Running a business can have a powerful impact on your life and the lives of those around you. But before you can run a business, you need to learn how to start a business in Tanzania.
Deciding to start your own business can seem like a daunting prospect if you’ve never done it before. Luckily, plenty of other entrepreneurs have, and you can benefit through the wisdom they gleaned from their successes—and their mistakes.
These 12 time-tested steps on how to start a business in Tanzania—whether it’s your first or your 10th—will help you with everything from finding and validating your money-making idea to figuring out your shipping strategy to finally launching your product or service.
How to start a business in Tanzania in 12 steps 2021
1. Identify a business idea
Finding a business idea is something you can approach systematically by relying on time-tested approaches that have worked for other entrepreneurs.
No matter whether you’re looking to start a low-investment business on the side or you’d prefer to go all-in on your idea, the best way to find a product to sell includes strategies like:
- Mining your personal interests. What do you like to do in your spare time? Are there products you can sell that relate to your hobbies or that would solve a common frustration you have?
- Research existing products. Peruse product reviews to see if there are common complaints about popular products and if you can identify gaps in the market.
- Capitalize on trends. If you notice a particular product seems to be popping up everywhere, or you have a great idea to help make the most of a popular item, you might be on to great online business ideas.
Remember, all you need is one idea to get started. Many successful businesses launched with a signature product and expanded into complementary goods from there.
2. Conduct market research
Validating your business might sound difficult, but it’s really just a matter of testing whether customers are willing to pay for your product before you sink too much time and money into it. It’s important to validate your idea no matter what type of business you’re starting.
There are plenty of ways to validate your business, from the simple to the complex. Here are some tactical examples that can help you figure out how to calculate market demand before getting in too deep.
- Set up a store to take preorders
- Launch a crowdfunding campaign
- Create a beta of your product or service to sell
There are other ways to validate your product ideas but when in doubt, start selling as quickly as possible. Learning from direct customer feedback and understanding how your products are being used is invaluable when learning how to start a business in Tanzania from scratch and growing it.
Take PopSockets, a now-ubiquitous way to confidently hold a smartphone in one hand. Initially, David Barnett designed PopSockets as a way to manage headphone cords.
It wasn’t until he saw students in his class using their PopSockets to get a better grip on their phone that he realized the unplanned value his customers saw in the product. That insight helped PopSockets sell more than 35 million units.
3. Find a business name
Work on finding a name for your business that makes it clear what you do, that’s short and memorable, and that isn’t already in use in your industry. This isn’t an easy task, but it’s one that’s achievable with a bit of effort and imagination.
Name generators can help you come up with a list of unique ideas, and there are also plenty of time-tested naming best practices to lean on for direction.
A strong name will usually have a few characteristics:
- Short and simple. You want customers to be able to quickly remember your name, and the best way to do that is to avoid a name that’s too long. One or two words is ideal, although three to four short words can also work if they create a memorable phrase.
- Different. If your market research shows that everyone in your industry seems to have similar names or relies on similar elements, it can be helpful to avoid them in order to come up with a name that really stands out.
- Original. Beyond just avoiding similar names, you’ll need to make sure your business name isn’t in use by a competitor already. To do that, run a free trademark search in the countries you’ll be doing business in, and make sure to check Google and social media sites, too. (The same goes for URLs, so do a domain name search before you register anything.) Even if someone hasn’t registered a trademark, in many jurisdictions they can legally challenge your use of a name they’ve been using to do business in the same industry. If you’re unsure, it’s best to consult independent legal counsel for advice specific to your situation.
Once you’ve settled on a brand name, use our domain name finder to see if it’s available and you’ll be able to purchase it directly while starting a store.
4. Write your business plan
Writing a business plan helps validate and formalize your idea and can streamline the business-creation process by getting you to sit down and think things through methodically.
A classic quotation that’s especially applicable to the business plan process is, “Plans are worthless, but planning is everything.” Many entrepreneurs say they rarely look at their plan once they’ve launched—but they’ll also tell you there’s value in thinking through and researching your idea while creating a plan.
If you want to learn how to start a company, it’s critical you learn to write a business plan. The following video can help you get there.
If you’ve never done it before, here’s a comprehensive guide to writing a business plan and a business plan template to help you structure your thoughts.
When creating your plan, make sure to pay extra attention to the competitive analysis and SWOT analysis sections. While nothing can replace validating your idea by confirming that people will pay for it, the research involved in completing these sections can be further proof you’re on the right track.
5. Understand business finances
The shared goal of any business is to make money, which means cash flow management is an integral part of learning how to start a business in Tanzania. You’ll need to understand some basics to get started and scale that knowledge as you grow.
There are plenty of businesses you can start with only a small startup cost, but others will require money for inventory, equipment, or physical space. A clear view of your total investment—before you spend a cent—is a must for helping to make important projections, like when you’ll break even.
A clear view of your total startup costs is a must before you spend a cent.
