TAKING YOUR BUSINESS TO THE NEXT LEVEL
Businesses are set up primarily for the generation of income and as a means for sustenance. The sustenance comes in the form of three basic needs of man, which are food, clothing and shelter. Another reason which is critical but whose importance cannot be over-emphasized is the creation of value otherwise called Value Proposition.
Value can be defined as the worth of something that can be typified by the actual value the owner ascribes to the business. It is the amount that you think you can get when you decide to reduce your level of shareholding in the company or otherwise dispose off completely due to various reasons.
Nigerians need to start thinking of opportunities they need to create for their businesses. Business should not be seen as a means to an end for only immediate needs but projections should be made for the future when age becomes a barrier, when there is no family succession plan, when interest as waned or when illness becomes a limiting factor.
In quantifying all the past effort, labour, resources, both human and capital expended over the years in your business set up, what value can be placed on the business? Does your business have tangible goodwill created over the life-time (business inception, growth, maturity and decline) and phase of the business? How much is your business worth?
I asked you if you were told that you have just two months to live and you have done a “bucket list” of things/places you want to buy/see before death comes calling; what amount will you sell your business? Or rather still, that a foreign investor is interested in your business but does not want a partnership so you decide to sell and begin afresh whether to pursue your lifelong goal of becoming a politician, a sagacious consultant or just retiring due to old age. How much do you think your business is worth? Will you say these are opportunities especially if offered fantastic mouthwatering pay-off? Are these opportunities farfetched?
What if in another scenario, your competitor was offered a mouth captivating amount for his business to which in quantifying terms, your business has more assets but due to some shortcomings which should have been avoided, this was not so. How would you feel? What are the opportunity costs of the missed investments?
In order to avoid shortchanging your business albeit yourself, what are the necessary factors to consider and improve upon to make your business attractive for any business opportunities which are just out there waiting for the right conditions and right mixes.
You need to work on the following:
- Create A Niche: Let the company be synonymous with something that people can easily identify with. You must ensure that there is a clear-cut segment of what the company is involved in selling vis a vis product or service. It is not ideal that companies be involved in too many things at the same time when there are no comparative advantage to leverage on. What does your company do better at than any of the other competitors in your industry segment? You can decide that your product/service will be known for quality, excellent customer service, prompt delivery and affordability among others. The creation of a particular niche will easily arouse the interest of interested investors who know they do not have to spend more money on market acceptability.
- Company Should Be Independently run: The company must have a life of its own and be self-sustaining without revolving majorly around the owner all the time. This means that decisions can be taken in your absence without distorting the natural course of the business. In essence, there should be the presence of other people that share your vision and believe in it as well as interpret the vision to make the business a success. Investors are very keen on such businesses that can run efficiently and effectively without the owner’s presence.
However, this scenario is an anathema in the present day Nigeria where most businesses cannot function without the owner/promoter. Most Nigeria business owners focus more on “now” as in business that just generates income for the present and immediate needs rather than on the future. They fail to build a sustainable entity that can easily attract one form of investment through either partnership or sale.
Some perfect examples in developed countries are Amazon, eBay and Google just to mention a few where owners have reduced their shareholding and made fortunes by inviting other people to partner with them.
- Create Diversified Customer Base: Your customer base should be diverse so as to prevent concentration risk that is often associated with the generation of income from one specific source. The occurrence of any negative incident or circumstance on your customer can greatly impair your business operations significantly.
The Pareto’s principle can be practiced in this regard in order to diversify your revenue base. Companies with large and mixed customer bases will easily attract interested investors.
- Good Track Record: Aside creating a niche, another significant point is for the business to be known for great culture which could be in term of both tangible and intangibles that cannot be easily quantified. The culture represents the way of life of the business vis a vis the acceptable practice or norm of doing things. What are the core values critical to your business and upon which its general practices are premised? Examples of such are excellent care service, prompt delivery and zero tolerance for pilferage & shortages etc.
- Create A Defined Goal: This is sometimes difficult for people to do. Some find that they cannot get themselves to create a path or identify objectives that they can work on systematically in order to achieve business goals. Where do you want the business to be in the next five, seven and ten years? What do you want the business to represent? What enabling structures or processes have you put in place to ensure accountability? What steps will you put in place to ensure sustainability?
The next time you want to set up a business for yourself, please consider what value you want to place upon the business if you were to decide that you no longer want to run it alone but to invite others to either partner with you or sell outrightly? What value will you place on your accumulated effort? What premium will you qualify as excellent and will be fulfilling for you? Once you decide this and know how to go about this, then you are on your way to taking your business to the next level.
Let your business serve both your immediate and future needs. Do not work without taking this into cognizance. Your effort, time, energy, skills to mention a few should be your marketable tools for the future and guarantee an heritage for you and your family.