“We have so many brilliant businesses ideas, if only we could get some start-up money”.
You have probably heard these comments numerous times. You may probably be one of the SMEs struggling to raise finance for a new or growing business. If only I could get that loan, you think, then everything will change and my business will shoot up.
A significant number of entrepreneurs who come to me for business plan writing have non-viable ideas. Many of them listen when I advise them to go back and do some market research. The purpose of the research is to establish if there are enough customers who want their product or service at the price they will be selling it at. A few of them say, “Just do the plan man. I need it to get a loan; I know somebody at the bank who will fast-track it even if the plan is not complete. I will look for customers when I get the money.”
Such reasoning is faulty. Many SMEs who got big loans from financiers are struggling to pay them back, especially in the new currency regime. Numerous others who inherited large business assets failed to maintain or grow them over the medium to long- term period. Clearly money does not build a business. As much as you want to think that all things would change if only you had more cash available, they won’t. The reality is that for most businesses, they don’t need more cash, they need more brains.
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Most of the best businesses started in the history of entrepreneurship were started with little or no money. Dell Computers, Apple, HP and thousands of others were started in dorm rooms or garages with very little cash. Divine Ndhlukula started Securico in a cottage with only four employees.
Show me the customer
The best indicator of a good business idea is a list of customers willing to buy the product. To build a good business you start with building a good customer base. First, though, you need to supply a product or service that they really need or want. Not something that they can get from hundreds of your competitors, but something unique and that they really need, such as a painkiller rather than a vitamin pill. People with pain will find the money to buy an Aspirin, but a vitamin pill, well people can buy when they have extra money available.
Next you need to get your customers to commit to buying the product. The best show of commitment is by paying up-front. It takes some skill, understanding and mutual trust to persuade customers to make such a commitment. But once you have mastered the art, you can start your business using the funds obtained from your own customers.
Successful entrepreneurs put a lot of effort in marketing themselves to potential customers so that they get support when they launch their products or services. How many people know you who are potential customers for your business?
Some entrepreneurs build relationships with future customers while still working for an employer. With the trust built over the years, such people will support your new venture.
To succeed in business, you need to learn a few tactics. Two of them are marketing and selling. As an entrepreneur, you will need to sell yourself to business partners, customers, financiers and other stakeholders. Failing to sell oneself is one of the causes of failure in business. No matter how good your product or service is, if you cannot convince someone to buy it, you are not in business. No matter how much money you have.
To help entrepreneurs learn some of the tricks of marketing, I have compiled some 50 marketing tips proven by experts from all over the world. I have already e-mailed this book to all entrepreneurs on my mailing list. If you want a copy, send me an email or visit my blog http://chichoni.wordpress.com. Best wishes in growing your business.
l Phillip Chichoni is a business planning consultant who works with SMEs and entrepreneurs. He may contacted by email on [email protected].
