MSME Digest with Kola Owolabi
INTRODUCING LEAN START-UP BUSINESS MODEL (1)
A lot of founders in Africa particularly Nigeria are at a loss of what to do to handle the resource-scarcity question. Traditional money lending sources, where business people raise money, have gone out of business or are not willing again to look the way of business owners most especially start-ups.
These entrepreneurs have no one to turn to again and majority are already gasping for breath and may give up the ghost and go out of business faster than expected. It is a pity that nobody is interested in their plight. Most government schemes put in place to help entrepreneurs solve the resource-scarcity challenge remain ‘schemes’ or a mirage that does not happen for anyone at the end of the day and entrepreneurs no longer trust them.
As a consultant, who has been working with entrepreneurs for nearly three decades, virtually all those who come to us, come for one purpose; how to access more capital, either to start a new business or expand an existing one or to take advantage of a market opportunity. The Lean Start-Up Business Model presents a most effective way to do all what you want to do with money without you going to rob a bank.
What is the Lean Start-Up Business Model? The start-up in the acronym does not mean it is meant only for those going into business for the first time. It refers to the commencement of any activity in your business. It ranges from starting a marketing campaign, starting to sell in a new market territory, starting a new project or starting a new year or new month or new week. That is, you need to start an activity which requires resources and you need to know whether it is worth the effort to pursue the course of action you have before you early enough so that you can know whether there is market out there for you in order not to waste the little resources you are deploying on that activity.
I will leave details of the meaning of the Lean Start-Up Business Model till the next post. But I want to close this piece with my own experience in business. When I resumed to my business after a stint running a consulting firm for another business organization, I put three products in the market. The three were launched with minimal resources. Out of the three, I loved one the most; which was publishing of a magazine. The other two were, publishing books and doing business development consulting. I was spending greater part of my time and attention on the magazine. I had more staff deployed to the magazine. At the end of the year, when I did my management accounts, I discovered that the money that the magazine, a business that I loved so much, was bringing in was far smaller than what we earned from the consulting arm. It was easy to decide which way to go after seeing the figures and anyone can guess what I concentrated on thereafter.
The beauty of my experience was that I had connected with the market on the magazine using minimal resources and so it was easy for me to exit that area when I discovered that the return did not justify the effort and resources put into it. Somebody may say maybe I needed more time for the magazine to turn in a profit due to the long break-even point associated with that kind of business. However, the difference was too clear at the time and I didn’t delay to make up my mind. If I had spent a fortune on putting the magazine in the market place, it would have been very difficult for me to leave it quickly and go after an activity with superior return on investment.
Kola Owolabi is the CEO of David Solomon Consulting – He is a Fellow of the Nigerian Institute of Management Consultants (FIMC.CMC). He can be reached by phone or WhatsApp through 08023203198.
