To thrive in business, think of it as a DIY project; just do it!
Get started to avoid facing potential partners empty-handed.
Last week, we looked at how the first four parts of a business work together to provide competitive advantage and increase chances for business success. It all started with customer segments provide a sustainable market for the value proposed (suit of products and services meeting the customer segment needs).
The customer segment profile helps define the appropriate channels for reaching with information on the product and for delivering the product and also how to acquire and maintain different customer segments.
Customer segments are uniquely defined by a process called customer profiling. Profiling customer segments along key features like age, gender, income (purchasing power), education, and other special or unique social behaviours that drive their consumption patterns is essential in identifying all the second (value proposition for each segment), third (channels) and fourth (customer relationship management) part of business. These first four parts of business provide value that a customer would pay for to create the revenues we desire (business part number eight to be discussed later). Each product or service is priced with a margin over the cost of production which is then what a customer pays for the products.
Crest fallen
Many young people are frustrated with what they think are great ideas that they are unable to take to market. I occasionally walk into the various entrepreneurship garages in Nairobi that offer funding for contestants with the winning business idea. Consequently, I have listened to numerous ideas presented by enthusiastic youth in such forums and I also take time to speak to them when all is done and dusted. Crest fallen would be the best words to describe the contestants who lose the competition.
The major challenge such youth face is a very simple step which I assure will continue to frustrate many young people across East Africa, because it is a direct contrast to how learning takes place in our education system. Entrepreneurship is ‘Do It Yourself’.
Entrepreneurs taking faith in your idea to offer seed funding will only get interested when the idea and model developed has generated some revenue. To do so you must have had the courage to look for some resources to produce what this market calls a prototype – otherwise simply put, your first impression of the product that meet the needs of the clients according to the profiling already done.
You will not have known to how explain this kind of need to people who are accustomed to taking risk well enough to part with as little as Sh30,000 may be from 10 people to make 300,000 you badly need to fund the prototype development. This is called pitching in a mature language and you don’t just acquire it in online classes or events as many of you do by running to every event where pitching is being taught. You get better at pitching by the depth of facts you command about your own model, facts acquired by doing.
Why would I consider giving you my hard-earned money to put idea and model that is not properly formed yet the risk of loss is 100%? I need to be convinced that you know your business, not your oratory skills. This comes from your responses that reflect what you have experienced in this short time with business idea on the ground.
Someone who has produced and sold twenty units of their own product can discuss how the market responded with actual facts as they happened. They can talk comfortably about the changes the customer segment has posed when they tested the product. This enables a provider of seed capital to see through the practicability and adequacy of the sought funding in closing the product development gap. When President Uhuru and Deputy Ruto floated five billion shillings Uwezo fund and lately the hundred billion Hustler fund by President Ruto’s Kenya Kwanza outfit, this is what they did not tell you. Because they also don’t know it. It is something you must experience to be competent.
Someone who has not produced and sold a single unit of a product they are proposing will blabber around with sentiments. Money and sentiments are enemies. Online classes and attending the many entrepreneurship events enhance the oratory skills you need after you have won the first battle on this long war. There will be many battles at each preceding stage so get ready. Just Do It.
Patrick Wameyo is a financial literacy coach at Financial Academy and Technologies, and an entrepreneurship coach at The Entrepreneurship Center EA.
