- May 30, 2017
- Posted by: pblafrica
- Category: Blog
As is usual, this is the season everyone wants to start anew, turn a new page in life. And so we go about setting new directions for our lives, setting up a business being a popular option among many. A KTN online survey about new year resolutions showed the second most popular resolution for this new year was setting up a business.
With the allure of returns, setting up a side business besides the usual 8 to 5 job is becoming more popular than ever. infact, last year’s KNBS survey opined that over 3000 businesses are started on a monthly basis in Kenya. The sad news is that slightly over 50 percent of these do not survive beyond the first year. The fate of the other half that do is not yet established but i am pretty sure most do not go beyond their third year of operation.
With a really probable business idea, motivated by huge returns (most probably read or seen elsewhere how it churns out cash), a business plan, some capital, one chooses to hit the ground literally running. Unknown to many however, is the fact that not all business environments are similar. Neither has it proven conclusively that business plans do work. The world of business has shifted from using business plans to business modelling. Business plans are rigid. Business models are flexible and fluid. They help the business structure adopt to the environment and hence, sustainable into the future. A business plan does not have to be elaborate. A simple vision, mission and marketing plan is sufficient. constant monitoring and evaluation is essential to check how the product (s) is being received and periodic consideration of customer feedback. Charles Darwin said that it is not the strong of species, neither is it the intelligent that survive, but the ones most adoptive to change. That is why cyanobacteria as a species have never died off, compared to earlier species of homos, we humans being the latest. They have survived over 2.8 billion years and still going.
Lack of knowledge in business finance is also a big factor why many stumble and fall in this journey of entrepreneurship. Business nowadays more than any other time are sustained by taking care of financial risks and as such, budgeting and strict financial management skills are necessary. Business is no longer operated on the age old model of selling and buying to restock, but rather, margins and future contingencies, among other factors, have to be considered. Business records have to be maintained, and analysed for future decision making. The vision of the firm should be in consistency with prevailing market conditions, and if not, aligned accordingly and backed up with financial resources to finance such undertakings.
However the major reason why businesses fail is not in execution. It is in the start point. Why do you choose to go into business? Is it cash returns? From common banter around here, most go into business to make cash. To them, it all starts and has to end with cash rewards.
An interesting study done by a management strategy guru, Jim Collins brought out a factor we ignore in business and industry. In his book, “Good to Great” he said that firms in a sector that succeed play according to an age old natural secret: the hedgehog concept. He said that firms competing in a sector that are successful concentrate their core business activity on what converges in three spheres: what they are good at doing, what they love doing and what they do and brings in most returns. Great firms endeavour to study their environments and persist in operating in this zone and therefore, have a surety of existing in the ages to come in the business environment. All major brands that have outlast the ages, like Coca Cola, have learnt the secret this secret and employed it fully. They have learnt to do just one thing well and thrive in it since they apply their passion and comparative advantage on it. It is not in how many revenue streams you have that make the business succeed, it is in just one thing that you can do well and you are passionate about.
It therefore means that going into business just because it will pay heftily is getting it wrong from the word go. You ought to ask yourself what you can do with the least of effort- that is your passion. Secondly, what can you do well – what you have capacity in. Money will always follow passion since executing your marketing plan will be effortless.
Finally, ensure whatever you want to do as a business fulfils a business need. A business that will not fill or serve any human need will not sustain itself. No man would fork out cash for something that cannot satisfy him in any way. Some businesses have gone a step ahead and went to the extent of creating artificial demand to push uptake of their products. It is a fact that whenever you see the Coke ad, you feel thirsty even when you are not thirsty. Why? They have known how to connect emotionally by creating this artificial demand and hence, sales. Cocoa cola started in the 1886 and sold only 9 glasses averagely per day. As we speak they do 1.9 billion bottles out of their huge interest in pushing for their product uptakes. Our own Safaricom uses the same strategy. The “Home is where the heart is” campaign comes to mind.
Alongside this, it is noteworthy that the famed icon, Michael Jordan receives more money than all the workers in their Malaysian plant combined. Mark you they work day and night when he has most probably never spent a few hours in the factory for tours. How is this possible? He has product endorsements of Nike’s apparel and shows the products off to his millions of fans globally. Inasmuch as he has never stepped into the factory, by just using his passion, he is able to master his payroll, well into the future. A business that commands the demand for its products will always have an assured future. It will last even beyond the competition. This is what Apple, Coca Cola, Safaricom have learnt and employed in their business strategies.
Cash rewards are a byproduct of what one offers. They should never be the main aim of going into business. Otherwise, three or so years into business, it would be a statistic as those that KNBS enumerated as mentioned above. Let your passion be the drive. Money will always follow ideas powered by passion. Align it to a human need and you will be good to roll!