I am always encouraged by the creativity and entrepreneurial enthusiasm of Kenyans. However, zeal alone will not achieve the results we want. Empowering our brilliant and gutsy people with knowledge on how business works will be the linchpin for success.
One of the first things we need to understand is that an idea is not the same thing as a business. Business is predicated on either a product or service. The ‘idea’ of the product or service is not the same thing as a tangible product or service.
The idea has not yet met a user and it is in use that we find its actual value. So, create a prototype and see whether it makes sense to you. If it does, test it on friends and family and eventually other potential customers. Only then will you know if there is potential for a business.
Remember your idea does not have to be unique or one of a kind to succeed. You just have to prove that it meets your customers’ needs better or in a different way. For example, if I want to sell tomatoes then I must have a differentiator strategy: Are mine cheaper, larger, healthier, tastier, more colorful… etc?
If I am a doctor, are my services faster, more specialized, friendlier…etc? The idea needs to become a product or service before we can know if it is a viable business or not. After you have produced the product or service the next question is whether there is a sufficient market.
The fact that a few people in your testing phase liked it does not mean that it is a business yet. You need to do some research and find out how many potential customers there are. If you find that there is a sufficient market, go out and start selling.
Have you heard the saying; It takes money to make money?; The idea cannot take root without money. It needs money at the production stage and also at the sales stage. The skill is to try your best to foresee how much money will be needed to get the business off the ground.
How much will it take to keep production running long enough to get traction in the market? Many businesses underestimate the time this takes and therefore do not raise enough money. A lot of the money goes towards constructing and maintaining the systems and structures that are the foundation of the business.
Supply chains and distribution, overheads like salaries and rent, marketing and sales processes. These are the elements that set apart great businesses from ideas that run out of steam in a few months. Often the idea may not be unique but the execution is outstanding.
We have had restaurants serving chicken for years in Kenya and yet foreign firms enter the market and dominate the chicken business. Why? Execution! The systems and structures supported by huge funds make them competitive in any market.
Article Written by Waithaka Gatumia, CEO Centonomy Ltd.