In my last post on investment, I gave you important advice on critical steps to take before considering investing. You do not just go and pour in monies in a project without sufficient information about the profitability of the project. I said you need to study the macro economic environment, the industry, geo-political issues, the markets and trends, level of competition and policy issues. I also mentioned the importance of engaging consultants or having access to investment reports or market surveys.

Industry Analysis

This morning we will cover industry analysis-an important area because you would like to know about an industry as a whole, developments in the industry, competitors in the industry and lastly whether there is room for new entrants who can make money in the industry. I will try and make this as simple as possible so that everyone can benefit from the information.

Transport Kombi Sector: Let’s say you would like to start a kombi business. At a higher industry level you are going to need information such as:

ü  The number of kombis on the road at national level

ü  The number of kombis plying your targeted route

ü  Most profitable routes in your city

ü  The kombi vehicle models in demand

ü  Amount of money collected per day by kombis

ü  Kombi sector developments in Zambia, Malawi or South Africa

ü  Buy to rent models

ü  At national level, operational issues such as cost and availability of fuel, cost and availability of spare parts

ü  Any developments in terms of Lorries or private cars ferrying passengers?

ü  Government Policy regarding kombis-are there proposed changes

ü  Substitutes-You may want to know whether buses will be reintroduced on roads, any developments on the railway sector. Number of cars imported per year. Number of mshikashika entering your targeted route.

ü  Number of people buying or entering the kombi business. Why are they entering the sector?

ü  Number of people exiting the kombi business, why are they leaving? What are the trends in terms of exiting kombi business?

ü  Road Fines-how much is each kombi paying per day? Is the figure increasing or decreasing?

ü  Toll gates? Are there plans to introduce more toll gates?

So this is just a brief analysis of the kombi industry-you will need to have this basic information before plunging head on to invest in the industry. ZBIN will be providing you with an example of the Kombi Industry in the next 3 weeks.

So there you are investors- the message remains Do Not Invest Without Enough Information. Some of the information can be found from our Watsapp forums where our members are always discussing business ideas on a daily basis.

One of the must know business tools or techniques is the SWOT Analysis technique. SWOT (strengths, weaknesses, opportunities and threats) analysis can help you identify and understand key issues affecting your business.

When you have a big business decision to make, one of the smartest things you can do during the planning process is conduct a SWOT analysis. It is an analytical framework that can help your company face its greatest challenges and find its most promising new markets.

SWOT analysis enables organizations to identify both internal and external influences. SWOT’s primary objective is to help organizations develop a full awareness of all the factors involved in a decision. It is impossible to accurately map out a small business’s future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats.

A SWOT analysis focuses entirely on the four elements namely Strengths, Weaknesses, Opportunities and Threats.

Strengths and Weaknesses: These are the internal factors within an organization.

• Human resources – staff, volunteers, board members, target population
• Physical resources – your location, building, equipment
• Financial – grants, funding agencies, other sources of income
• Activities and processes – programs you run, systems you employ
• Past experiences – building blocks for learning and success, your reputation in the community
• Current processes, such as employee programs, department hierarchies and software

Opportunities and Threats: These are external factors stemming from community or societal forces.

• Future trends in your field or the culture
• The economy – local, national, or international
• Funding sources – foundations, donors, legislatures
• Demographics – changes in the age, race, gender, culture of those you serve or in your area
• The physical environment
• Legislation
• Local, national, or international events
• Market trends, like new products and technology or shifts in audience needs
• Political, environmental and economic regulations

Below is an illustration of a quick SWOT Analysis of The Zimbabwe Business Ideas and Network.

So what next after drafting a SWOT Analysis document?

Your next step should be to come up with an Action Plan which will guide you in terms of follow up strategies. For instance you may want to take advantage of your strengths or take an advantage of emerging opportunities in your environment. You can come up with top priority areas to action, who will be responsible for what  and when. Make it a practice to always review and update your document. You can even include this document whenever you are reviewing your monthly financial performance

We hope to bring you  more Management Tools and next week we tackle Financial Performance.