Why Be An Entrepreneur & Not Self Employed? 


In my entrepreneurship mentorship sessions, I always float this question to my audience: why are you into business? In response, I receive an array of answers  some convincing, others not. That is normal with open forums.

In a study carried out by the Kenyan National Bureau of Statistics (KNBS) last year in Kenya, it was established that over 2.2 million businesses had collapsed over a five year period. Even more shocking, was the revelation that slightly over 400,000 start-ups never lasted beyond their second year of operation. 46% of these firms die off within their first year. 

Youth unemployment remains Kenyas biggest socio-economic challenge. So enormous it is that it shakes the core of the countrys dominance as an economic powerhouse. Statistics put it that one in every six young Kenyans is unemployed. In neighbouring Tanzania and Uganda, the rate stands at one in every twenty on average. 

Ask any Kenyan youth about their occupation and they would respond that they are either gainfully employed (in a job), or self-employed (taken to mean ‘business owners’). More often than not, they venture into self-employment as an option for lack of employment opportunities. They undertake business with neither the requisite skills nor passion for it.

Nonetheless, are these who are self-employed truly in entrepreneurship? Is there a line between self-employment and entrepreneurship? 

It has to be cherished that entrepreneurship is a philosophy of sorts, a lifestyle. Methinks entrepreneurship in being a vocation, one to add value to society. An entrepreneur would identify a challenge and consequently task himself to provide a solution. His main motivation is to fulfil a human need and alleviate a pain point. Despite the challenges they encounter, they keep on trudging on the path to their objective. 

Take Thomas Edison, he who invented the light bulb, for instance. Over 999 times, he failed and never gave up. He said that each time he failed, he discovered one way that he would not do it. His optimism paid off at last. Again, let us examine Jeff Bezos, he who for some days beat Bill Gates to be Forbes Richest Man alive. When he started Amazon, his dream was to provide a link between producers and the consumers and build the worlds largest online retailer! The business made money for the founder after six years of operation. Facebook, the worlds largest social media platform, took five years before it reported a profit. Alibaba took eight years while Tesla, the world acclaimed innovative automobile manufacturer, is yet to be profitable to date!

Coming closer home, Parapet, the regions leading cleaning company, took three to four years to stabilize and post profits. While it may seem business leadership translates to super profits, Business Daily too proves otherwise. The paper is the countrys leading business publication and yet, seven years after launch, it is yet to post a profit!

Did the founders of these businesses give up since they were unable to recoup their investments in the short term? Absolutely not. In fact, with the continued negative feedback on their financial positions, they persisted and got motivated by the need to fill their identified society gap until when their businesses broke even. Hence, entrepreneurship is a philosophy, a calling of sorts!

On the contrary, those who take entrepreneurship to be a profession (self-employment) look forward to financial rewards or compensation. As such, they would get into business to be free most of the time (or so they think), to express their bossiness around, and most popular of all, earn huge payoffs from the business! Some even start a business to be able to live a defined kind of lifestyle. To others, getting their hands into business is an express ticket to wealth generation. Nonetheless, this is getting it all wrong. 

Entrepreneurship is about value creation. The sanctity of undertaking business is to enrich the human race. Their mission in life is made complete by solving a human need. It therefore cannot be a short term affair as for the ‘self-employed’. Entrepreneurs go for the long haul. For instance, Coca Cola has outlived its founders, more than a century after its invention. When the firm started in 1896, it sold nine servings per day in Atlanta. The founder passed on two years after inventing the beverage. Currently, the firm sells an average of 1.9 billion bottles daily across the globe! 

In addition, entrepreneurs are risk takers and dare invest in a venture in pursuit of their objective. They would not fear failure. Failing is just but part of the process of success. Whenever they encounter failure, they keep on working their passion to fruition. A self-employed individual is risk averse, choosing to play safe with the intention of reaping big from their undertaking. Failure discourages them altogether.

