A man will be imprisoned in a room that is unlocked but opens inwards, as long as it doesn’t occur to him to pull instead of push. Businesses fail for the same reason; the lack of awareness of a few potholes while driving it as a start-up. As exciting as that your start up is, know the facts, 80 percent of start-ups in Nigeria fails in their first 5 years. This can be averted.
So before you start another business, or fail with that idea and start-up, consider the following;
1. Number of founders: The number of founders in a start-up is likened to ingredients needed in a food. And just like salt to food, too little or too much, in this case founders will ruin the taste. From experience, I have come to realize that having 2 to 3 founders is ideal. Take for example, in Apple, it was Steve Wozniak and Steve Jobs, and for Microsoft it was Bill Gates and Paul Allen. For the defunct Mo Hits, it was D’banj and Don Jazzy; Buhari and Tinubu’s Alliance formed the APC. Or better yet, make it 3 founders (Jay-Z, Dame Dash and Biggs Burke started Rocafeller Records).
2. Do the founders complement each other: The Founders Should be Yin-Yang. In the early days of Apple, they had two geniuses, Wozniak could produce anything, and Steve could sell anything. To overthrow the PDP, Buhari had character and popularity, Tinubu had the money and that was a formidable force coming together!
Now, over to you, what is your other founder bringing to the table? Skill, network, drive, experience, funds, brand equity?
3. Lack of essence: Really why do you want to do what you really want to do? I strongly advice that every business should start with a “why”. The “why” should be clearly defined and used to drive the top most level of corporate strategy. Research has established that organizations that start with why would stand the test of time. This is what Jim Collins and Jerry Porras turned into a masterpiece titled Built to Last. Many organizations could not survive for so long because they did not start with why. Organizations like Ford Motors, Toyota, Pepsi, Coca- cola etc. are still in existence because there were some things, they got right but which many of their peers that started the same time with them did not get right. If you remember the dilemma of the late Steve Jobs, who was sent packing from the company he created, his dismissal brought in John Sculley, Michael Spindler and Gil Amelio as succeeding CEOs of Apple respectively. And when things took a nose dive, they discovered a need to find the brand’s essence, so they had to bring it back alongside his custodian of the DNA. Steve Jobs came back to Apple after the exit of Gil Amelio, the DNA in him called “simplicity” and “creativity”. That led to the current success being enjoyed by Apple. Purpose refers to the ‘why”. Above all, in life or business, we have to put our purpose (why) before the how (process) as a means to work on the what (product/services).
Every now and then, the why should be stated as a reminder of the reason for the firm’s existence. Most business and operational level decision should be checked to ensure that it’s in alignment with the firm’s essence. Take for example Alphabet, the trillion dollar parent company that owns Google built their “why” on making all complex form of knowledge easily and affordable (and that has led to the development of Google search, Google Map, Gmail, acquisition of YouTube etc.) what you see in all these subsidiaries is the same ideology of making complex information easily and affordable. Apple’s central ideology is on simplicity. There is no one Apple product you need a manual to use; what else can even be simpler than A for Apple.
To increase the chances of having a successful start-up, find your own “Why”, define it, start from it and walk through to create your products, staff, culture all in alignment with it. The “why” of great organizations simplifies who they are and all that they know. They seem to have also drawn the ”how” from a complex bunch into a single organizing idea, a basic principle or concept that unifies and guides everything all through. Great firms with why seem to have a template for having the same results over and over again even when they move from an obsolete model or even product to a new one due to market dynamics.
