“No one lives long enough to learn everything they need to learn starting from scratch. To be successful, we absolutely, positively have to find people who have already paid the price to learn the things that we need to learn to achieve our goals.” — Brian Tracy
sme’s chat with phillip chichoni
Although the focus is currently on the number of businesses that are failing, companies that are closing, number of workers who are being retrenched, uncertainty over the proposed bond notes and all the chaos in this country, opportunities remain in abundance.
If you go to the office of the Registrar of Companies, you will notice dozens of new companies being registered every day. Although this is not a solid indicator of the health of the business environment, it shows that not everyone has given up hope; we still have many people with the entrepreneurial spirit.
Some people want to start businesses but they are not sure how to go about it in a way that leads to success. The common view is that you begin with a clear idea in mind for the business, with a definite product or service, and with particular customers in mind. This is one way, but it is not the only one.
Studies of real businesses that have managed to grow and become successful reveal that there are in fact four major ways in which business owners started. You will find that each way is suitable for certain entrepreneurs in certain circumstances, but each carries its own types and levels of risk.
Quality product or service and market experience
The first and the most common way, which is probably the easiest, is to start with a good product in a market that you thoroughly know. One entrepreneur discovered that insurance firms overseas were adopting new, efficient software and thought it would be ideal for local companies. Therefore, he approached the supplier of that software and negotiated distribution rights. After securing the rights, he approached the senior executives of a few firms, who knew him very well and managed to convince them to migrate to the new software. Once he got these firms on board, his company was well on its way.
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In recent years, 23rd Century Systems used this approach and are currently the exclusive agent in Zimbabwe for German software giant, SAP. Afrosoft has gone even a step further by actually developing software solutions tailor-made for local companies’ needs.
The key to success in this approach is to have market experience in your chosen industry, like having worked in it for example. You have to know what the customers’ real needs are and have strong contacts in the industry.
Clever idea but limited market experience
The second way is to have a clever idea but with little experience of the market. You will be entering an industry you are not very familiar with and in which you have very few useful contacts. This approach is feasible but is not for the faint-hearted. One firm started as a broad-based computer bureau for small firms. However, it soon discovered that small firms did not want their services. However, they continued studying the market until they discovered that pay-roll packages for SMEs were in demand and their business took off. This approach may take some time for you to understand the market’s real needs, but once you find a niché, you are set. You set out to discover what the market wants and then focus on satisfying that need.
A clever idea with no market
This is usually a new product or service that people in your market have never heard of. Your job is to educate the people and create the market. It will be difficult and time-consuming, but once you create the market, you will become the market leader. Kubi Indi started her brand of cosmetics and hair products when she returned from London. Many people had probably never heard of such products that were specifically targeted for the black skin. But after a while, Kubi became a leading brand, not only in Zimbabwe but also in southern Africa.
The biggest mistake many people make when using this approach is assuming that the market will automatically accept their product. You need to educate the market thoroughly.
The two-stage approach
This approach is for an entrepreneur who is not very sure of what product or service to supply. They start a more general enterprise, like an engineering or distribution firm. If it is engineering, they produce components for other firms, all sorts of components as required. A marketing firm will distribute all sorts of products on behalf of producers. The objective is to learn the market and gain experience while generating cash from the start. In the long-term, they will identify a specific product that they will focus on and manufacture it under their own brand. This approach allows you to get used to running a business, build up cash and to think more carefully about what business your company should ultimately be.
Until next time, keep on accelerating your growth.
Phillip Chichoni is a consultant who helps SMEs and entrepreneurs build sustainable businesses. You may contact him by email, [email protected]. You can also visit http://smebusinesslink.wordpress.com