If those calculations show you’ll need more funding than you can afford to spend out of pocket, you can look at options like a small business loan or a crowdfunding campaign.
Bookkeeping needs to be one of your primary financial tasks as soon as you’re ready to start making purchases for your business. Accurate records of your income and expenses will help you keep an eye on cash flow and make for a smooth transition to working with an accountant or bookkeeper later on.
To make the process even easier, consider opening a business bank account and obtaining a business credit card. Keeping your personal and professional finances separate makes doing your business taxes much simpler and can help you automate some of the financial steps to starting a business as well.
6. Develop your product or service
You’ve done the legwork, and you understand the financials behind how to start a business in Tanzania. Now it’s time to dig deep into the product or service you’d like to offer.
For a product-driven business, developing your product could mean taking one of three general approaches:
- Creating your own product. Whether you’re making items by hand or sourcing an original product from a manufacturer, developing your own product to sell can help you stand out in the market.
- Customizing an existing product. With print-on-demand options, you can add your unique designs and ideas to products including t-shirts, leggings, towels, backpacks, and more.
- Curating a selection of products. Dropshipping is a way to stock your store without creating a new product, letting you start selling almost immediately without managing inventory. For more information on getting tips for starting your dropshipping business.
As you develop your product, keep your total costs in mind when figuring out your pricing. While your product’s price is not solely driven by costs—and there are many factors that influence pricing strategy—it’s important to price your product profitably.
7. Pick a business structure
Your business structure influences key parts of your business, from taxes to operations to your personal liability.
Choosing the right structure is about balancing the legal and financial protection you need with the flexibility offered by different options. It’s an important decision and it’s one you should consider carefully before you launch your business.
Choosing the right structure is about balancing the legal and financial protections you need with the flexibility offered by different options.
Business structures vary based on your country and area, but two common types—that may go by different names in your country—are sole proprietorship and incorporation.
A sole proprietorship is great if you’re the only person involved in the business and is usually the lowest-effort structure to pursue, but it leaves you personally liable for the business and its activities.
You can hire employees as a sole proprietor but you’ll need an employer identification number to do so, which means registering your business.
On the other hand, if you opt for a more formal structure, like a corporation, it’s easier to involve multiple owners and you’re not personally liable for the business. At the same time, there’s more paperwork and steps involved in starting and maintaining a corporation.
When it comes to understanding how to make business structures, there are a few factors you’ll need to consider:
- Where is your business located? Your country’s laws will outline the different business structures you can form and whether or not you need a business license to get started.
- What kind of business are you running? Some structures are more suited to businesses of a certain scale or within a certain industry. There might come a time when you need to restructure your business in order to work with new partners. It’s not uncommon for large businesses to ask that their suppliers or partners be incorporated, for example.
- How many people are involved? If you’re going it alone as a solo founder, you may be able to look at streamlined options. If you have a business partner or multiple people with ownership in the company, you’ll need to look at more advanced options to ensure everything is set up and shared properly.
An accountant or lawyer can be helpful in evaluating the different options available in your area and with the process of setting up your business.
8. Research licenses and government regulations
Once you understand how to start up a business, look into what licenses and government regulations you need to operate legally. No one wants to end up in legal trouble.
Your business is subject to the laws governing businesses in your area, as well as laws and regulations specific to your industry.
For instance, a food service business needs to follow specific licensing and regulations for handling what it sells, but it also has to pay attention to the legalities of its marketing efforts and to trademark and copyright laws.
With so much to know, and a lot of it specific to your location and industry, it’s worth consulting with a lawyer to get advice before you launch your business. Investing time and money upfront to obtain legal advice can save you from considerable headaches down the road.
9. Select your software systems
When learning how to start your own business, it’s important to understand the value of good software.
One of the best ways to reduce the heavy lifting involved in running a business, and to set yourself up for future success, is choosing software that can help you automate or streamline the things you need to do.
Often, when you choose the right software systems, you’ll be able to set them up once and have them run efficiently with little ongoing work. Consider looking into software to help you manage the following:
- Accounting. With multiple options to help you track everything from a meal with your business partner to a big inventory order, accounting software is one of the best ways to start your business off on the right financial foot.
- Email marketing. A good email marketing tool will help you stay in touch with your current (and future) customers and make sure you’re able to send the right messages to the right people at the right time.
- Ads. Paying for ads is often a cost of doing business, especially online, but there’s a marketing software that can help streamline the process and make the most of your advertising budget—no matter how much you have to spend.
- Project management. Even if you’re a sole proprietor, having one place to plan your work and keep track of important tasks can help you stay on schedule.
- Website or online store. Choose a platform that allows you to easily manage all the critical tasks involved in running your business. Look for a theme that supports your product lines, and gives you the ability to take and manage orders easily. To get an idea of what you’ll need to do, here’s a comprehensive store launch checklist.
