You want to be successful in business? These are the rules
Entrepreneurship is touted as the most effective way of creating wealth. In fact, there is now a growing population of individuals who have quit their nine-to-five jobs to start businesses. Many others are running side hustles while employed. Additionally, there are thousands who lost their jobs due to Covid-19 and have opted to try their hand in business.
Whichever side of the spectrum you fall on, it is critical that you understand the dynamics of entrepreneurship. For a start, entrepreneurship is similar to a game. You can either win or lose. You can also end up being a fringe player who doesn’t make any tangible progress. Your success will be determined by how well you know the rules and adhere to them.
The targets and the goals
To run a successful enterprise, you must clearly stipulate the goals of the enterprise, and financial targets to be achieved. These objectives will be informed by certain business aspects such as risk mitigation, management and the return on capital you expect. Kevin O’Leary, a prominent investor in a popular investment show titled Shark Tank, says that business owners who set lofty goals, those who don’t set smart targets and those who are comfortable with achieving 50 per cent of their goals will always be underperformers.
“Setting lofty financial targets that can only be met by a few employees ultimately reduces the morale within the group. It also means your sales targets will hardly ever be met,” he says. Businesses that post a 100 per cent conversion on goals and targets are those that focus on reality as opposed to fantasy, and on finding practical ways in which those achievable goals can be met by the workforce.
“It is important to set goals that everybody in the business can achieve. This will boost morale and increase sales. These goals ought to be set on a quarterly basis,” he says.
The first 24 months
O’Leary says that within the first two years of operation, an entrepreneur should pay close attention to the Sales department. “Within that period, the return you will get from sales will either validate your business concept and mode of operation, or prove that you’re in the wrong business,” he says. This also means that you must be prepared to fail and to rethink your concept if you record negative results.
“If customers are willing to spend money on your product or service, you will only need to adjust a few aspects to grow bigger,” says O’Leary, who adds that an entrepreneur must be smart enough to distinguish between customers who are good for businesses and those who are liabilities. For example, customers who pay well and on time but leave your workers feeling disillusioned, ashamed and dishonored are bad for the business. Keep in mind that your business will only be as good as your employees.
Diversification trap
Avoid venturing into too many things at once. “From my experience, focusing on one thing is the surprisingly simple secret behind extraordinary results in business,” says Nancy Aketch, the founder and CEO of Taraji Insurance Agency. The risk in running multiple ventures at once is that you will most likely neglect your primary business or offer mediocre services and products. “The world does not reward mediocrity. Train intensely at one thing, be passionate about it, be great at it, be known for it, and the world will pay you well,” she says. Take Churchill and Tabitha Karanja, two renowned local entrepreneurs. Tabitha is primarily known for her brewery business while Churchill is popular for his comedy and entertainment business. “You must learn how to say No to the temptation of chasing every interesting money-making idea you get,” says Nancy.
Funding
Securing seed capital is the biggest challenge that budding entrepreneurs in Kenya face. It might be hard for you to get a bank loan to start your business since majority of banks will consider you a high risk borrower. This leaves you with the option of finding angel investors and venture capitalists. If you get a chance to pitch for funding, you must separate your feelings and emotions from the suitability of your business. Your feelings will not matter to the angel investor. O’Leary says that he never cares about how the entrepreneur feels about their business. This means that when you approach an investor, the last thing you should do is lay too much emphasis on your passion. “If a business has no merit, it is a bankrupt idea that is going to fail no matter how emotionally attached the owner is,” says O’Leary. Also, getting funding is not a guarantee that your business will succeed. You will still need to create structures such as proper financial management and bookkeeping to make it work.
Failing
Following all the rules will not make your new business immune from failure. Even the smartest and most innovative entrepreneurs across the globe have their own bag of losses. “Take your failures as part of your progress because the art of becoming a successful entrepreneur is a process of trial and error,” says David Williams, the author of Seven Non-Negotiables of Winning. BY DAILY NATION
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