The signs of economic growth are evident in PNG. Based on the expansion of commercial centres in Port Moresby and Lae, it's clear that now is a good time to start a business here.
Starting a business can be risky, however, particularly because many people put hours of their time and thousands of Kina into their budding business. Before you dive in, there are a few things to ask yourself.
Is my idea profitable?
For many business owners, opening an operation is all about turning their passion into a livelihood. Nevertheless, it's important not to let your dreams cloud your judgement when it comes to what makes a good business.
Before doing anything else, think critically and objectively about your idea's potential. Does there appear to be a market for your product or service? If so, what's the evidence?
If your idea seems too risky, responsible lenders will not work with you.
Don't daydream alone – talk about your vision with friends, family or a trusted advisor. This is particularly important if you'll require a business loan. If your idea seems too risky, responsible lenders will not work with you.
Have I set a realistic timeline?
Many people are surprised by the amount of hurdles you need to go through to get a business off the ground.
In their study of regulations relevant to small- to medium-sized domestic business around the world, The World Bank uncovered some of the required procedures for starting a business in PNG. For business owners, understanding each step is imperative.
Some steps include:
- Obtaining a company seal
- Obtaining a company, reserving company name and completing registration with the Regulatory Authorities
- Registering with tax authorities to comply with the various requirements
- Applying for a trade license
- Opening an authorised superannuation fund
- Purchasing insurance to protect your business and the people you employ
These tasks are not suggestions either, they're legal requirements and without completing them, your business will not be able to operate in Papua New Guinea.
How will I finance my new business?
Choosing a property, renovating, buying equipment, stocking inventory, hiring people … the list of things you need to pay for when you start a business seems to be never ending.
That's why many people use their own savings to finance everything. If you don't have adequate savings, a business loan will be necessary.
Even once you begin operations, it might take time to see any profits coming in.
Even once you begin operations, it might take time to see any profits coming in. In your planning, you will need to take into account the money required to support the business until you start to generate income to cover expenses.
Some level of financial strain can be expected in the start phase of your business, particularly considering the often unstable economic climate in PNG. According to the World Bank's most recent report, PNG is forecast to experience quite slow economic growth until 2020 – with 2.1 per cent forecast for this year, and 2.5 per cent the following year. While there are still economic opportunities in PNG, business owners should be sure they understand the conditions before they invest.
Am I adequately protected?
To protect your money as well as your efforts, make sure you purchase small business insurance. The right coverage will support you if your business suffers from a fire, a burglary or a range of other threats that could harm your operation.
At Trans Pacific Assurance, we design our solutions around the unique business you have established and these will be tailored especially for you, so you can be sure that you will be protected against a variety of risks.To find out more, reach out to our expert team today.