However, even more interesting is the ability of an entrepreneur to flex with dynamics on the ground. He appreciates that there are constant shifts on the ground and as such, he/she is prepared to change in tandem to the shifts. This is the reason why those who take entrepreneurship as a calling do not give up. Their flexibility works to their advantage. For the self-employed fellow, their rigidity works against them. Like the dinosaurs of old, their rigidity causes them to fail due to their inadaptability. 

How else can we explain the findings of a study by CB Insights, who undertook a post mortem on 101 start-ups that failed recently? In this study, they found out that the major cause of start-up failure is lack of a human need (up to 42%). Lack of capital only came second with 29% of subjects alluding this to their failure. This is interesting since most business founders blame the lack of capital as the cause of business failure. 

The crux of the matter is the motivation for an individual to get into entrepreneurship. That is what determines whether a business will last or not. Of particular noting is the fact that all the mentioned businesses that have outlasted the times had one common denominator  their founders had the right mind set. To them, business was not a means to earn a living. It was a calling, a vocation. If we re-evaluated our motivation to get into business, we would reverse this failure rate of businesses in our country and region and reap big from the ripple effect in terms of economic growth and sustainability. 

So then, would you rather be self-employed in business or choose to be an entrepreneur? The better choice is quite explicit!

-Ends-

This article was first done for publishing in the Cytonn Investments Plc Blog by Michael Okinda,  the author.  

He is an acclaimed personal branding & business coach under his PBL Africa initiative. 

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Still, I have Faith in the Kenyan Enterprise Story

This week I have had mixed feelings about a subject I love most  entrepreneurship. And more so, about Kenyan startups and enterprises.

After a short period of mourning one of the major brands I have celebrated over and over because of their ingenuity, I got some really glad news about three of our brands, two of them home grown that won major awards at the World Tourism Awards. Kenya Airways, our national flag carrier, was voted as the top airline brand in Africa for the second straight year. It beat South Africa Airlines, Rwanda Air and the likes. Maasai Mara Game Reserve, the eighth wonder of the world, was voted the best in the national parks category beating Kruger National Park (South Africa) and the Namibian National Park. Sarova Hotels and Lodges, our premier tourist hotel chain, also won top awards in the hotels category in the continent.

But that is not news. Nakumatt was the biggest surprise of them all. After a prolonged period of negative publicity due to dwindling business fortunes, there was some good news  they have started restocking their stores again! To those who are not up to speed with the goings on in Nakumatt, the retail mart chain has been having it rough in the last 24 or so months. Faced with growing debt and a strain on their working capital reserves, the supermarket chose to start rolling out of the markets they had entered. They first closed the Ugandan store and later on, followed up with their Thika Road Mall (TRM), NextGen Mall and Westgate Mall stores. Last week, their landlords, the Junction Mall in Nairobi threatened to close their shop due to reduced traffic. One more in Nairobis Industrial Are and another in Mombasa too have gone down too. People have been avoiding going to their stores for lack of sufficient supplies despite their we need it, we’ve got it brand tagline.

 It was therefore a sad thing to see the mighty bronze elephant statues being dismounted from the entrances of their stores as the giant slowly fell. 

But the story of Nakumatt is reminiscent of the Kenyan entrepreneurship story. An entrepreneur comes up with a great concept, works his way to make it established like a colossus. But the problem starts to arise when the firm reaches its maturity stage and the growth either stagnates and declines or continues to rise and forms its Achilles heel. The latter is what happened to Nakumatt. Nakumatts rise has been anything but phenomenal. In a few years from being a small backstreet store, it established its footprint all across the region. As at the beginning of the year, it has slightly more than 60 stores across Kenya and Uganda. With increased stores and pressure to deliver to its clients, Nakumatt relied heavily on suppliers credit to meet the demand. With no cash to pay for its supplies, it resorted to extend its debtor days from the standard 60 days to more than twice that number 120. But what even made things worse was a strategic decision by the Nakumatt management to start producing their products under the famous Blue Label brand. In this case, it approached producers of various products and bought in bulk to resell to its customers, undercutting its suppliers. The Blue Label products were even more popular with consumers as they were cheaper than the conventional ones. 

