PERSONAL FINANCE: 5 FAQs about starting a business

Over time people have sent me a lot of questions about starting a business. Here are the five most common ones.

How does one start a business?

By starting. Business is a transaction. You get money for the value you give. Translate your idea into something tangible that can be transacted upon.

If you like cooking and you sell a meal, you have started a business. If you offer somebody advice and they pay for it, you have also started a business. If you draw a painting, make a chair and sell it, that’s also a business.

To support those transactions, you will require certain things like a separate bank account or a dedicated MPesa number.

From the very beginning, separate your personal funds from the business funds and keep records of all transactions (money coming in and money going out).

You can also give your business a name and register it. You are giving your business an identity that is separate from you.

Which business should I start?

Nobody can actually tell you what business to venture into. The right question to be asking is what problem can you solve.

If you decide to sell bananas, it should be because you have noted there is a shortage of bananas in a particular area, or demand for a particular type of banana.

Too many people start businesses simply because somebody else is doing it; that is not the right way think about it.

Match this problem to a skill you have and something you are passionate about, or at least like doing. Many of us discover our true passions after starting a business so it is okay if you don’t have the answer.

My first business was helping people buy and sell shares on the stock market. People needed help to do so (solving a problem) and I had the skills. Later it transitioned into something else but it provided the foundation for starting.

Where can I get capital to start my business?

First ask yourself what you need money for. To employ people, rent an office, buy computers? None of this has to do with the ability to get customers in.

Many businesses do not need as much capital as we think they do to start. You don’t need a fancy office to start. Use your house. You don’t need to employ people from the beginning. Go and get your first 10 customers then you can begin to think about capital.

Once you have started, your eyes will be opened up to other ways of getting resources. So instead of waiting for capital, go and test out your idea and improve on it.

How do I pay myself from the business?

I wished I asked myself this in the beginning. Most people have a mind block here because they are looking at large amounts.

For many, especially those transitioning out of employment, your business will not be able to pay you what you were earning so don’t look at it that way. This shouldn’t stop you from starting.

Pay what you can as a salary. It will probably not meet all your expenses but pay anyway. It is the habit and discipline you want to instil from the beginning.

You can decide to start off with Sh10,000 a month. As the business grows, you can keep increasing the amount.

It is very important to pay yourself. When you don’t do this, you will eventually become undisciplined with business funds and use them for personal purposes.

How do I know my business is the right one?

You don’t. When you start a business you are becoming a student. There are no guarantees because as you learn, the way you see things will change. A lot of businesses transition.

The product they started out offering is not the one they currently offer.

The nature of the business may change as you get better at recognising opportunities and understanding your customer. So you don’t have an answer in the beginning to this question. You just have to be committed enough to learn the lessons.

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Waceke runs a course on entrepreneurship. Get in touch with her on waceken@centonomy.com | Facebook/WacekeNduati | Twitter@cekenduati