In an exclusive post for HumanIPO, Muthuri Kinyamu of social media agency Social Edge Africa shares five lessons he has learnt about business from working in start-ups and small and midsized companies in various sectors, as well as setting up his own company. He specifically focuses on start-up entrepreneurs in Africa and those who want to get into business in the near future.
1. You’ve got to know your sport!
We’ve got loads of people who go into business without getting their facts right. A good number doesn’t have information and recent data to guide their strategy and help them understand the industry, and sadly our people perish from lack of up to date, reliable information and data. You need this to create a value proposition for your service or product. Why? Before you go to pitch to clients, investors etc you need to have hard data from credible sources to back up your arguments, or else you will sound very shoddy! Before you take that leap into business please do your research well, identify the gaps, see the challenge, then package your business to tackle or address a specific problem or need in the market. Before you create another social network for Africans or Kenyans ask yourself exactly why people should join it!
2. Have a business model.
This is simple, how do you make money? What are your revenue streams or sources? You’ve got to know how you will make the money otherwise you aren’t in business. Every app you develop isn’t a company, can you monetize your stuff? Who pays for it? Is yours a B2C or a B2B company? Participating in hackathons is good, if you win there’s good PR coverage for you, prize money and gift hampers, but that’s not why you exist as a company. Press coverage doesn’t pay your bills and in most cases what you get is an inbox full of congratulatory messages from friends and enemies alike and a few new followers on Twitter! I see lots of social businesses which operate like NGOs, because their founders are always looking for grants and support from companies. It’s not bad if there’s a UN body that pays your office rent and administrative costs, however you need a model that can sustain itself economically.
3. Know where to fish!
Know where to sell, how do you approach these customers? Where are they found? Where do they hang out? Do you have people on the inside? How good are your networks? After you have a business model in place, please understand you are a start-up. Don’t start an events management firm then walk into Coca Cola and ask to organise their next big launch or pitch for the next Guinness experiential deal! Not unless you really have some good financial capacity to execute their big ideas. Please remember you don’t even have a good portfolio that you can showcase in the pitch. Worse still do you have good answers to questions like “who are you, where else have you done this, why can you do it better than others”? So where do you start? Friends, family, former colleagues, the last company you worked for are good places to approach, seek leads and get introductions to a few key decision makers in the companies in your prospect list.
Think about high value clients that can pay for your product or service when you deliver. They could be individuals, small and medium sized companies, NGOs, schools etc. Focus on working where there’s less competition.
4. Can you deliver?
Preparing a PowerPoint with all the good ideas and concepts you copied online is really simple. So here you have landed the deal, you have the LPO with you. Do you have a talented team to deliver in place? Do you have the finances? Most start-ups shut down here, because they simply didn’t deliver on what they promised! If you nodded yes to all those ideas the client floated here’s the time you do the real thing, the fancy things you said you can do, the apps, the 3D games, cool sites. My advice to you is please don’t promise what you can’t deliver if you want to build a good mutual business relationship with the client you have. If you are a cab company and you said you have a fleet of 15 cars in your proposal yet in reality you have 2 please know where to get the other 13. Business isn’t that easy, and it gets tougher when you can’t deliver.
5. You’ve got the cheque, what next?
Here’s where another load of the “would be” successful guys fail! With all the hustle and hard work, money is now here, the bank balance looks pretty fine. The bank now even calls to ask whether you need a loan, overdraft facilities etc! Sounds good? Middle class indulgence sets in, for some guys the wardrobe changes, it’s time to move to a bigger crib in a better neighbourhood, there’s a new car, and people start serious partying. What I am trying to say here is, when that big break comes, please re-invest part of the money into the business to boost your technical, financial and human resource capacity. This sounds boring to most of the young guys reading this but if you burn the mullah on liabilities you’ll find yourself in the position you started! You may consider giving a bonus to your hardworking team to keep their spirits and morale high, it’s also time to give contracts to one or two talented interns that you have already with you. Always know that a company is a good as the people it keeps. After the first big break IT’S NOT YOUR TURN TO EAT!!!!
Muthuri Kinyamu is the business director at Social Edge Africa, a social media agency that handles strategy, monitoring, evaluation and management of brands on social networks. You can follow Muthuri Kinyamu @KenyanMarketer and reach him through [email protected].