4. Wanting to make money too fast: We project our revenue too high in the first few months of starting up, even little practical feasibility. But in reality, we live in the era of disruptive innovation, the business models for most start-ups is shifting from trying make money directly and fast too to creating very cheaply, more engagements and well spread payment plan. We need disruptions. Imagine a real estate company in Nigeria that lets people pay for rent monthly or a hotel of 100 rooms that would be owned by 100 different people. What used to be called the collection of crumbs, is actually how wealth is created over time. In the words of Jack Ma (the richest man in China and founder of Ali Baba) at the World Economic Forum 2017 in Davos, he reminds us that “nobody makes money catching whales. People make money catching shrimps”. Sadly, must start-ups want to make it now and make it big over a short period of time? Take a good look at the likes of Google, Twitter, WhatsApp, what you’d see is indirect revenue generation while the services are offered up for free over an extended period of time. This is the era people want premium for free, it’s called ‘’FreeMium’’ (we can learn this locally even from your Mallam that sells you Suya, let them taste it, and they’ll buy). In the 21st century, if we can’t test it, we can’t buy it).
The quest of money too fast puts start-ups under pressure. Make your business about essence than profit. Revisit the revenue generation column of your business model canvass and try to be as indirect as possible. By the way, a business model refers to how a business or an organization hopes to capture and distribute value for profit. The big question is, should it be static or dynamics. It answers questions on your value propositions, market and customer segments, revenue streams, production framework, distribution networks, cost structures and growth plan. It is dynamic and should be responsive to market forces and evolving times. Ensure that revenue is not out at the forefront. And just because a business hasn’t started making money yet doesn’t mean it’s a failed model. In times of cash flow challenges, understand that even revenue resistance is an assistance if you have the persistence.
5. Funding is not the problem: This seems to be the most talked about factor. Every time I hear people say, there’s no capital, if only they knew they are the biggest capital (character, influence, skill, talent, positioning, Alliances). Whether life or business, it’s not what you don’t have that stops you, it’s what you have and don’t know how to use. Starting lean is the best way to grow a start-up.
6. Wanting to scale too fast: As a start-up, do you really need that office space, what happened to your apartment and your internet? Our client Ruff-n-Tumble started from her room, then moved into her car and today over 20 world class superstores nationally.
7. Lack of focus, sincerity of purpose and discipline to follow through: People get distracted so easily, teams scatter even before they are formed.
We make a little money and we get our eyes off the ball. Stay focused. Focus creates blindness. When you focus on something, blinding away distractions, magic happens. Also be sincere and open, to your team and your customers. They know you are human and that you are bound to make mistakes. It’s okay to engage them at times when things are not going as planned and have a template to deliver the facts but that you are on top of the matter and working towards getting better. Don’t over value what you are not and undervalue what you are. Being a start-up is not a disease, it’s an exciting phase. Carry them along it. Also have the discipline to follow through with commitment.
As business people, we all need to master the art of discipline and delayed gratification. I mean don’t let pleasure distract where you are going to. Don’t lose your stamina on the fast lane, keep that conversation of growth always in your head and persevere till you get there. As you grow, comfort and distractions may set in. But never let a win get to your head and a loss to your heart. Choose your fights. You will never reach your destination if you stop to throw stones at every dog that barks at you. Don’t let offence or pleasure distract where you are going. Success is all about work process and ethics. Stay true to you. Extraordinary work ethics means hard work and commitment. And commitment means staying true and loyal to what you said you’ll do, even after the mood and situations you said it has left you.
8. Inability to innovate: Innovation should be the weapon of every start-up; else how else do you want to compete. Take for example, the age long Jik bleach never thought they should innovate till the start-up Hypo knocked them off the mallam’s shelf by putting bleach in sachet. Cowbell did the same thing to Peak Milk. Blackberry phones kept hanging till newer phone companies took them out of business. St Louis Sugar still haven’t re-branded, I look forward to a start-up that would disrupt them. There is no other challenge more challenging than the challenge to challenge and improve one’s self. Bigger businesses and individuals, teams and organizations have this challenge. This is where start-ups can slide right in. Be open to everything and attached to nothing. It’s hard for a lot of people to let go what worked before in the quest for what can work better, even with themselves. This is what you and your start up should do. Make products that are better, cheaper and faster to deliver its value to customers. I’m looking forward to working with your start up.