SME CLINIC With Kola Owolabi
This series we are starting here is going to be a fairly long one. The reason is simple. After you have started a business, the next thing is how to grow it. A seed starts growing the first day it is planted. As it draws nourishment from the soil, it begins to sprout in the sense that a new life starts coming out from it. The original seed will rot and die, but the new thing coming out represents life that must keep growing from the beginning and continue to grow until the time of fruiting.
A business planted, or started comes out similarly out of the seed, which we all know as the seed capital. The capital that is used to start a business is the seed and it finishes its work the day the business is started. No serious entrepreneur dances around the seed capital no matter how big it is. Just like the seed of a plant that is planted must die while the new plant is sprouting from the ground, the seed capital must die for anything meaningful to come out of that business.
Permit me to use the rest of this post to talk about why the seed capital must die and the attention of the entrepreneur must quickly be taken away from the seed capital. We have seen great businesses start with huge capital and the businesses never survived, some beyond their first year. The reason is simple. The seed capital is used to put together whatever the business needs to let it start making products and services. No matter how outlandish the setup of the business or how extensive are the structures put in place, there is no business, until you have your first customer and you start making sales. Customers may be attracted in the first place by the beauty of your structures, however customers are kept by the seriousness you attach to taking care of their needs. They are not there to buy your factory or the beautiful cars that your executives ride, they are there to take advantage of the products and services you have on offer that will meet their needs. If that is so, it will be foolhardy to relish in flaunting your structures as a business. It will be counter-productive to be showing off how much capital you used to start the business.
The story is supposed to be around how much you are ready to take care of the interest of your customers, which is all what they care about. Customers, like normal human beings are selfish. We all want to get the best for ourselves for as little as we have to pay for what we buy. If you are ready to exploit that trait, not by you showing off how rich or blessed you are as a business but by being all out to give the customer so much more value than what he has paid for your product or service, you have a business that will grow very quickly.
I will end today’s post with a personal experience. I was part of a business that was started as a financial services establishment. I was part of the top management and we were given a tidy sum by the promoters to start the business. I am saying here that the money was tidy, because it was big enough for us to pay for a good office space in one of the choicest locations in Lagos metropolis. We had the office tastefully furnished with good air-conditioning. Everything was set to do good business. We were also well heeled in our dressing as people working in the financial industry. Every day was good as we were serving ourselves tea to complement our highbrow outlook. All these point to the fact that we started with a very comfortable capital base. But with no business coming in, the capital began to diminish and after paying ourselves; I am sure you will be glad to know that we were also put on comfortable packages in line with our industry’s tradition, just six months down the line, it was apparent that the end was near. The money in the bank could not pay more than one month’s salary. We had run into stormy waters and the party was going to be over shortly.
I will continue in the next post with what was done to salvage the situation so that we can learn that no matter the size of the capital you use to start a business, that capital must die, and the sooner you took your focus away from the capital, or you even refuse to bother to raise too much capital while starting; the better for you.
Kola Owolabi, (FIMC) Fellow of the Institute of Management Consultants, 08023203198, is the Executive Director of Centre of Entrepreneurial Research and Development based in Igbesa, a surburb of greater Lagos, in the vicinity of Crawford University. The organization has had the opportunity to execute landmark business development (business plan preparation and conduct of feasibility studies) and market research briefs for organizations both within and outside Nigeria. He can be reached by phone or WhatsApp through 08023203198.
