As an avid student of entrepreneurship, I thought it best to share some of my notes which I constantly make whenever I study or read an article be it on businesses, markets, and entrepreneurship.
And if you know me, you know that I'm passionate about entrepreneurship and my goal is to help as many African entrepreneurs with the relevant content, insights, inspiration, motivation, and the right business mindset, as well as an understanding of entrepreneurship.
And...
Personally, on a daily basis, you'll find me on a book, podcast, entrepreneur's YouTube channels, blogs, and entrepreneurial content - it is with the reasons that I want to be a better entrepreneur, and to do so, I need to constantly learn and develop myself.
There more I learn there more I get different perspectives and philosophies, which I believe would be helpful for us African entrepreneurs, and the mindset will be key to our success.
Therefore I thought it best to share these thoughts, which I've compiled in my notebook and will now transfer them digitally into my blog, so bear with me and please leave a comment and share the post so other entrepreneurs will able to see it as well.
knowledge is best when is shared and the more we share it with others, there more we change not only our lives - but others as well.
So...
What is it that entrepreneurs need to know before or while they are venturing into entrepreneurship?
1. On Capital
Any business idea that you have one way or another is going to need capital - and that is what entrepreneurs need to know. You going to need money in order to get your business running.
You must have enough liquid capital (cash) to sustain the starting and growing phase of your business. This is the first thing you must put in mind - your business will need cash-injection.
However, it does not mean that you have to start to raise or have tons of money and debts in order to start. You just need to be well-informed of the average capital requirements of starting a business.
Before venturing out or starting you need to figure out and need to know the kind of resources, infrastructure, and personnel which will be needed for the running of your business and you need to know each cost.
In conclusion, we can say that as an entrepreneur starting out - you should never underestimate how costly things can get, and with respect to industries - You should know that some industries are less capital intensive than others. It's a matter of understanding your sector or industry and it will assist you in understanding your capital requirements.
2. On Personal Lifestyle
Talking on a personal note or based on my observation - Africa is and was supposed to be filled with many creative, millennial, and serial entrepreneurs who are doing remarkable things on a huge scale and running successful companies that are beyond Africa.
Maybe it's what I got exposed to compared to you, however, I have learned that most companies and founders get to fail in this world of entrepreneurship because of personal lifestyle.
After their business starts gaining momentum they tend to rush into upgrading their personal lifestyle by acquiring an expensive watch, a fancy car, huge houses, go on endless vacations and spend on other luxuries such as partying hard, splashing expensive champagnes and so on
Their personal life gets to get in the way of their businesses and by so doing it affects their businesses. As an entrepreneur, you need to separate the two - your personal lifestyle and your business.
Your personal lifestyle should not affect your business and you should not treat your business as a loan, bank, or money machine that funds your personal lifestyle. Always think beyond - know you've got employees to pay and hire and if the business runs out, it does not only affect you.
Think long-term, think about building something meaningful, an empire, and which will live beyond you - something that will change the world.
What should you do instead?
* Take the profits and reinvest them into the business
And I'm not saying you should not live but I'm certainly saying have a mindset and know that your personal lifestyle can affect your business if you don't come back - especially if you treat the business as just a way of loan and money machine. There's a line between paying yourself as a business owner and gratifying yourself permanently.
When you reinvest the profits - it helps for the business growth and the long-term performance and future expansion of the company. Reinvesting back into the business is key to the growth of your business and will help your company become a giant.
And always remember that "the most important and sensitive part of a business's life is during the growth phase."
Therefore, during this phase - you should focus on growing, expanding, and reinvesting back into the business rather than gratifying your personal needs.
3. On Advice
In general, most entrepreneurs start businesses because we want to make key decisions and take charge of our lives. One of the other motivating factors of starting a business is because we want to be our own boss and take leadership. And on the other hand, it might be that our previous employers did not really treat us fairly - therefore we then decide to start a business.
Some entrepreneurs go into entrepreneurship and they define being a boss as doing as you want and however, you want and need to be - well that's necessarily not the case. You can be your own boos or the boss of others- that does not mean you won't need advice.