However, we have to appreciate  that the Nakumatt enterprise is a wholly owned family outfit. Atul Shah, the current heir, is the son of its founder. Many suitors have approached the family to invest into the firm but they have continued to hold on. As such, the working capital has been provided through external borrowing and sources from within the family, which limited its operations. With a restricted cash inflow to finance operations, suppliers refused to provide more suppliers on credit since the delivered goods were not being paid for. And that is how the firm was pushed into a corner since human traffic was reduced significantly. Stories of stores with empty shelves were abound on social media and the print media, further eroding its brand position and equity. They remained with no option but roll out of the markets they had entered, further deteriorating the situation.

This therefore means the cookie started crumbling when the owners of the firm refused to adjust to the demands of the business in terms of capital. A business that grows demands a huge outlay of capital and when the owners are restricted, it ultimately collapses. Most startups are started with an all- mine mindset by the owners. They start businesses with an intention of being the sole beneficiaries of returns and hence choke it up in the fullness of time since growth is stifled for lack of capital. What we need to appreciate is the fact that a business is like an asset. No asset is held for good. There must be an exit strategy sooner or later in the course of time. The owners must be ready to cede part of the shareholding and ownership in exchange of additional resources (financial or knowledge) to help their vision advance to even bigger proportions. 

As the founder, you will still remain the originator of the business idea and the vision carrier. But moving the business from its nascent stages to maturity would demand that you leverage networks and resources. And this is where the call for additional shareholding is most welcome. It is time we learnt from firms founded in the West. Facebook, Google, Apple and the likes, were started off by one or two people who came together. With time, they needed additional resources to grow and as such, they had to cede control of their firms in exchange for additional resources that have made them the conglomerates we know them to be, today. It pays to know when the time is ripe for an exit in any undertaking.

Nakumatt was approached by investors interested in injecting additional cash but they chose to cling onto their baby. Now they are struggling. It is my hope that they would indeed heed to the needs of the business and give in, for the preservation of this important national success story. And I do believe that other startups would learn this lesson and follow suit. This is why I still have hope for the Kenyan Enterprise, that indeed we will thrive!This week I have had mixed feelings about a subject I love most  entrepreneurship. And more so, about Kenyan startups and enterprises.

After a short period of mourning one of the major brands I have celebrated over and over because of their ingenuity, I got some really glad news about three of our brands, two of them home grown that won major awards at the World Tourism Awards. Kenya Airways, our national flag carrier, was voted as the top airline brand in Africa for the second straight year. It beat South Africa Airlines, Rwanda Air and the likes. Maasai Mara Game Reserve, the eighth wonder of the world, was voted the best in the national parks category beating Kruger National Park (South Africa) and the Namibian National Park. Sarova Hotels and Lodges, our premier tourist hotel chain, also won top awards in the hotels category in the continent.

But that is not news. Nakumatt was the surprise of them all. After a prolonged period of negative publicity due to dwindling business fortunes, there was some good news  they have started restocking their stores again! To those who are not up to speed with the goings on in Nakumatt, the retail mart chain has been having it rough in the last 24 or so months. Faced with growing debt and a strain on their working capital reserves, the supermarket chose to start rolling out of the markets they had entered. They first closed the Ugandan store and later on, followed up with their Thika Road Mall (TRM), NextGen Mall and Westgate Mall stores. Last week, their landlords, the Junction Mall in Nairobi threatened to close their shop due to reduced traffic. One more in Nairobis Industrial Are and another in Mombasa too have gone down too. People have been avoiding going to their stores for lack of sufficient supplies despite their we need it, weve got it brand tagline. It was therefore a sad thing to see the mighty bronze elephant statues being dismounted from the entrances of their stores as the giant slowly fell. 

