If I asked you to name good businesses, you are likely to point out big companies. You will probably mention global corporations like Apple, Coca Cola, Nike, Facebook etc. Back here at home you are likely to name companies like Bidco, EABL, KCB, Safaricom etc. These may be great companies but it’s not all about size. If recent events have shown us anything, it’s that size is not all it takes. We have seen supermarkets, that two or so years ago may have been considered great, with empty shelves. Clearly something not so great is going on. We have witnessed profitable financial institutions let down clients with bad governance. So declaring profits is not all it takes to be ranked among good businesses. We have read the reports on the status of our national carrier. So doing well is not just about expansion and scaling. Many times being a big business and being a good business have nothing to do with each other. Making money (for a while) is also not the only factor. I have seen several small businesses that are indeed great but don’t think so because they are ‘small’. SME’s walk around with an inferiority complex because size and money are what many people look at as the benchmark. Those are important but they are not the only measure. I think it’s time we redefine that narrative. What really makes a business good? Let’s simply look at People, Product and Money for today.
It is commonly quoted that the most important assets in business are the people. I think fewer business actually practice what they preach. I have entered many offices that feel like death from the entrance. I can immediately tell that the person who greeted me at the reception would rather not be there. As I walk around I can feel the tension in the air. In the actual meeting it is evident that only the “boss” is allowed to talk and everybody else simply agrees. In such cases i always want to get out of there as fast as possible.
Good businesses have great culture because i have walked into other companies and had a complete opposite experience. People look happy to be there. There is energy and creativity from top to bottom. You can tell that the person who serves tea takes pride in his or her job. Even the cutlery is creative and matches the tone of the company. The conversation flows and I find myself staying beyond the time agreed. Culture is a whole topic in our entrepreneurship class beyond the scope of today’s article but in a nutshell it is a combination of the environment, values, behaviors and aspirations of people in an organization. It is challenging yourself as an entrepreneur to set up a company where people work for more than just the money.
A great product makes good business. Please note I did not say great idea. There are so many people with good ideas but they do not know how to translate them into great products. Opportunities and value lie in the product. Not the idea (Click to Tweet this thought). Investors don’t back ideas, they back opportunities. A product then packages this opportunity in a way that can be consumed by the customer. It does not have to be a new innovation but good business does have something unique. It may be packaged or delivered differently. Good products offer benefit by solving a problem. There must be a need and the product must be in response to a certain market that is willing to pay for it. Good businesses impact the lives of their customers in some way. It could be financial through better pricing, convenience, changing something about them and their way of life, an experience, association and so on.
Beyond the face value of what the product or service is and what it does, a business should connect to the underlying motivation of consumers. In other words, if someone else had the exact same product or service, why would the customer choose you? One of our students got this insight into her business. People do not come to her because she is the best fashion designer. They come there because she has a knack for making people feel better about themselves. There are loads of designers like her but that’s what she does differently and that’s why people buy. She now needs to package and structure this so that she can deliver sustainably to her customers. There is a lot of behind the scenes execution, processes and structures to make this all fit together.
Last and in no way least is money. A good business does make money but it’s how it makes the money that counts. The big companies I mentioned earlier all made money at some point but something went wrong. It’s interesting how we give awards to companies on the basis of turnover. This really has no meaning. You may be turning over billions but in reality making no money. We run a class on raising capital and our facilitator always advises people that in business value is about Cash Flow (Click to Tweet this thought). Is there money moving in and out of the business? Is money being collected and paid on time? Revenues and profits don’t pay salaries and rent. Cash Flow does. It’s more about sustainability than the amount. Good businesses are also able to keep greed in check as they grow. Don’t let money confuse you. Don’t buy a luxury car with the money your business needs. Don’t steal your companies’ money. Don’t cut corners. Pay your taxes. You may look invincible for a while but these things catch up with you. Let’s build great enterprises.
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