Starting a business is touted as the most effective way of getting rich and wealthy. Nowadays, there is a growing phenomenon of people who are either quitting their 9 to 5 jobs to start a business.
There are others who are running side hustles on the sidelines of their official careers. Most of those making the switch from employment to business are inspired by the popular mantra that they can never be as rich as their employers.
There is also a category of people who are trying their hand at entrepreneurship after losing their jobs, especially over the past one year that has been dominated by job losses and economic depression.
Whichever the case you might be migrating from, it is critical that you understand how entrepreneurship works. For a start, entrepreneurship is similar to a game. You can win or lose. You can also be a mid-table player who doesn’t make any real tangible progress.
In this game called entrepreneurship, the result you’ll get will be determined by how well you know the rules and adhere to them.
The targets and the goals
From onset, every business must be run based on goals and financial targets for it to succeed. How you set these goals and targets trickles down to the way you handle business aspects such as risk mitigation, management and the return on capital you get.
Kevin O’Leary, a prominent investor in the popular ABC investment show, Shark Tank, says that businesses that set lofty goals, businesses that don’t chisel their goals, and businesses that are comfortable with achieving 50 per cent of their goals will always be underperformers.
“Setting lofty financial goals and targets that can only be met by a few employees ultimately drags down morale within the business. It also means that sales targets will hardly be met,” he says.
In contrast, businesses that post a 100 per cent conversion on goals and targets are those that take note of what is achievable and what isn’t and how the achievable fits in with the workforce.
“It is important to set business goals that everybody in the business can achieve. This will boost morale, and the conversion rate of sales will increase. These goals ought to be set on a quarterly basis,” he says.
The sales in first 24 months
Mr. O’Leary lays emphasis on sales. This should be a primary focus within the first two years of your business. “The most important thing to do in a new business is focus on sales.
Within the first 24 months, the sales you get will either validate your business concept and mode of operation or prove that you’re not in the right business,” he says. This also means that you must be prepared to fail and to rethink your concept if the results come in negative.
“But if customers are willing to spend money on your product or service, you will only need to adjust and grow bigger,” says O’Leary. You must also be smart enough to distinguish between customers who are good for your businesses and those that aren’t.
For example, customers who pay well and on time, but leave your workers feeling disillusioned, shamed and dishonored are bad for the business. This is because your business will only be as good as your employees.
You must beware not to venture into too many things at once. “From my experience, focusing on one thing is the surprisingly simple truth behind extraordinary results in business,” says Nancy Aketch, the founder and chief executive officer 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 your 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 of the renowned local entrepreneurs.
Tabitha Karanja is primarily known for her brewery business while Churchill is popular for his comedy and entertainment business. “You must have the ability to say no to the temptation of chasing every interesting money-making idea that you get,” says Ms. Aketch.
Seed capital is the biggest challenge that budding entrepreneurs face in Kenya. It might be hard for you to get a bank loan to operationalize your business.
The majority of banks will consider you to be a high risk borrower. This leaves you with the option of 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 what the entrepreneur feels about their business. This means that when you approach an investor, the last thing you should do is to over-emphasize your passion.
“If a business has no merit, it’s a bankrupt idea that is going to fail no matter the emotional attachment the owner has on it,” says O’Leary. Getting funded is not a guarantee that your business will succeed. You will still need to create structures such as financial management and bookkeeping, to make it work.
Ironically, following all the rules of entrepreneurship 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. Be prepared to fail, but do not be afraid of failing.
“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 7 Non-Negotiables of Winning.