But the story of Nakumatt is reminiscent of the Kenyan entrepreneurship story. An entrepreneur comes up with a great concept, works his way to make it established like a colossus. But the problem starts to arise when the firm reaches its maturity stage and the growth either stagnates and declines or continues to rise and forms its Achilles heel. The latter is what happened to Nakumatt. Nakumatts rise has been anything but phenomenal. In a few years from being a small backstreet store, it established its footprint all across the region. As at the beginning of the year, it has slightly more than 60 stores across Kenya and Uganda. With increased stores and pressure to deliver to its clients, Nakumatt relied heavily on suppliers credit to meet the demand. With no cash to pay for its supplies, it resorted to extend its debtor days from the standard 60 days to more than twice that number 120. But what even made things worse was a strategic decision by the Nakumatt management to start producing their products under the famous Blue Label brand. In this case, it approached producers of various products and bought in bulk to resell to its customers, undercutting its suppliers. The Blue Label products were even more popular with consumers as they were cheaper than the conventional ones. 

However, cognizance has to be taken into consideration that the Nakumatt enterprise is a wholly owned family outfit. Atul Shah, the current heir, is the son of its founder. Many suitors have approached the family to invest into the firm but they have continued to hold on. As such, the working capital has been provided through external borrowing and sources from within the family, which limited its operations. With a restricted cash inflow to finance operations, suppliers refused to provide more suppliers on credit since the delivered goods were not being paid for. And that is how the firm was pushed into a corner since human traffic was reduced significantly. Stories of stores with empty shelves were abound on social media and the print media, further eroding its brand position and equity. They remained with no option but roll out of the markets they had entered, further deteriorating the situation.

This therefore means the cookie started crumbling when the owners of the firm refused to adjust to the demands of the business in terms of capital. A business that grows demands a huge outlay of capital and when the owners are restricted, it ultimately collapses. Most startups are started with an all- mine mindset by the owners. They start businesses with an intention of being the sole beneficiaries of returns and hence choke it up in the fullness of time since growth is stifled for lack of capital. What we need to appreciate is the fact that a business is like an asset. No asset is held for good. There must be an exit strategy sooner or later in the course of time. The owners must be ready to cede part of the shareholding and ownership in exchange of additional resources (financial or knowledge) to help their vision advance to even bigger proportions. 

As the founder, you will still remain the originator of the business idea and the vision carrier. But moving the business from its nascent stages to maturity would demand that you leverage networks and resources. And this is where the call for additional shareholding is most welcome. It is time we learnt from firms founded in the West. Facebook, Google, Apple and the likes, were started off by one or two people who came together. With time, they needed additional resources to grow and as such, they had to cede control of their firms in exchange for additional resources that have made them the conglomerates we know them to be, today. It pays to know when the time is ripe for an exit in any undertaking.

Nakumatt was approached by investors interested in injecting additional cash but they chose to cling onto their baby. Now they are struggling. It is my hope that they would indeed heed to the needs of the business and give in, for the preservation of this important national success story. And I do believe that other startups would learn this lesson and follow suit. This is why I still have hope for the Kenyan Enterprise, that indeed we will thrive!

             ***** Ends******

The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How to maximize on your contacts for Business and Professional Growth. Both books are available on Amazon. He is also a Personal Branding and Business Speaker with PBL Africa and a Cytonn eHub Mentor. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                pblogix@gmail.com

LinkedIn:             https://www.linkedin.com/in/mike-okinda-9652b210a

Telegram:             @Mokinda

Telegram Community:      https://t.me/joinchat/EkprBT6zCKCRUmQUaDD9cQ

 

DOMINANCE BY STANDING OUT: LESSONS FROM KENYA’S CBA BANK

Dominance

Interesting times these are – after the enactment of the Banking (Amendment) Bill 2016 late last year, most of the Kenyan banks’ profits went southwards. Actually, for the financial year closing June this year, a bank known to have zero loans at risk of loss (PAR), Victoria Commercial Bank, recorded a loan on default, to underscore the dire situation facing the industry.

But even more amazing is one bank that went against the tide – Commercial Bank of Africa (CBA) which posted improved profits where even its more heavily capitalized bedfellows failed. Last week the bank reported a net profit of Kes. 2.7 Billion up 14.1% from the previous year.  It would be interesting to study their business model to find out why.