You need to know that even though you're your own boss, for the success and sake of your business you need to be an open-minded entrepreneur or business owner. You need to seek advice where you need it necessarily and you should seek it from someone with a different perspective. This will help with an "ego" as running a new venture, leading a team, employing people, and making some money comes with a big ego.
Like it or not, you'll need a bit of advice when you start running a business venture and for instance, in some point, you'll need someone who is knowledgeable in areas such as accounts, legal, copyrights, IT and so on
Always remember that "great entrepreneurs surround themselves with the right people and someone who has a different perspective than theirs."
3. On Basic People Skills
You need to know and understand that business is about people...
And what do I mean by that?
If you're going into business and you're about to build and run a venture which you wish to see it successful - You just need to know that your leadership in steering your company into a successful empire, you need to understand and master basic people skills.
Business is about a...
* Seller (the business owner who have the product, service, app, system)
* Buyer (customers or clients, users who are willing to buy or subscribe in exchange of the value you provide )
* Employees ( people who make sure that the product or service is delivered, and continue adding value to it)
* Investors ( this are venture capitalists, shareholders of the business you own)
Therefore, we can rest assured and come in conclusion that when you're in business you deal with people - These are people with different expectations, some you want them to buy, to invest, and others to work; so you're dealing with people and people's skill is a must-have.
What should you do?
Understand that operating a business is about building key relationships - a mutual, beneficial, and creating win-win situations. It's about interacting with people and hence you should master people's skills.
This is part of leadership - which I could give a thought on leadership however basic people skills is part of being a leader and a great leader. It takes a great leader to run an organization into a successful one because leaders know how to deal with people. The ability to relate with others, the ability to interact, communicate, and the ability to solve problems just to mention but a few, basic people skills.
Having basic people skills will help at the start of your company especially in the growth stages as you're building a team and it will give your team a reason to stay and believe in your vision.
4. On Business Structure
It's important to set out a business structure from a get to - as an entrepreneur you need to have a solid and correct structure from the beginning phases of your business.
You need to figure out, is your business an incorporated company, sole proprietor, or a limited liability partnership? These are the things you need to know and a good accountant or lawyer will be able to advise on the best way to structure your business in order to achieve your business goals.
This shows the seriousness you're into in starting a business and shows professionalism as well as integrity on your part as an entrepreneur. It helps to have a legally recognized business and a structure provides clarity and guidance within your company. Having a solid and correct business structure is one of the best insurance policies you can make.
5. On Customers
Your business won't be in existence if it was not because of customers who see it fit to be part and parcel of what you provide. They are your cash-flow and there more you make them happy and adding value, there more they fall in love with your product or service.
I've seen most entrepreneurs doing the mistake of not understanding their customer and this leads to the disaster of the business. always remember that you're in business because of the customer.
So what is it that entrepreneurs should know on customers?
* Customer is King as Jeff Bezos aways say
It's about listening to customers (their needs, wants) and is also about inventing on their behalf. Don't just invent because you feel like it, but invent according to the appetite of the markets and customers.
"Customers are always dissatisfied, even when they don't know it. Even when they think they're happy, they actually do want a better way, and they just don't know yet what that should be," says Bezos
They not only care for customers but they have built a culture within Amazon and that is a culture of customer obsession.
What do you do?
* Listen to your customers
* Know your customer base
* Invent for them
* Obsess over them
Another thought will be:
* Don't rely only on one key client
* Have a diversified customer base "don't just have a customer that is only a government."
Why? Because governments change and if another one comes - you might be out of business
6. On Greed
Greed takes us back to personal lifestyle
why? Because I have seen that most people who treat their business as a personal bank or money machine are greedy. They not into business to expand, but for self-gratification and selfish reasons, therefore it is important to know this from the get-go as an entrepreneur who is starting out in business.
As much as you check your ego, you also need to check that greed does not grip in- Though one of the motivating factors of building a business is making money, however, if you let greed grip in it will lead to fraud, irregularities and bring the hard work of your company into a disastrous downfall.
You need to be able to differentiate between your money and the money of the business.
