Whilst many businesses are going through challenges of survival and sustainability, others are growing, attracting more customers and making money. It is interesting to note that difficult times such as we are in presently in Nigeria provide opportunities for new profitable businesses to come up because of new challenges. If you do not deliberately look for challenges and needs to meet, then you may not see opportunities, even the ones knocking at your door.
Challenging business environment
The business environment is changing and existing businesses that cannot adapt their operations and methods to take advantage of the changing business landscape may not be sustained.
In the last few months, there have been several stories of businesses and enterprises closing shop because of lack of patronage and rising cost of input materials.Other reasons why many businesses are not doing well include inability to scale up the business and respond to changes in the business environment.
We recently counselled a young entrepreneur who was into cleaning business, but could not sustain it because he wanted to be involved always to ensure good quality work and clients’ satisfaction. As a result of this, his clients’ base was limited. He lost two major clients and the business crumbled.
Collaboration and partnership
As much as possible, do not depend on yourself alone in your business. If you do, then the business cannot grow. Think of how to grow the business through collaboration with others, the use of technology, and employing more people to work with you as workers or partners.
There is now a lot of emphasis on additional stream of income in order to make both ends meet. Mr Jack Mark (not real name) is in paid employment with a multi-national company based in Lagos. He established a side business about three years ago, but the business failed in less than two years. He did not have enough time to supervise the business. Mr Mark got his fingers burnt because the business depended on him to succeed. He was self-employed and not a business owner. It is difficult to succeed as self-employed whilst in paid employment.
The concept of being self-employed and owning a business is illustrated by the story below.
WHERE THERE IS NO WATER
Once upon a time there was this little village near Sokoto. It was a great place to live except for one problem. The village had no water unless it rained. It did not rain frequently in Sokoto.
To solve this problem once and for all, the village elders decided to engage contractors to have water delivered to the village on a daily basis. Two people volunteered to take on the task and the elders awarded the contract to both of them. They felt that a little competition would keep prices low and ensure a back-up supply of water.
Contractor 1 – Ahmed
The first of the two people who won the contract, Ahmed, immediately ran out, bought two jerry cans and began running back and forth along the road to the lake which was a kilometer away. He immediately began making money as he labored morning to dusk hauling water from the lake with his two jerry cans. He would empty them into a large concrete holding tank the village had built. Each morning he had to get up before the rest of the village awoke to make sure there was enough water for the village when it wanted. It was hard work, but he was very happy to be making money and for having one of the two exclusive contracts for this business.
Contractor 2 – Yakubu
The second winning contractor, Yakubu, disappeared for a while to think of how to approach the task. He was not seen for months, which made Ahmed very happy since he had no competition. Ahmed was making all the money.
Yakubu returned three months later.
Instead of buying two jerry cans to compete with Ahmed, Yakubu had written a business plan, incorporated a company, found four investors, employed a manager to do the work, and returned three months later with a construction crew. Within six months his team had built a large volume stainless steel pipeline which connected the village to the lake.
At the grand opening ceremony, Yakubu announced that his water was cleaner than Ahmed’s water. Yakubu knew that there had been complaints about dirt in Ahmed’s water. Yakubu also announced that he could supply the village with water 24 hours a day, 7 days a week. Ahmed could only deliver water on the weekdays — he did not work on weekends. Then Yakubu announced that he would charge 75% less than Ahmed did for the higher quality and more reliable source of water. The village cheered and ran immediately for the faucet at the end of Yakubu’s pipeline.
Contractor 1 – Ahmed
In order to compete, Ahmed immediately lowered his rates by 75%, bought 2 more jerry cans and began hauling four jerry cans each trip. He ensured that each jerry can was washed after every delivery to ensure clean water all the time. In order to provide better service, he hired his two sons to give him a hand for the night shift and on weekends. In addition to his two sons, he hired many other hands. He also bought more jerry cans. The more hands he hired and the more jerry cans he bought the more problems he had with the workers who demanded better condition of service.
Contractor 2 – Yakubu
Yakubu, on the other hand, realized that if this village needed water then other nearby villages must need water too. He rewrote his business plan and went off to sell his high speed, high volume, low cost, and clean water delivery system to other neighbouring villages. He only makes 5 kobo per jerry can of water delivered, but he delivers millions of jerry cans of water every day. Regardless if he works or not, millions of people consume millions of jerry cans of water, and all that money pours into his bank account.
Yakubu had developed a pipeline to deliver money to himself as well as water to the villages. Yakubu lived happily ever after till his old age.
Contractor 1 – Ahmed
Ahmed worked hard for the rest of his life and had financial problems especially later in life as he grew older in age.
Ahmed and Yakubu
Ahmed was self- employed. Yakubu owned a business.
What are you doing?
Are you building a pipeline or hauling bucket?
Adapted from ‘Rich Dad’s Cash Flow Quadrant’ by Robert T. Kiyosaki with Sharon L. Lechter (1999)