The underlying reason for this resilience is their association with another powerful brand – Safaricom’s Mpesa product. Safaricom is East and Central Africa’s most profitable blue chip entity; with a valuation that ranks it as the fourth most valuable brand in Africa. Mpesa is a mobile phone based wallet that enables the public to do financial transactions at their convenience.

By linking up with Mpesa, CBA developed a mobile based banking service called Mshwari that has become a hit with the unbanked. As such, anyone, as long as they are subscribers of Mpesa, can borrow and repay funds through their mobile phones. Additionally, subscribers are able to save their funds at a fixed rate of return to be withdrawn later with some interest. It is literally a bank without a physical vault. As at the end of last year, Mpesa had on boarded slightly more than half of Kenya’s population – over 47 million customers.

By compensating for the fall on revenues due to regulatory restrictions through enhanced revenues from Mshwari, the bank was cushioned adequately. It is observed that revenues rose by 16.3 percent year to year to close at Kes. 5.5 Billion.

Dominance

The Hint

According to the World Giving Index published this year, it was observed that Kenyans are the third most generous people in the world. It underscores the social cohesion that exists amongst Kenyans and their sharing habit. It is this social value that the developers of Mpesa chose to ride on and develop their product, thereby aligning their product with a truly Kenyan value. This is the main reason why Safaricom and Mpesa to be specific have enjoyed dominance for the last ten years of its existence.

And this brings out two very important lesson most of us entrepreneurs purposely ignore: synergy and values.

Robert Kiyosaki said that networking is the business of the 21st Century. Networking is about leveraging relationships, within and without the firm. Smart firms, like CBA as explained above, chose to take advantage of the readily available market by Mpesa subscribers to offer their services – banking. As an entrepreneur, ensure you create linkages with other players in the sector and related sectors to ride on their associations and operations. Be it supply chain management, production, knowledge exchange, etc. ensure you find a suitable partner to establish a mutually beneficial relationship. For CBA, Safaricom Mpesa provides them with an already established market. In turn, Safricom earns from the lending expertise from the banking partner. The days when a firm would exist on its own are gone and synergistic interactions are the way to go.

Values, I say, are the most important element in a business. I always ask people- what does their business stand for?  I opine that any great business is built on the foundation of their organizational beliefs. Its product offerings are only accepted once their value system is in tandem with the societal belief systems of their target markets. Considering this example, Safaricom realized Kenyans like sharing. Our national philosophy is Harambee, literally meaning to pull together. Whenever someone has an enormous project, people would come together and contribute towards helping in the realization of the project. These gatherings are called Harambees. In the west, it is known as crowd funding. It is an embodiment of our giving spirit.

A Kenyan who lives away from home would always send home some cash to help his kin back at home. Mpesa’s launch, coincidentally, was done at the onset of the infamous 2007/2008 Kenya Post Election Violence (PEV) period when banks and other financial systems ground to a halt. With the service, stranded populations were able to send and receive cash at the convenience of their homes. Additionally, as opposed to banks which had locations majorly in urban centres, Mpesa had a huge network of agents that permeated all the areas of the country. The footprint covers more than 70% of the nation, with a huge concentration in the rural areas. Add that to the convenience of only requiring an ID to be registered, Mpesa became an instant hit with users all over the country.

Much more can be said about this success story of Safaricom but one thing stands out: values. This is what made them to be acceptable and build a loyal client base that has proven hard to break. Airtel Kenya Limited, then known as Zain, launched a competing service nicknamed Zap. It waived its fees altogether but the population could not accept it since it did not resonate with its ideals and values. To many, Zain was for the urban rich and elite. It was also not used by the majority as almost all phone owners had Safaricom lines.  Safaricom hence passed off as an authentic Kenyan brand that was deemed cheap (even when it was not).

Well, there you go: what will you do as an entrepreneur to replicate a success story like CBA’s? It is not too hard to go against the grain and disrupt the ideal and become dominant. It just needs a little tweaking of the obvious to stand out.

And indeed, you can!

