MSME Digest with Kola Owolabi
In a previous edition of this post we discussed how one can generate money making ideas. We concluded with the advice that you should build your business around an existing and proven need, and that as a small business person you should not dissipate time, energy and money pursuing ideas that are virtually new to the market. That is fine I believe you will say. But I know so many will be asking the big question, I already have an idea with a proven need, how can I actually start making money with it? How do I translate my ideas to money?
To address this issue I will relate the story of two young men who came to my office a few months ago with a powerful idea. They were thinking of a business in the telecommunications sector that will cost them about N200 million to start. However, when I asked them how much they had in savings or available to them to implement the idea, they started looking at me. Obviously it was only the idea that they had.
I was very impressed with the idea. The guys, both below 26 years, just out of school were very enthusiastic about their idea. They had done considerable work on their plan. The document was beautifully laid out. I considered the requirement for them to start. Two hundred million naira. I quickly remembered the way Microsoft started in 1975. Microsoft today is the largest computer software maker in the world with about 90% of the computer operating system market. The two guys that started the company, Bill Gates and his partner Paul Allen were extremely young at the time. Bill was 17 years, a freshman at Harvard University and Paul Allen 21 years had just graduated from college. They had an idea that would revolutionize the entire world of computing. At that time computers were the huge contraptions that were kept in big halls with 24-hour air-conditioning which only a few had access to. They saw the future as belonging to a computer small enough for a person to use in the corner of his room at home and cheap enough for an average person to own. They knew its time would soon come and software will be needed to run the microcomputer they dreamt about.
I believe you know the rest of the story. The two guys put up the small capital that they could gather between themselves and proceeded to launch Traf-O-Data that later became Microsoft. The company started in earnest at the garage of Bill Gates father’s house. Bill Gates quickly dropped out of Harvard, (why will he continue when destiny had placed in his laps what will set the pace for generations unborn to study in all Computer departments of educational institutions).
Let me tell you what the two of them did to implement the idea which has brought them so much money that Bill Gates became the richest man on earth for seven years running while his partner Paul Allen was number five richest at the same time. This is different from what most entrepreneurs do today.
Rather than go to re-invent the wheel to create new software, they looked for existing and available software that could be customized for what they wanted to do. After getting one, they put a proposal together and proceeded to IBM, the largest player in the market at that time. They made their pitch and got an opportunity to develop a software for a personal computer IBM was developing at that time. They worked hard for five days to do the job. The job was delivered in record time. They were paid and the rest in now history. They proceeded to capture the entire market using the proficiency they gained while working on the IBM job. They did not go around looking for money. They went around looking for opportunity to utilize their skills. They proceeded to look for market first. That is contrary to what most of us do. We make searching for money major business and neglect looking for market which is the main business. People want to make money first before making the business. It is supposed to be the other way round. You make the business first and the business will start making money for you. So many have made looking for money the main business rather than looking for how to get market for their business.
That is what I told the two young guys who came to me with the big IT idea. I told them we had to start first by identifying and looking for a market for their idea rather than look for money first. I told them that nobody writes capital no matter how big it is into Profit and Loss account. It is sales you write to your Profit and Loss account. If you started your business with one billion Naira and you don’t make sales you are digging your grave fast.
Most people would have advanced in their businesses if they spent the time they use chasing capital to chase market for their ideas. The way out is to start at a level the available resources you have can carry per time. You then proceed to work hard and make more money to enable you expand gradually. So the model I will recommend is starting with the market first. Identify the market. Thereafter take a census of the market to determine the prospects that may likely need your services. Write all the names of your prospects no matter how many they are. I advised somebody who is into magazine production to get 2000 names of prospective buyers on paper. Out of the 2000 he should be able to get 1000 to buy his first 1000 copies to get the publication started. I told him to write the full names of those people so that immediately the magazine was out he will send sales letters to them directly.
Kola Owolabi (08023203198), CEO, David Solomon Consulting Limited is a Fellow of the Nigerian Institute of Management Consultants (FIMC.CMC). The company can be reached via phone or WhatsApp at 08023203198.