10. Find a business location
Your business plan will help guide what kind of space you need for your business. If you’re selling print-on-demand t-shirts, you may only need to find space in your home for a small workspace, a desk, and a laptop.
On the other hand, if your business requires in-person retail space, you’ll need to find a place to rent.
To help narrow down what you need from your business location, consider these questions:
- How much space will you need for inventory? If you’re accepting deliveries of thousands of items at once, you may not be able to accommodate it in your living room.
- Do you plan on offering in-person retail sales? Selling out of your home is certainly an option for your first orders, but if in-person is an important channel you’ll want to find space that’s comfortable and easily accessible for customers to visit.
- Will you be packing and shipping orders from your location? Depending on the scale of your shipping operations, that may necessitate more space than you have available in a home office.
It’s possible you’ll be able to run your business from a space you already have available, especially if you don’t plan to sell in-person. If that’s the case, here are some home office design ideas to help you create an effective workspace while you get your business off the ground.
11. Plan workload and team size
Now that you know how to open your own business, it’s time to dive into building your team.
How much work will you need to do and what skills will be required to launch your business? These are fundamental questions you’ll need to answer because they’ll guide both your timeline and your level of investment in your launch.
If you plan to do all of the work yourself, you’re limited by the time you have available to invest. If you plan on hiring help, you’ll need to account for those costs—as well as the time involved in finding and onboarding freelancers or employees.
Here’s an overview of the basic skills you’ll need to learn, know, or hire as you launch:
There are many design decisions that need to be made as you learn how to own a business, from designing a logo to choosing your brand’s colours. Here are a few key ones to focus on:
- Logo. You can rely on a logo creator like Hatchful or online image software like Canva to build your logo.
- Colours. Start with one of the many online tools that can create a colour palette, or use Hatchful to pick colours for your brand.
- Website design. Starting with a professional theme for your website gives you a site that’s based on design best practices.
Great photos are essential to your business, especially for eCommerce sites, but that doesn’t necessarily mean you can’t DIY your product photography.
Marketing is an integral part of understanding how to start your own business and can require multiple skill sets. Start by deciding which marketing activities will have the biggest impact on your new business, and use your plans to make a list of the skills you’ll need to execute them.
For example, running paid ads is a much different skill set than taking lifestyle photos to build your Instagram following.
Research and understand some of the most common promotional tactics used in your industry, and make sure you have the skills required to implement them.
One key to understanding how to run a successful business is operating with a smart shipping strategy. Once products are ordered, how will they get from Point A to Point B? Make sure you have a shipping strategy in place that covers key details like:
- Pricing. Will you offer free or discounted shipping to your customers or pass on the exact cost to them? This is a nuanced decision that impacts many parts of your business, so it’s important to run the numbers and weigh the options.
- Packaging. Lighter packaging often means lower shipping costs, but you’ll need to balance weight with protection. Cardboard, while heavy, is more protective for many products than a poly mailer.
- Locations. Will you ship internationally, nationally, or just locally? The answer will depend on your products and your goals—and it can change as your business grows.
Hiring help for your business
If you don’t have the time or skill to DIY everything you need for your business, hire help. You can find a virtual assistant for ongoing, routine tasks or work with an expert for more involved projects, like creating your website or your marketing plan.
Managing your workload
Once you have a good understanding of what needs to happen and who will be completing the work, it’s time to add a bit of project management to make your life easier.
Consider using a time management tool like Trello or Asana to write down, assign, and track tasks. Time management tools are especially helpful for keeping teams on schedule but don’t underestimate the value of structure for yourself as well.
12. Launch your business
At this point, you know everything there is about how to run a successful business. You’re ready to take the last and most exciting step: launching!
The preparation you’ve already done has laid a solid foundation to support your launch, so you can focus on marketing activities and making your first sale. However, a plan of attack, especially as you’re trying to build traction, can help make your launch even more successful.
While every launch will be unique, there are some elements that can boost any business’ first few days of sales.
- Leverage your network. Promote your store first and foremost on free channels that are already available to you, which includes your personal social media and your contacts list. Sending one-on-one emails asking for support, which can be as simple as a social share, can go a long way toward gaining traction.
- Consider offering discounts. Rewarding early customers with a discount code that fits with your profit margins can help you get traction early on, especially when your store is new and may not have many customer reviews or social proof points.
- Test paid ads. Even if you start with a small budget, paid ads can be one of the most effective ways to get in front of your ideal audience. Testing early and learning from your results can help you drive your first few sales and optimize your ad performance as you scale.
Understanding how to start a business from scratch
Starting a business isn’t easy, but it also doesn’t have to be daunting. Whether you want to bring a product into the world to solve a problem you’re having, build a profitable business to be self-employed, create business opportunities for the people around you, or bring in some extra money every month, these steps on how to start a business in Tanzania can help you make your dreams a reality.
Now that you know how to open your own business, it’s time to get started.