And to put another observation or thought I would say, it is with this reason that we don't see a lot of African millennial entrepreneurs building companies like Facebook, Uber, Airbnb and so on - Though one of the factors is that we don't have access to resources, infrastructure, and capital, however I've seen the pattern has always been about self-gratification instead of building something meaningful - and this, in turn, have caused us to be behind.
7. On Management
A lot of companies and new businesses fail because of the break down in the relationship between top managers of the organization, in turn, it results in disputes between owners, founders, partners, families, and so on.
What should you do?
From the get-go put things into paper and in signatures - Have a legal agreement, copyrights, and outline the terms whether in shares and leadership in the paper.
Never underestimate the power of an agreement and having a lawyer who will put things in legal documents. Most disputes come from who owns the idea, especially when money starts coming in - and other management disputes might come from salaries and not understanding who does what.
It is imperative to put things in paper, contracts, and agreements even when the business is still in its infancy. This also shows the seriousness and integrity you have into venturing into entrepreneurship - it means you understand these things and are building a serious thing, not a fly by night.
And always remember that "these agreements are not there for the good times, instead they are the to protect your business in the bad times."
8. On Business Plan
A business plan is essential because it puts things in perspective, outlines the goals, values, and mission of your business - just see it as a blueprint, however, don't be intimidated by a business plan.
It does not need to be 50 or 100 pages long with hard to pronounce jargoons - actually, there more it's like that there more complicated things became.
I solely believe that entrepreneurs do have ideas however we get to complicate it on a business plan - we want it to be long, complicated, and with jargons that are hard to understand.
Make it simple, easy to follow, and understand - if it means one page so be it. As long as you know what are the values, mission, and goals of your business as well as the problem which you want to solve.
And always remember that "a business plan grows as the business grows." If you're starting out and you have about 100 pages business plan and you've studied your competitors, researched the markets and you already have projections of revenues and stuff - likely you're lying
Here is the thing you need to know as an entrepreneur " if you have a business and have 3 or 6 clients, few employees and you're providing services or you have an app and you've got users growing. A business plan grows as the business grows."
What can we talk about now? Ohh...
9. On Numbers
As an entrepreneur who is starting it will help that you understand number - though I must admit, I'm not good in number and I never liked mathematics in school. I've always been a theory and history guy, however it would help if you get to understand economics when you're venturing in business.
Note: I'm not saying you should study economics. Most entrepreneurs think that maybe having an MBA or a qualification in finance or economic then it equals to success in business - That's not the case and the next thought will give a perspective on that.
Why you should know and understand numbers?
Because cash flow is vital for all businesses and you need to know how to make a profit. One of the keys to starting a business is making profit and revenues. However Most entrepreneurs get caught up in the sales number and some use it as a PR stunt, however, don't let that scare you.
It is all very good to have swelling sales and revenue numbers, but it is not good if those sales don’t convert to net income and profits in your bottom line.
* You should not get all caught up in sales number only, focus on the net-profit as well
Do not get caught up in sales numbers only, for there have been plenty of businesses that have had 7-figure and up in sales/revenue yet ended up losing money with a negative net income.
It is nice to hear that you made R2 million in sales revenue - however, do you know that you can make that 6 figures and still have a net profit of about R100, 000 and on the other hand you can have an entrepreneur who makes from his/her business R1 million in revenue and R500, 000 in net profit
You see it helps to know your numbers and it will help with your projection and how to make a profit. It will assist in understanding operation costs, how to price your product or service with profit in mind.
10. On The Entrepreneur
It is said that a business is only as good as its weakest link, and if the owner is that weakest link, then even the most promising of ideas will fail under such management. This is why it is imperative for every entrepreneur to continue to grow, learn, and develop their skill set.
You may not need a formal education to start in business, however, you going to need self-learning and constant life of personal-development. Deciding to start a serious business is not like selling Nike shoes or selling energy drinks, or hotdogs on the street - that is hustling, not entrepreneurship.
It becomes entrepreneurship when you set out to build a legal business or empire out of it.
Thought I should share the things I write on my notebooks - I hope you're learning and someone these insightful thoughts benefit you in your future endeavors.
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