As an entrepreneur or budding entrepreneur, when you do what other people are doing, you would never be as good as they are, you would basically live under their shadows.
To be great, you are either doing something new or you are disrupting an existing solution.
It is no longer news that 90% of startup fail in their first 2 years while an extra 5% fail in their first five years.
I conducted a similar research as a business consultant and I discovered that 90% of people who win grants are either no longer operational or still struggling to get market share. 95% never got up to their financial projections, the other 5% who did well where either doing well before or received a wide range of other financial and physical support to scale.
The 5% extra that makes it pass the first five years of struggle and market entry, what do they do differently?
Without the right business idea or proper business strategy, most of you who eventually wins the Tony Elumelu fund or win any kind of grant may end up drastically failing, in fact as the matter of fact 95% of you if records are right but the essence of this class is that you get it right and do things differently just like the 5% that makes it pass the first five years of tussle and market penetration.
To participate in business or investment competitions, People basically go into space and come up with a wonderful idea to impress investors but in reality, they are unable to implement such idea… it is one thing to have an idea and it is another to have an executable idea.
Before we even delve into how to craft business ideas, let me share a little story of what I observed to be the failure point of most entrepreneurs who secured an investment of any sort to start their business.
I have a friend who is into tigernut production, as soon as he got a 1.5 million Naira investment, he went straight to rent a factory which costed about 400k, he bought machines that costed him about 600k… he now used some of the cash to settle nafdac, buy raw materials, etc.
He did all this without having a single standby customer. When I asked him who he is going to sell to, he said he will supply to supermarkets, sell on roadside and stuffs. Now I asked myself, what happened to the people selling before?
You just want to rush into the market just like that and the rest will give way so you can sell?
Ofcourse his business failed. Tigernut is a very niche market and people who take it are selective and most times loyal to a brand so you need to convince them otherwise.
In a situation where you secured an investment, do not rush to rent shops or buy equipment, re validate your idea and sign up clients before doing so. You don’t pay rent and acquire machines before going to look for customers, you acquire customers before paying for rents and machines that way you are not hit by depreciation loss.
You may think I have drifted, no but everything I have said above is interconnected and emphasizes the need to only spend a kobo on a good idea.
What could he have done differently?
He could start producing at home. Buy grater and small juice extractor that doesn’t even cost more than 20k, buy small bottles and labels and use his own fridge at home to chill. Try to supply to offices, or people who drink such and as the demand grows, he can now think of buying bigger machines and space. Dear entrepreneurs, you build business based on demand, you don’t build businesses out of excitement or out of passion as some people will put it, passion only comes to play when there is a need to address a surging demand.
Now to the business of the day; how do I come up with ideas?
People say ideas are expensive but in reality, ideas are cheap. People get ideas most often but never validates these ideas and thus fail in the process of execution.
Whenever you find yourself asking any of the below questions or making any of the below expressions then know that there is a potential idea in the corner.
How do I…
I don’t like…
I need help….
I can’t find….
I wish there was….
The next thing after observing yourself asking the above question will be to observe if other persons are asking the same questions. If you find people encountering same problem then an idea is born. People are most likely to fight to solve a problem they encountered more than an idea they found randomly.
The next step is to research any existing solutions, are there any one doing this? If yes why haven’t they reached me or these people yet? Your answer to this question can form a base of recreating the solution.
Here is an instance: I have a friend who imports clothes from china and sells at Aba , but he had to come to Lagos each time to pick up his visa to china.
Most times he finds it frustrating to do the rounds so he told me he was looking for any special visa pickup service to deliver his visa to him in Aba instead of having to come to Lagos each time.
Note that this is a problem as transport to and from Lagos is about 12,000 naira on road and 45,000 on air plus hotel accommodation as most times the embassy may end up asking you to come back the next day or your transport arrived late due to maybe traffic or something else.
This my friend observed other importers and noticed the same frustration, he approached them and they were willing to use the service at 8,000 naira boom a visa delivery business was born. So all he needed to do was to employ a staff at Lagos, and have him go to the embassy to collect ready visas and then ship it to Aba using courier services for 2000 naira and nets a profit of 6000 naira on each transaction.. That is over 300% cool margin.
Now the other means of coming up with an idea is coming up with an idea that makes people see they have a problem, some people don’t know they have a problem until you approach them.
Before the advent of phones, we were comfortable with sending letters and fax and waiting for a month for it to be replied but when GSM came, we saw we had a problem we didn’t know all the while.
Now back to my friend’s VISA business:
As he began to deliver visa to these clients in Aba, other importers in Owerri saw what they were doing and were even willing to pay up to 15000 to get theirs delivered to them as well because the money, time and stress of going to the Lagos embassy can be averted with just 15k.
So in nutshell, is your idea solving a known problem or revealing to people a problem they had but didn’t know.
A good idea seeks either open up new possibilities of improve on existing systems.
I have mentored a lot of businesses that are raking in a lot of millions and one unique thing they have is usually based on two models:
Idea based on demand
Idea revealing a problem people faced but don’t know they exist.
Here is another example: one of my mentee just setup a pharmaceutical servicing business. What he does basically is to help pharmacies track expiring products. One of the major issues of big pharmacies is that they usually don’t track old stocks to see the drugs that are expiring so most times they end up selling expired drugs to clients.
The above idea is based on demand and is solving a direct problem. Most pharmacies are signing up the product and business is moving.
To build an idea, you are either doing something new or disrupting the current market.
Now specifically for those applying for the TONY ELumelu grant of 1.5,000,000 Naira, what ideas should you submit and not submit.
The application screening has evolved overtime. Some few years ago it was basically based on idea but now a lot of other things are being put into considerations.
Your background and skills to efficiently run the business is also heavily considered plus your financial projections.
Having said that, we intend to run a more intense master class for people inducted into the Evolve Africa Master class.
The masterclass will be facilitated by three entrepreneurs who had won diffrerent business investments, exciting isn’t it? they will teach, coach and mentor you.
The Masterclass will basically do two things:
1. Discuss and explain all the sections of grants like the Tony Elumelu Application + others and how best to answer the questions.
2. Idea incubator where you get to engage with a mentor to help you modify your idea or dump the idea for a new one.
To make the work at the incubator easier for us, we encourage members to purchase a recently published book “The Entrepreneurs’ Guide for starters and startups” as it will answer most of your business questions.
Note that getting this book is a pre requisite to getting admitted to the masterclass as we don’t want to keep repeating what we already covered in the book.
The hardcopy of the book is 1500
The softcopy of the book is 1000
To place your order, pay into the below account:
And send proof of payment via whatsapp to 07036432507 or via email to email@example.com
2019 should be a different year for you, it all depends on the sacrifices you want to make or the investment you are willing to make in yourself.
Most people will spend couple of thousands this Christmas on clothes, drinks, etc but may shy away from spending on their business or personal growth.
If you really want to start a business, I will be hoping to hear from you.