a revenue model that will cause your business to receive consistent cash flow. If your customers are owing you GHS 15,000 and you need just GHS 5,000 to pay off current bills to keep afloat, and you couldn’t get those monies, you will be forced to borrow from others to pay off those urgent bills to keep your business going. If you couldn’t, you’re on your way out!
If you’re starting a business in Ghana with little capital, you’re already constrained. You need a business model that will generate cash sales—avoid credit— from customers. The more cash flows from your customers into your business, the better your business will stay afloat financially and grow.
3) Keep Your Eye on the Numbers
Accounting is the language of business. Budgeting, forecasting, income generation, expenditure management, and general cash flow management, are all essential components of accounting. If you’re starting a business with a little capital in Ghana, consider leveraging free accounting software to keep track of your invoices, sales, and profit. You can monitor these numbers regularly to make changes in your business that will enable you to grow and thrive.
4) Adopt Guerilla Marketing to Attract More Good Customers
Good customers pay on time. They give fewer problems and enable your business to keep going. Bad customers buy your goods and services, delay for far so long, and siphon cash out of your business. Invest in guerilla marketing and attract more good customers who will buy your products, pay afront and keep your business going. You shouldn’t overspend on your advertising. It should generate more returns.
5) Hire Slowly & Think Carefully Before Spending on Office and Equipment
Two of the biggest expenses for business are labor and capital expenditures such as fixtures, furniture, and equipment. Good employees make your money, while bad employees waste your money. You need to plan and hire slowly and carefully to find the right person for your business. You should only hire when you absolutely have to. Also, delaying spending on the office until your business has come to the level where customers ultimately have to visit the premises or you definitely have to.