Does Past Accomplishments Guarantee Future Success?

vision

The past two months have been a depressing time for me, being a celebrator of local ingenuity in business. Indeed, nothing is as depressing as seeing a business entity, you have literally grown with it since childhood and now, when you are almost in your midlife, you see it gradually go down.

Nakumatt is one instance. I first encountered Nakumatt, then known as Nakuru Mattresses as a small store in Thika in Pilot Estate while still a pupil at Thika’s Kiboko Primary School.  Then, we would sneak from school during lunch hours to go and wander in between the shelves just to awe at the marvelous displays of commodities. It even made Pilot based pupils to puff up their pride since there was no other supermarket nearby that equaled Nakuru Mattresses.

As we aged further, the outfit grew in leaps and bounds to be East Africa’s biggest retail outlet by branch footprint. It opened over sixty outlets in number across virtually all of East Africa’s countries with a workforce of over five thousand employees with most of their branch outlets operating 24 hours daily.

success

Indeed, the conglomerate that grew from a tiny shop in Nakuru with a few sales calls, had gross revenues of almost US D 500 Million. Conservative estimates put their market share five years ago at 20% in Kenya with their Brand Equity Index hitting a high of 55%. With it came many accolades and awards. These include the Price WaterhouseCoopers East Africa Most Respected Service provider for the year 2006 and 2007, Planet Retail ranking as top retailer outside of South Africa for 2008, Planet Retail Award as Second Most Innovative Retailer in the World for 2009, East African Super Brand for 2007 and 2010, recognition by the East African Community as a pioneer East Africa Investor in 2011 and its CEO recognized in the Financial Times Top 50 Emerging Market Business Leaders for 2010.

With all these accolades lining their cabinets, it was expected that the enterprise would be much more stable and vibrant. However, beginning over two or three years ago, cracks started to emerge. Suppliers were paid late, eroding the creditor confidence of the firm. In a flash, stores in the home country and away started closing up as most stores within the domestic market and beyond, further eroding the public confidence that was celebrated before.

But then when did the rain start beating Nakumatt? Many theories have been put through and deliberated. From their strategy to compete their suppliers through their ‘Blue Label’ strategy to their ambitious expansion plans which choked their working capital outlays.

But I beg to differ. I guess the management realized like the iconic Titanic, the firm was too big to sink. And they became lax with time. Internal weaknesses in controls went haywire and losses started building up. Corruption, inefficiency and lack of corporate governance ideals took over. In a way, it is not external factors that brought down this beloved retail giant – internal ones did.

Which brings me to what I needed to communicate – we most of the times take pride in our past achievements to the detriment of forging ahead and firming up our strengths.  Do past milestones surmounted give us a guarantee that our future would be rosy and good? Not at all. The past belongs to where it should be – the past.

Past vs future

This is the main problem most of us have – looking back and taking pride in past achievements and forgetting that we have a life to live ahead. We most of the times blame the external environment – the economic situation, the government, etc. for our own-caused failures.

To avert this, we need to always focus ahead and be mindful of the red flags raised as we trudge along this journey of living. And as I said, ignore what is past. Let it remain where it should be – in the past. Future success is only guaranteed when there are solid plans and commitment to realize the future vision. For whatever achievements you made back then is not significant in the present times. It is history! So do not make the mistake, either as an organization or at the individual level, to glory in past achievements.

 

The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. Both books are available on Amazon. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                              pblogix@gmail.com

LinkedIn:                         https://www.linkedin.com/in/mike-okinda-9652b210a

Telegram:                       @Mokinda

Telegram Community: https://t.me/joinchat/EkprBT6zCKCRUmQUaDD9cQ

Facebook:                       https://www.facebook.com/maikol.okinda

SECRETS OF DOMINANT ENTERPRISES

This week, Facebook announced that they had hit 2 billion subscribers. Facebook is urguably the world’s biggest media content provider inasmuch as it does not create any content of its own! 

