Birds of a feather flock together. Being the type that loves talking about business and various entrepreneurship initiatives, I happen to interact with many like minded people. A good number of them are the employed corporate type who admire the grass across the river in the entrepreneurial world. They never tire to gauge opportunities in comparison to their employment benefits.
While their foresightedness is worth admiring, the biggest shortcoming in these discussions is when opportunities are considered worthy or non worthy of pursuit based on how much one is likely to earn.
One case under discussion consisted of someone who went into fruit farming on three acres of land and as part of his business decided to engage in the sale of seedlings. He currently has an annual turnover of 80,000 seedlings and a quick computation puts him at a potential annual income of Ushs 400 Million (Approx US$ 130,000) from the seedlings sale alone. Within no time everyone was all praises for the business and wishing they could get into it asap.
From a cautionary point of view, I always prefer that one takes time to understand the overall implications of engaging in a business before taking that leap. Revenue figures alone tend to be misleading. Key issues that tend to be swept under the carpet as we glorify figures include among others;
Availability of Expertise
Available systems to manage money
Setup Requirements: Some business opportunities despite having a lot of potential in earnings aren’t that easy to set up. They usually require making significant sacrifices that could be related to one’s lifestyle, finances, family, current employment among others. I know of cases where some people have had to part with their spouses due to business decisions, others have had to exchange high flying urban lifestyles for a calm and laid back rural existence.
Availability of Expertise: There are opportunities you may pursue and find that the market is short of professionals that you can hire affordably as a start-up. When I was venturing into the Food Processing business, I wanted to have very good packaging material for my products. Unfortunately, what I found on the local market was basic packaging and matters worsened when I failed to come across a packaging professional to help me understand and procure what I needed. This entailed me venturing into self study on packaging using online resources. What I could have done within a month ended up taking over 6 months to achieve.
Customer Acquisition: Its one thing to have the product or service but another to get paying customers. One may be able to match the 80,000 seedlings that our fruit farmer produces in a year but fail to sell even half of them. It has taken that fruit/seedlings farmer ten years to reach his current state of business. Along the way, he has burnt his fingers and perfected his customer profiling. This is something you learn on the job. While you may have the capacity to produce 80,000 seedlings, getting them sold might turn out to be your biggest nemesis.
Vision: What is your vision for the business opportunity? Is it merely to make money? If Yes, then you had better think twice because the day that income stream attracting you dries up, your business might be no more. With a good vision, you can afford to engage a flexible approach such that as trends change, you change with them. When Uganda hosted the Common Wealth Head of Governments’ Meeting (CHOGM) in 2007, an opportunity seeker who had contacts with Government officials quickly set up a recruiting firm with the desire to partake of the large sums of money that had been budgeted for hiring staff. He flourished prior to the event but when it ended, it was evident that he had no clue how to proceed with the Recruiting business. He closed shop within six months after the CHOGM event.
Unexpected Setbacks: Pursuing business opportunities is akin to what Psalms 23 tells us in the Holy Bible, “… though I walk through the valley of the shadow of death, I will fear no evil …” Anyone that has pursued the setup of a business knows that there are moments when you even start doubting yourself especially if what you are pursuing isn’t obviously decipherable by those around you. To make matters worse the script doesn’t usually flow as expected. Just when you are seeing the light at the end of the tunnel, a spanner is thrown into the works. A year into the Food Processing business I talked about earlier, we got a big setback when our sole provider of packaging material wound up and we had no other local alternative. It was such a setback considering that our flagship product had begun picking up. It took us over a year to arrange for alternative supplies from China with a lot of lessons learnt in the process. I also know of a tree farmer who lost over 200 acres of grown pine trees to a fire but he’s still soldiering on. When he starts reaping, while others will be admiring the size of his pay cheque, they most likely won’t have a clue what setbacks he faced.
Available systems to manage money: An armchair business professional will tell you to set up a software to manage your accounts, request clients to pay in the bank among other text book related solutions towards addressing this issue. However, in most developing countries, the economies are largely cash based. Bank transactions are at a bare minimum and it’s the advent of Mobile Money transactions that has lately increased the level of electronic financial penetration. Depending on what business you do, it is likely that the majority might be cash based customers. Whom do they pay the money to? How quickly do you get to know that money has been paid? Where does the paid money end up? How do you disburse money that is meant for business expenses? These are very crucial issues to look into. It’s hard to rely on trusting employees to remit all the money they are paid by customers. Without being in control of how the money comes in and goes out, your business might be a big earner but you’ll most likely end up bankrupt.
So, next time you’re discussing a business opportunity, don’t stop at admiring its revenue potential, lift the veil and look beyond the till. That’s where the real work lies.