What does it take to start a business?
By Twama Nambili
MSc Corporate Governance and Business Ethics
Founder, Pheora Rucci Limited and Investor Network of Namibia.
A lot of people come up to me and tell me, “Twama, I want to have my own business…Where and how do I start?”. Today I share some of the experiences I have had as entrepreneur and some of the lessons I have learned. I hope this helps you.
Solve a real-life problem
Before you start a business, you want to identify a problem in the market that you want to solve. You then have to clearly define how you intent to address this problem. If someone is already addressing the problem (a potential competitor), you need to identify how you will differentiate yourself from them. How will your product be better?
Demand is key
It’s not just enough to establish that there is a problem, you also need to ensure that there is a demand…will customers buy your products or service? To identify this, you can conduct market research using surveys, a prototype (if you have one), or existing secondary data.
If you are the first person to address the gap, ask yourself: “why has none addressed this problem before?”. It’s possible that perhaps the reason why your solution to the problem has never been implemented is because there is no demand or it’s not needed by the market. That said, don’t assume that the reason none has done it before is because it’s not viable. It’s also possible that none has ever thought of it or that those who have were not brave enough to implement it. When I launched the INN crowdfunding platform, I was the first to introduce it to the Namibian market. Now, there are various crowdfunding platforms sprouting up in Namibia.
Be ready to put in insane hours
With INN, I used to work 17-20 hour per day. I put in my heart and soul. The business demands it, at its infancy. Eventually, as the business grows, you will be able to hire employees and your hours will become less…however, at the beginning…expect to have no life. Expect to strain relationships with friends and family, because you will be married to your idea until it takes off. Just like a baby, it needs constant care and attention until it grows.
A great idea does not always equal success
Having a great idea does not mean that it would be successful or that people will buy your products. I have learned this from several businesses I have launched, including Listify, Pheora Rucci and the Investor Network of Namibia. There is a lot of variables that play into the success of a business/product/service, which include but are not limited to funding, marketing, location, demographics and viability.
Communicate your idea to the customer
It’s very important to get your story right. The customer needs to understand why they should spend their money to buy your product or service. You must give them something of value and this value should be reflected in price, quality, service, etc.
It’s all about the money
You can have the greatest idea in the world, but without the funding to bring it into reality—it won’t be realized. Getting funding, especially from investors/venture capitalist/bank, is extremely difficult for someone who is not well-established or well-connected. However, there are many avenues where one can look for funding. I have used these avenues myself. You can get funding from 1) friends and family 2) Angel Investors – doctors, lawyers, professionals who invest in exchange for equity 3) crowdfunding from popular sites such as Kickstarter and Indiegogo 4) Grants – you will have to apply for these and they are competitive 5) Incubators and Accelerators – you need to apply for these as well, but most give you access to capital and business coaching.
If I had a penny for every time I had been rejected!! I would spend days cold-calling, e-mailing, and knocking on doors just to get anyone who would listen to my ideas. I would approach 200 people and get rejected by 195 of them. The way I dealt with this constant rejection? I grew a crocodile skin. Really! I believe that one has to keep trying. If you talk to 100 people, at least 1 of them will say yes and that is a great start. You need to build a great appetite for rejection, because without this appetite, you will give up on your idea very quickly because there are so many people who will tell you that your idea will not succeed.
Filter the noise
Everyone, including your friends and family will become a critic. If you walk up to a friend or a stranger and tell them about an idea/concept, they will immediately want to give you their opinion. It’s human nature. They would be quick to tell you how you can improve your idea (in their image) and they would predominantly identify what is wrong with your idea. It’s your responsibility to filter through the noise. Only listen to constructive criticism—advice that is actually given to help you grow and not break you down.
Hush, hush, hush!
Avoid telling people that do not need to know. Unless you think your family and friends will support you, do not tell them. In business, the people who would discourage you the most about starting your business are your family and friends. I am talking from experience. Most of them will project their fears onto you and others will discourage you because they don’t want to see you rise. So, keep your business idea a secret and until it starts to take off. Keeping quiet also protects your ideas from prying eyes and thieves.
Protect it, if you can
Ideas cannot be patented, so it’s important that you find ways to protect your ideas. One, you must ovoid telling just anyone (including investors) without the right protection. The best protection for an idea is a Non-Disclosure Agreement, you can find samples online and tailor them yourself. The NDA prevents the people you disclose your idea to from using your idea or creating something similar to it within a set period of time (e.g 5 years). This is what I did, if you want a sample of the one I use, contact me and I will email it to you for free. This is essentially just a contract, however, the downfall of any contract is that in order to enforce a breach – you need to hire a lawyer and for those without money, an NDA may become useless. That said, if this happens to you, there are always lawyers willing to take your case without upfront fees if they know there is a high chance of success and if the person being sued actually has money. You can’t sue someone with nothing. I mean, you can, but then you will only waste your time and money.