Uber, the world’s largest taxi hailing company, also does not own a single cab of its own. Neither is Alibaba, the biggest online retailer as far as business inventory is concerned. Airbnb follows the same fashion, with no real estate of its own, despite being the world’s largest accommodation provider. 

Coming closer home, Safaricom Kenya Limited is the biggest telco in East and Central Africa. With its profitability hitting Kes. 45 Billion ($ 442 Million) this year, the amount alone is enough to finance Kenya’s Health Ministry for an entire year, going by the country’s 2016/2017 budget. 

However, Safaricom is not known for being a communication company alone. Its flagship product is MPesa, a mobile wallet value addition which enables subscribers to undertake financial transactions. Banks have in effect, rode on the platform to offer lending products. So far, it is estimated that over 27 million Kenyans are subscribers of this mobile money service making Safaricom to be Kenya’s and East Africa’s biggest bank, quite literally! Mark you it does not own a single brick and mortar vault! 

Peter Drucker, the infamous management guru, said that the main function of business is marketing and innovation. This therefore implies that the main purpose of enterprise is to create customers. And hence, it follows that a successful business is only one if it creates and builds its customer base. It is therefore be logical to conclude that a business’ growth is only measured by the number of its clientele. 
This is the secret that has alluded many  businesses that exist in this day and age. Most startups are established to churn out revenues and monetary payouts to their owners. But then, it also explains why a huge percentage of startups fail – due to lack of focus on growing customers. Jim Collins, another guru in management, postulated the Hedgehog concept in which passion, ability to perform and cash cows are factored to create dominance by a firm in a sector. A firm can never generate sustainable cash flows unless it has the numbers in terms of customer numbers. If you study all dominating firms, they have invested heavily on acquiring and maintaining their customers to realise the returns they have.

It therefore calls for the entrepreneur to study his intended clientele well enough to keep up with their tastes and preferences and in addition, changes if any. Firms that withstand the test of time are those that are able to mutate in tandem with the changes in their market niches. This is exactly what cost Kodak and Nokia brands  – rigidity in their product innovation in conformity to customer tastes. New entities came, adopted to the client preferences and took over their markets. 

It again demands that the core corporate values of a business entity have to be in tandem with values of the populations they target. Safaricom Kenya Limited, as mentioned, was not the pioneer telco in Kenya. Kencell was. It later changed ownership and became Zain and currently is branded Airtel. However, despite being the pioneer mobile telecommunications company in the country, it is still struggling to capture the majority share of the available market. Safaricom commands slightly more than 70% market share thanks to its Mpesa value addition on its service. Mark you it is not the cheapest hence the price factor is out of question!

Now for one to understand Mpesa, one has to appreciate the culture of the Kenyan people. Kenyans are a closely knit society which values sharing and blood relationships. As such, more able members of the family travel out in search of job opportunities and whenever they land a job, they would remit some of their earnings to their homes as a way to assist others. This sharing philosophy is what Mpesa was built on – to remit funds, albeit in small quantities. At the time of its launch, most banks had locked out most of the population by their stringent account opening conditions. For one to subscribe to Mpesa, one just needed an ID and a Safaricom line. And that is how the revolution started in 2007 with the launch of the service. Through MPesa, Kenyans could send cash, buy airtime, pay for goods, even borrow on short term basis through the click of their button. And that is how Safaricom wormed its way into the hearts of Kenyans, and assured its place into the Kenyan culture. Its value tag was “Get connected”, in consonance with the social connectedness of the Kenyan people.

Well, do you desire your business to live beyond you and post better returns? Then you have to think about your value system and match it to your clients’. That way, like Safaricom, Facebook and all the others mentioned, you will be assured of longevity of business. 

Customers feel their needs are met by firms whose values fulfil their needs. It is upon the business to craft its strategies around values that will give the potential clients assurance that their needs and preferences would be fully met. That way, one is guaranteed long term loyalty and growth. 
The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                             pblogix@gmail.com

LinkedIn:                        https://www.linkedin.com/in/mike-okinda-9652b210a

Telegram Community: https://t.me/joinchat/EkprBT6zCKCRUmQUaDD9cQ

Facebook:                       https://www.facebook.com/maikol.okinda

Why That Business Plan May Prove Useless for Your Startup.

