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Essentials for Starting a New Business

By Tunde Owoeye-Phoster.

Forget these business start-up tips to your detriment!

These days, a lot of ‘small’ businesses spring up and the first question I ask is why? One of the new entrepreneurs on the block was once asked why he started his business and could not really give any tangible answer in the next five minutes after the question was asked. As stupid, simple and straightforward as that question is, he could not give a valid answer.

It is no wonder then, that statistics show that a lot of businesses fail within the first year of operation. Time and time again, you see a lot of shops open with fantastic painting, some new advertising and an optimistic entrepreneur hoping to make a kill in his newfound business, then after the initial rent has expired, there is not enough cash flow to pay the next and the business folds up.

Now over to you… Think about the question also, why do you want to start your business? Why did you start the business you started? Why not just patronize already existing businesses?

Some of the likely answers we hear are, “to make more money”, “to be my own boss”, “because I feel a deep seated conviction from God”, “to be wealthy and famous”, and “to be in control of my time”. If your answer falls within those mentioned above or sounds close to them, think again!

Business is not supposed to be started solely on these sentimental reasons. As much as the reasons above are not bad at all, starting your business blindly solely because of those reasons may crash the business in no time.

 

Why should you start your business?

The answer to this is also as wide as any dictionary can contain but there are four classifications here that you cannot do without unless you want to hustle through entrepreneurship and be at the mercy of the giant competitors and merciless customers.

1.    Cheaper

You need to start your business because you can offer the same or better product/service at a somewhat cheaper price. Don’t get this wrong. This is not reducing your initial charges to attract customers. This is about devising a system that allows you to beat competition.

When Michael Dell started Dell Computers, computers were primarily sold through distributors, who then resold to smaller distributors, who finally sold to the end-user. Dell found out that the cost of the computer itself was less than half of the price the user paid for it. That was the landmark idea he was looking for. He devised a means for better-performing computers to be sold over the internet directly to customers at almost half the price the giants were selling the less-performing ones and the rest is history. I’m sure that may no longer be a strong competitive advantage these days but it surely set Dell on its path to greatness as a business.

2.    Faster

Can your new venture deliver services or products faster than competition and to the interest of the consumer? What can you do to shorten your response time compared to industry standards? How can you deliver your products and services faster? Can you give quotations faster?

When FedEx wanted to really play big in America, they devised a system to deliver small parcels overnight and then pushed the advertising to the extreme. The advertising copy went like this: “When it absolutely positively has to be there overnight!”  The rest also is history. The same was in effect for Henry Ford where he devised how to make cars faster with the assembly line. This was also the case with the Bus Rapid Transport (BRT) system, an innovation by Lagos State Government designed to get people faster to their location through dedicated bus lanes.

3.    Easier

Nobody really likes work. Every person on the surface of the earth will prefer to lie on their bed and get paid $1million every month. You know those advertising headlines that keep getting ignorant folks time and time again right? If there is something easier about your venture, then you will attract customers by default- Pick-up & Delivery, toll-free enquiries, order online, pay on delivery, pay online, and search hundreds of thousands of houses at once at a website. Google is a major I.T. giant today, all because of ‘easier’. Everything is easier because of Google, easier to search and find information, easier to find locations, easier to read, respond to emails, easier to view attachments, easier to send attachments, easier to open your email and so on. Your innovation does not necessarily have to be I.T. related, it could be payment plans (pay twice or thrice). Whatever it is, make it easier.

4.    Better

Making something better about your product or service is another path you can tow. Although making something faster and easier sounds like making it better too, better covers every other thing that has not been covered in our previous three points. One of the reasons people buy a product or service may be because of how they feel. If you make them feel better, you have achieved this. What can be better about your packaging, customer service, quality, customer relations, office environment or store ambience? Think BETTER!

When SLOT Phones devised a better shopping experience for phone buyers in Lagos Nigeria, they pulled a huge market share in the industry. Before SLOT, almost all phone shops had no name, were skeptical to open their phones for you to check if you wanted to buy, and had little space for more than two people to stand at a time to make enquiries; it was a mess. SLOT redefined the shopping experience, providing better ambience, a way to interact with phones before buying, better customer service, and super store branding with their name boldly written on their stores. The rest one more time is history!

 

Before you jump off the cliff innovating, remember these points:

  • Whether cheaper, faster, easier, better or the four advantages combined together, it must be in the interest of your potential consumers.
  • A business cannot be all things to everyone. Have an image and vivid description of your potential target and device your competitive advantages to fit your core target.
  • A system must be developed to create consistency in the value you are offering to customers. Customers don’t want to get your products in 30minutes in a day and get it in 2 hours for the next three days. This will create negative word-of-mouth.
  • Lastly, note that NO competitive advantage lasts forever. You must continually innovate to stay ahead of competition. Make it a periodic chore, yearly, quarterly, monthly, so you can stay ahead.

See you at the top!

 

 

About The Author

Tunde Owoeye-Phoster (www.twitter.com/tundephoster ) is the CEO of Phoster Solutions (www.phosterng.com) a branding and advertising firm with. Co-founder of two other companies, he is a business coach and one of the lead facilitators and consultants at Orange Academy where he lectures both new and experienced staff of Nigeria’s largest companies.

He is a LEAP Africa Awardee (for empowering youths through entrepreneurship education) and is also a FATE Foundation Alumnus. He is a graduate of Management and Accounting from Obafemi Awolowo University, Nigeria. He is a dynamic and practical speaker who possesses the ability to bring insights to the minds of both the young and old about entrepreneurship, branding and innovation. He is married and lives in Lagos with his beautiful wife.

He can be contacted through his email: tundeowoeye@yahoo.com

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