Article by Adepeju Jaiyeoba
Yesterday, I read the story of a lady who called out her employer, a young entrepreneur who runs a food business, for owing her and her colleagues salaries close to six months. As the young entrepreneur struggled to defend herself, detailing how her food business ran down, she opened up on her struggles. Here are five key things entrepreneurs running a startup should strictly avoid from her story
1. Don’t Get Investor’s Money Before You are Investor Ready and Be Specific About What the Funds Raised is to Be Used For – So the entrepreneur in question had raised some funds for her business from investors but that money quickly fizzled out with no meaningful impact on her business leaving her in a trail of debt.
Lesson: Understand that investor’s money is not your money. It is not money to buy aso ebi, go holiday to the Caribbean Islands or even buy your dream car. If you get money before you are investor ready, you will spend it all on unnecessary things. Before seeking money from investors, be specific on the exact problem it will solve and when the money arrives, stick with the purpose and ignore distractions. Problems have a way of multiplying when money arrives. Be focused
2. Don’t be in a Hurry to Expand– Within a short while of raising funds from investors someone told the entrepreneur in question about an opportunity to expand her business. She diverted all the money raised for her business to this proposed expansion and ended up being duped according to her.
Here’s the Lesson: Stand solidly on one ground before you begin to seek conquering other grounds. Expansion does not equal to more customer base or even a successful business. Don’t get drowned in the race to build an empire when your ‘room and parlour’ is still on shaky grounds.
3. Hire Based on Needs- In stating her side of the story, the entrepreneur mentioned that all her staff kept coming to work even though there was absolutely nothing to do.
Lesson: As an entrepreneur, don’t keep staff you don’t need. Don’t be in a hurry to employ full time when you know hiring part time will do the job and keep you out of debt. Even when you hire full time, don’t hire a truckload of people just because you want to reduce unemployment or because you really pity them. Learn to say NO to the things and people you do not need. It is not the number of staff you have that determines whether you have a thriving business or not, it is their competence and efficiency.
4. Don’t Get Swallowed Up in the Race to Brand Without Content– In trying to defend herself, the young entrepreneur posted several photos of her outings and business. She had spent money on tee shirts, branded packs, Nylons and the likes.
Lesson: Don’t concentrate on building a brand around an empty content. Work on your content, service delivery, customer service and interpersonal relationship with people. Also work out a percentage of your cost that should go to marketing and branding otherwise you will spend all your money there. A key part of this is knowing your target customers and where to find them. While branding is important, don’t spend too much on it. As Adekunle Gold will say, Ariwo ko ni Music. (Noise is not the same as music)
5. Be Strategic About Ways of Acquiring New Customers- The entrepreneur in question posted details of so many fairs she attended and paid heavily for in a bid to acquire new customers. Some of this included the Lagos international trade fare and I think another trade fair organized by the Lagos Chamber of Commerce.
Lesson: If you don’t understand your customers or target populace, you will be tossed around by every wind. So even though you are into food business for example, you need to decide if you want to target office workers thereby focusing on online orders and deliveries, working women, thereby offering soups and food in liters or maybe even school children. If this entrepreneur had her customer segmented, she would have know that It is not every paid exhibition, show or trade fair that you have to register for so as not to waste very scarce resources. Know your targets, know where they can be found and concentrate on reaching them through the most cost effective means possible.
Have a great week everyone.