It is the norm for any business advisor speaking to newbies starting on the journey of entrepreneurship, to suggest that they start their business by doing a business plan. In fact, for many financial institutions, this is a core requirement for financing. But then, do business plans really work?
We have to accept that natural law of success: failing to plan is automatically the recipe to fail. Hence, failing to plan is planning to fail, so goes the adage. It therefore goes that planning in itself is a critical component in starting out as a business. It just cannot be wished away. Studies done to evaluate the relationship of business planning and success rate of the same give a direct correlation between the success of business and planning. This has been the theory that has been peddled all along by conservative business trainers, coaches and tutors.

But doing a business plan in itself is tedious. It requires input of many hours and abstract thinking, of where the entrepreneur needs to see his business in the foreseeable future. in actual sense, for one to do a practically applicable business plan, it would require technical expertise and this is not only discouraging, but expensive in the course of time. Its implementation too is another issue altogether. Business plans are rigid and structured that are almost always not flexible to the constantly changing conditions on the ground. This in effect implies that the conditions at the time of formulation of the entire plan are not guaranteed to be similar at the time of implementation. 

Business markets change almost on an hourly basis and hence, relying on a plan drawn up in the past for the present situation would almost always result into failure. Hence a fluid, more adaptable system of business planning especially for startups is needed. Its implementation is even hampered by its cumbersomeness. No plan is less than a page and hence it requires that one has to ruffle through the numerous sheets of paper to get a point. 

Faced with these challenges, Alexander Oxerwalder developed a simpler, fluid and highly adaptable business planning tool, which he aptly named the business model canvas. The model was planar and hence visualization of the business was simpler and less tasking as opposed to the conventional business plan. 

The model has nine critical components: value proposition, key activities, channels, customer segments, customer relationships, revenue streams, key resources, key partnerships and cost structures. It defines clearly and in a diagrammatic, planar form, how a business is going to create value for its target clients, what activities it will involve itself in in achieving this, how it will deliver this value and through which means, what strategic partners it would create linkages with, cost factors associated with its activities for maximum revenues, in a simple structure. 

It is aptly called a model because it is fashioned to adapt to the conditions on the ground. Hence, if the cost factors change, or the taste and preferences of the target market niche change, the model is adjusted to ensure that the maximum returns are obtained at the tail end. It therefore ensures the concerns of the business stakeholders are taken care of at all times.

The Business Model Canvas (Picture: Courtesy)

On the contrary, a business plan cannot adapt to conditions on the ground. Therefore, any shift destabilizes the entire plan and hence, it is considered rigid. The business model canvas is based on experiential operationalization and hence, concepts and theories are tested before full implementation. Ideas are tested using the model. For the plan, this is not possible. The input to output process flow is fixated on the process major, with the theorized output quality and quantity realized at the terminal end of the entire process chain. The thought process is also exclusively applied on paper rather than testing on the ground.

The business model canvas also is more result oriented with a special emphasis on the how to component of achieving results and returns to the shareholder. The business plan is deficient on this. It only dwells on the final result or outcomes rather on the techniques and strategies to attain that. On another front, the business model canvas is more visual. As said before, it is planar as opposed to the business plan which is voluminous and made of several pages.  It is more of hypothesis and theory than being practical. Hence, it is nearly impossible to visualize the business from the initial stage of idea conceptualization, through to implementation and finally, delivery of the final product to the desired market. The business plan therefore falls short in representing the business as a vision which the business model perfectly does.

Startups in their humble beginnings require fluid and agile tools that would perfectly fit into the business system and enable the outfit adopt to the ever changing business external environment. A business plan would not be able. It is a known fact  most who draw up business plans eventually discard them since their implementation is near improbable. If you are currently operating a young enterprise, or in the threshold of starting one, it is time you change with the times and draw up a business model canvas. That is assured to work out fine!
The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or professional a jump-start, he can be reached via the following contacts:

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