Enterprise Issues
With Siaka Momoh
This piece, by Siaka MOMOH, first published over a decade ago, is sourced from Archives Siaka-Momoh
It is not easy starting off a business, often it takes a lot of courage taking the decision to start. Ask employees contemplating opting for self-employment, they will tell you this. And when you finally take the decision, you must be ready to scale some hurdles.
These are hurdles the lily-livered will be scared of and so would pull out. But the determined will face them head on and trudge on.
Mgbeoma Kuye set up Kadmos Enterprise in Aguda on Lagos Mainland to process cassava into fine flour but had to switch to commercial plantain farming when she was faced with an insurmountable hurdle. Government’s policy somersault on cassava was her undoing.
According to her, “as a matter of fact, we are crawling. We have suspended this line of business for something else. We were into cassava processing to supplement wheat flour production by the flour mills as directed by the government during the Obasanjo regime. “But along the line, soon after Obasanjo left, government policy on cassava changed and so we could not continue. We are now into commercial plantain farming.”
The Federal Government had a 10 percent cassava inclusion in wheat flour milled by the nation’s flour millers policy in place, but to the chagrin of farmers who had invested heavily on cassava production, went ahead to change the policy.
In a release of its Common External Tariff (CET) that will run from 2008-2012, the government made a retreat from its resolve to promote and support cassava development as a national crop.
Before the government’s policy change, it was criminal to import such products as cassava flour, starch, chips and other products of cassava into Nigeria. But the new policy endorsed the importation of cassava flour, chips, starch, even garri, etc.
Even with commercial plantain farming, funding the project is an issue. Kadmos Enterprise is currently into equity funding. Part of the company’s plan is to set up a poultry farm. It needs N10 million for this project but the bank is only willing to give N5 million.
“And the collateral demand from the bank is difficult for us to meet.” Kuye said, with resignation.
Chubike Okafor is chief executive of Nclosure system Nigeria Limited, a company that is into the supply and installation of roofing, windows and doors partitions, curtains, laminate wood floors and plastic ceilings, and alocobond cladding. For him, moving from idea to reality was challenging.
He narrated: “Many factors played out. As new comers, we had no name in the industry. So, we were faced with the problem of creating an image. A major challenge was for people to give you an opportunity to do it; they are interested in your portfolio.” Okafor had to count on his professional background, academic background, and took advantage of a few opportunities to do it well.
His staffers are on contract. He believes businesses can kick off from the bottom up…
Ngozi Omumuawuike is CEO Ngof Ventures, a dry cleaning business based in Port Harcourt. Her initial problem was labour turnover. Some of her staff had to be dropped when they could not cope. For her, know-how is key to the business of dry cleaning, and “we found this very challenging.”
Finance was another hurdle her company had to scale as she said: “The banks’ interest rates are on the high side; they demand you must have a stipulated minimum deposit before they can fund your business. And when you do not have this you are stalled.”
Start-ups problems are universal. Christine Garton’s story in The Wall Street Journals published August 2007 underscores this point. Garton tells the start-up how those teething hurdles can be scaled. It reads: “Young entrepreneurs are again taking the start-up plunge. And why not? It took only 21 months for two twenty somethings to launch and sell YouTube for $1.65 billion. Still, before the big payoff, many start-ups struggle to find enough funds or clients to get going.”
“Money is one of my biggest concerns, says Josh Smith, a 20-year-old junior at the University of Maryland in College Park who recently created his own record label called Indie Street Records. Although he plans to put $16,000 of his own savings into launching the company, he says “the most difficult challenge is convincing people that you’re savvy enough to do something even at a young age.”
For all the YouTubes, thousands of young entrepreneurs like Smith face the daily frustration of having a business idea but the inability to get a foot in the door with potential investors or decision makers that can turn a business idea into a reality.
Here are five strategies that may help you increase your odds of success when pitching a business idea to a new client or investor:
• Be persistent
Laura Darrah, 28, co-founder of Treesje, a handbag and accessory company in Los Angeles, says persistence has been the key to her company’s success. She and her partner, Sheila Nazarian, each contributed $1,000 to get the venture off the ground despite a lack of experience in running a business.
“Persistence does work,” says Ms. Darrah. “We wanted to be in Bloomingdales since the very beginning, but got the brush off for the first two years of business. They finally got back with us last year, and now our bags are in Bloomingdales.”
• Partner up
For young entrepreneurs with no track record of success, the right connection can mean the difference between being in business or not. Unfortunately, most young entrepreneurs lack these all-important relationships. It can help to find a partner that does.
Prior to starting her company, Darrah had never worked in the fashion industry while Nazarian had.
They met at a friend’s wedding where they discovered a common love of fashion and a desire to start their own business. Darrah had just received a master’s degree in business administration from San Diego State University, where she gained business savvy, and Ms. Nazarian had been building up her contacts in the fashion industry as a buyer for an apparel company in Los Angeles…
• Hire the connections
If a partner isn’t readily available, another option is to hire a professional that does. A business consultant, marketing expert or publicist can bring a Rolodex of contacts that a young entrepreneur might not have…
• Stand out from the crowd
“I think the main problem was getting people to take me seriously since I was so young when I started,” says Tina Wells, who started Buzz Marketing Group, a youth-focused marketing-services company, at the age of 16.
To get around this potential roadblock, Ms. Wells, Buzz’s chief executive officer, says she tried to focus potential clients’ attention on her work, rather than her age.
“Be willing to take risks in your work,” she says.
• Launch it anyway
Smith has taken the right step in starting the record label even without a financial backer, according to Carlos Barrionuevo, director of business development at NPR (National Public Radio) and co-founder of Blackvoices.com, a media company targeted to African-Americans.
“If you’re young and have a great idea for a company or product, you probably won’t get far in pitching an idea that is just on paper to a large company or investor,” he says. “Set a vision for what it could be, and do as much as you can on your own. Demonstrate some amount of success. Even if it’s in a small way, others can see where it’s going.”
But he cautions not to expect success overnight. For most start-ups, success takes patience.
