I have spent the last decade in an organisation I watched grow from an entrepreneur’s idea into a structured company. (The company began with start-up capital of N17.50K). This was done in one of the most hostile business environments on earth – Nigeria. I have also spent considerable time thinking about how the many fledgling & brilliant entrepreneurs in Nigeria can evolve into structured corporations (and perhaps even fast track their way there). But first, it would be helpful to describe what an unstructured business looks like.
As an entrepreneur, you can tell your business isn’t structured if:
– Potential clients have a brief but can’t find you because you never pick up your phone or promptly return calls.
– You don’t have a backup or secondary phone line.
– You don’t have staff that are equally as competent as you. Therefore your business can’t grow beyond the number of briefs you can individually handle.
– Your official email address ends with gmail.com or yahoo.com.
– You’ve not empowered leaders in your company (where leadership is defined as the ability to take executive, binding decisions such as signing cheques and contracts).
– Your office is your dining room table and a multinational won’t give you a job because you won’t pass their typical office inspection.
– You’re not a registered company and have no idea what VAT and Withholding Tax are.
– You fall ill for 3 months and your company falls apart because there’s no one to hold the fort while you’re recuperating.
– You can’t do international business transactions because you don’t have a credit or debit card.
– You won’t be granted a visa because your company doesn’t have consistent income statements over 6 months or corporate registration documents.
– None of your staff has a proper job contract with defined job descriptions, expectations, obligations and benefits.
– You don’t have a business card.
– You don’t have a website.
– You don’t know how to knot a tie or dress appropriately for a business dinner.
– You can’t stand toe-to-toe with your international counterparts.
There are many more examples but you get the point.
From discussions with young entrepreneurs, I have tried to collate a progression sketch for how to move from the first stage of entrepreneurship to a more structured stage. (I will not speak particularly about Finance, because an entrepreneur who has not figured out how to raise finance for his business is NOT an entrepreneur and should get a job).
These are my suggestions:
1. DECIDE ON YOUR REASON FOR DOING BUSINESS
Your concept of life and raison d’être will invariably affect your concept of business. If your ultimate desire is to just make money for instance, you won’t invest in structure and you’ll lack critical business focus. If tomorrow, fish becomes a hot selling product, you’ll jettison whatever it is you’re doing to jump into the fish market.
Once you decide why you’re going into business and the kind of company you want to build, then you can design a structure to get you there.
2. PUT IN PLACE ADMINISTRATIVE AND REGULATORY STRUCTURES
OPERATIONS: You may have very creative ideas or products. However, if you do not create an enabling environment to develop, manage & protect them; then package and present them to the world as marketable propositions, you are deploying valuable effort to create inventory.
Administration is the business of the business. It ensures products get to market. It protects you and ensures you remain a going concern. You’d be amazed for instance what a properly filed letter or invoice can do for you when a dispute arises with a client. Also, what a prompt response to a brief or a returned telephone call can do to your bottom line.
Hire an efficient operations person to handle the everyday business issues so as the business driver, you can focus on the bigger picture. And please, do not get a boy to do a man’s job. Never get an immature, cheap minion to run your operations. You will destroy your company. Find someone who can comfortably represent the company in a meeting with a Lawyer, for example – someone very intelligent and responsible. Someone you trust.
REGULATORY ISSUES: Stop trying to handle regulatory issues on your own. There are competent individuals and firms who consult for small and growing businesses. Instead of banging your head against the wall trying to register your business at CAC, pay someone to do it. On the issue of business names, sometimes, all you need is a little wisdom. It’s easier to register an abstract non-English word that you coin or your own God-given name, than an existing everyday name. For example, Visix Enterprises is easier to register than Crusader Trustees Company.
Growing businesses need basic templates to work with (and I’m not talking about letter or invoice templates). You need an HR Contract template for staff you’ll be hiring. For your accounts, you need to do your first Trial Balance and Management Accounts, if you’ve existed for a number of years and are tax liable. You also need a basic Financial Policy and Accounts Tracking template, which makes your accounts audit so much easier when you begin to pay taxes. It also helps you see at a glance how much comes in and goes out of your company; what your profit margins are; your daily expenses and whether on the whole, you’re a going business concern or approaching death.
You also need a Service Contract template for clients and contractors. There are LAWYERS & ACCOUNTANTS that specialise in helping growing businesses in these areas and it may be cheaper for you to retain them on an annual basis or to get them to develop the basic structures over a project period of say 3 months.
SUPPORT SERVICES: There are a number of service providers every entrepreneur needs to have on speed dial. They include:
– Website Developer
– Travel Agent
– Generator Technician
– Insurance agent
For example, a small enterprise can’t “afford” to have a car stolen or bashed by a danfo. Comprehensive insurance helps you cushion the cost.
2. DEVELOP A BRAIN TRUST
A growing business may not be able to afford a management consultant or to commission market research. Sometimes the perspective of a single mentor is also too narrow and limiting for a long term vision. Therefore, you may need to put together a group of people you respect within and without your industry who will serve as a Strategy Board, Advisory Board or just Sounding Board. They should be experienced, seasoned and wise. They should be approachable and willing to tell you the unvarnished truth. Their job is to meet every year (or half-year), hear you out and provide market insight from an outsider’s point of view. They do not make executive decisions but provide counsel. They are your ad hoc focus group and help you shape ideas into marketing propositions. In some cases, they also provide links and networks. You may decide to pay an honorarium for this service or simply buy lunch – it’s up to you.
3. HONE YOUR MARKETING STRATEGY
Besides having a good brand, website, brochure and other marketing tools; you need a hands-on person to physically sell your product to the market when it’s ready. (This may or may not be the company founder). It must be someone who has the personality and drive for it. If it’s too expensive to hire someone, get an agent you trust and pay them a commission. But nothing beats having an in-house point person. Without a marketing driver, your business will die a slow death. Sometimes your strategy may be to not publicly market but to rely on referrals. Notwithstanding, you need someone to physically write proposals, attend meetings, do presentations, seal the deal and most importantly follow up on payments . Remember, when the idea or product is developed, someone has to look for potential clients, sponsors and business partners.
4. GET AN OFFICE
Instead of trying to bear the cost of an office, identify 2 or 3 other people like you and share office space for at least the first 1 year of the rent period. Split the cost of diesel and other bills, have a common reception and meeting room but keep separate work spaces (because of confidentiality issues). After a year, some people will be able to afford their own office space and move out, while others will join. Having a shared office provides economies of scale on office supplies.
5. TRAVEL, READ, MEET PEOPLE
Move beyond being a local champion or competing with local champions. Broaden your perspectives and learn about the best in your industry, internationally. Travelling does wonders to your world view. You can do it physically or through the pages of a book or the web.
Spend time with potential clients or seek to understand their world. Read what they read. It will help you to see things from the customer’s perspective and to develop products that meet their needs. Also, you’ll come to realize that customers prefer to do business with people who understand them not people who speak technical industry verbiage.
I hope the few prescriptions in this write-up have been useful. I wish you the very best in your business endeavour. You can reach me on twitter @subomiplumptre and join the conversation at #NigeriaSME.