Recently I read an article by Ian James where he echoed my concern about the fact that many of people leaving our jobs and jumping into entrepreneurship.
An unprecedented number of people are launching businesses only to find out that no one really wants what they are selling. Alternatively, starting a business and realizing that they totally misunderstood the market.
Therefore, I would like to offer these reminders to [would be] entrepreneurs as we launch our services and products (they may seem simple enough, but these tips can be lifesavers):
Plan on paper before you launch out in real life. Use tools like a business plan, opportunity canvas (this is my preference), business model canvas, minimum viable product canvas, feasibility study, cash flow analysis etc.
And no, I do not expect anyone to do all these at the same time; and I personally believe that the type of business you want to engage in should determine the type of planning tool you should use.
Having said that, I must emphasize that you must plan, it’s unavoidable. And as you plan, please make sure you think about these areas of your business:
- The problem you have identified and are looking to solve
- The solution/product/service you are looking to provide, which will solve the problem identified.
- Unique value proposition; this is the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition. It is best to have an unfair advantage.
- Competition: Who is providing the same or similar products/service/solution as you intend to provide? Identify what edge you have over your competition. It could be price, presentation, economies of scale etc. It really does make sense to leverage on your competitive advantage.
- Think finance. What will it cost you to provide/manufacture your solution/product/service. You don’t want to start then have to stop after 5 months because the costs are prohibitive, do you? Also, project your projected review streams. You need to make sure that it’s realistic. Do your projected revenue streams justify your remaining in business?
- Customer segments. You need to think about those prospects who will immediately subscribe to your product/service. These are your early adopters. Then after your early adopters, who else will see your product as the solution to their problem? How do you reach them? Where do they stay? What is their earning capacity? How does information reach them? What value will they derive from your product?
- Distribution channels. How will your products get to your customers? Are these distribution channels reliable, cost efficient and scale-able with increasing volumes? Think also about marketing channels. How will you get information to your prospects? Social media, Keke Ads, Billboards, SMS, radio jingles? How does your choice affect your financial projections?
- Key progress matrices. How and at what stage will you know if you are on track with your business? Will you measure success by sales volume, revenue, profit etc.? These need to be determined on time so you know. It’s not about feelings, but rather cold hard facts and figures.
- Test your idea – this is the time for surveys, making prototypes/samples, engaging focus groups, market research etc. Depending on the type of business, you may need to create and launch a minimum viable version of your product and gauge customer reception to your product. A minimum viable version of your product is simply the version of your product with just enough features to gather validated learning about the product and its continued development. Testing can save you tons of money; money you would have spent running after a particular product or service dream, importing items (in this economy), rent, the hassles involved in hiring, employee wages, stocking your shop, buying machines etc.
These steps are used for analyzing the business opportunity you wish to embark on before you jump in.
When you have put your thoughts together, you can discuss them with your partner, adviser or mentor. This will help you see the holes in your plan. You will know whether or not your plan is viable.
Case Study: G2
With this in mind, I’d like to introduce Mr. Eju Anti, he is an entrepreneur who feels he can successfully sell ‘Gourmet Garri’ aka G². Eju currently lives in Zango Kataf in Kaduna State, and he is confident he will draw clients from far and wide to patronize him irrespective of his location.
G² is eba stuffed with a variety of soups and shredded beef; then wrapped in transparent polythene bags. Each bag weighs approximately 185grammes. Mr. Anti intends to sell this for ₦3,000 a piece.
His belief is that Nigerians are tired of the regular fare, and presentation. He is convinced that they want something different. And are willing to pay more for the novelty of the concept and presentation.
G², he says will be marketed solely via social media, specifically Instagram. He wants to attract the socialites and bourgeoisie sect.
G² major competitors are caterers who take advance orders and deliver meals to offices and homes; these have perfected the product distribution channel. Other competitors are the local food vendors with notable variety and marked packaging disadvantage. These folks sell their eba and soup (with a myriad of protein options) separately and the average price is ₦900 a piece.
Eju hasn’t considered issues like storage – how will he preserve the G²? The biggest concern is how he pegged his price impossibly higher than the market range.
Has he identified the correct marketing and distribution channel for his product?
How feasible is this? What would you advice Eju to do? Why?
You need to consider these same kinds of questions before embarking on your entrepreneurial journey.
I see more and more would-be entrepreneurs farming out their business planning stage to consultants. Frankly, this is akin to giving someone your clothes to wear for you, and walking out of your house stark naked!
Graphic I know, but I really wanted to shock you out of that habit.
To succeed, you have to do your own business planning. You own the vehicle; you really need to be intimately acquainted with what’s under the hood of your business.
You do this by, analyzing your opportunity on paper (with the steps above), running it by your adviser(s) and testing your idea thoroughly.
Many times, your idea looks good in your head, but when you have everything down in black and white, you begin to see gaps or feasibility of your plan.
In this economy, one cannot afford to launch and go burst more than necessary. It may mean a couple of months delay, but better delay then start well, than rush and go burst, right?