Take the risk
To start a business, there are risks you will have to take. That could be quitting your comfortable job, spending your savings, spending less time with friends and family, doing things out of your comfort zone, and so on. You need to mentally prepare yourself for such risks. I quit my well-paying job at Old Mutual when I started the Investor Network of Namibia(INN), but of course I saved enough to help sustain me for 6 months. This meant that I gave up quite a lot…eating at nice restaurants, buying my favourite wine, going out a lot, and so forth. I was prepared to do this. Be brave enough to quit your job, but only quit when you are certain that there is a way to sustain yourself.
Failure is good. Failure is how we learn. The most successful people fail more than average person because they take risks. An average person fails less because they choose to stay safe, but this also means that they learn less. Learn to welcome failure. Start a business knowing that it might fail. There is always an uncertainty that a business may fail. You may, of course, put contingencies and strategies to avoid this from happening. However, know that failure can happen and it’s a good thing. Of course, failure is only useful if you learn something from it. I have failed so many times; I started many businesses and only 2 were actually successful. But every time I failed, I took something from that failed venture and took it into my next venture. That’s why I keep growing and getting wiser every time.
There is no such as thing as overnight success
People like to think facebook was an overnight success. Facebook started in 2004 and it only really started taking off in 2007 and only became prominent after 2009. Most people don’t know this because they tend to only focus on success and not look at where the business came from. There are cases where a business may enjoy a sudden explosive success (a fad), however, I would not suggest this for any business that wants to last because such businesses tend to fail fast shortly after. If you achieve growth way too fast, it’s hard to sustain that and there is only one way to go after that…which is down!
There is no consistent formula to success
I see consultants telling people “follow this and you will be successful” and business coaches saying “follow my easy formula and you will be as successful as I am”. I stay away from people who say such things. They are just trying to make money off of your naivete and desperation. Real successful people know that there is no consistent formula to success. Schools will try to convince you that there is a specific formula too, with all their theories. Don’t believe that either. You can apply a theory exactly as set out in a textbook and you will still get different results, because in the real world – many factors are at play. The way to achieve success varies from person to person. 10 people can apply the same strategy but they will achieve different results because there are many factors that affect each strategist, the strategy itself, and success as a whole. None can walk back in your shoes exactly how you have walked in them, they can try, but it will never be the same. Of course, it certainly helps to apply proven models to enhance your chance of success, but understand that just because a method is proven to work for someone else – it’s not guaranteed to work for you. And what works for you, is not guaranteed to work for the other person.
Create your team
At the early stages of the business, you will probably feel like you need 20 arms and you might actually start feeling that you do have 20 arms. You will find yourself being both the lawyer, the CEO, the marketing director, the IT officer, and the sales person for your company. However, it’s very important that you get business partners or employees to help ease the load. Specialization is essential in business. When you do all these tasks, you spread yourself too thin – meaning that you are not able to do any of the tasks effectively or efficiently. Hence, begin recruiting. I understand you will not have money as a start-up, but you can pay your recruits in equity. I believe a strong and successful team should have a CEO (leader), Marketing person, Legal counsel, Accountant or CA, a sales person, and an IT person (if it’s a tech company). It’s up to you how you distribute equity amongst your recruits. I distributed equity based on the value I felt that each recruit will bring to the team.
You need a leader
This is for startups with more than one founder. I know it’s exciting to be pursuing a venture with your friends. However, you need to elect a leader—the one capable of making tough decisions. A leader needs to have a clear understanding of the company’s vision and hold every employ accountable to this vision and also help lead the team to that vision. A strong company cannot have 2 leaders. It does not work because, with human nature, there will eventually be a struggle for power and influence. If you have 2 leaders and they disagree on what strategy to follow, this brings conflict within the company. Your employees will be torn as to whom they should listen to. Hence, pick one person, and also keep your leader accountable. Pick someone with leadership qualities, and is objective.
Create a sound go-to-market strategy
Once you have identified the product or service you want to provide, you should create a go-to-market strategy on how you plan to take your offerings to your target consumer. The strategy should include a marketing plan, as well as how you will sustain the business.
There are many elements to starting a business, such as funding and business model, that I did not touch on. However, I hope that this advice somehow helps you in your current and future ventures.