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The current entrepreneurial eco system in Kenya is largely dominated by the birth of various start-ups – be it tech or social enterprise. Regardless, there are similarities that cut across each of these in terms of their formative demographics.
More often than not, entrepreneurs face a challenging time distinguishing between an idea and opportunity. The former is a skeleton of one’s thought process while the latter is a viable concept that can be spun into a business model. This is after the entrepreneur has assessed its commercial viability, as we will later see. Many startups achieve success through identifying an opportunity in the market – but at the right time. On the contrary, other factors too craft the success curve.
Having worked with hundreds of start-ups across the African landscape –specifically in Kenya - I have observed key traits that shape the success curve for a start-up to thrive. As an entrepreneur and business advisor, here’s what sets the class from the mass:
Is your idea commercially viable?
Quite often, entrepreneur’s term their idea viable irrespective of the economic or social demographics. This could yield false hopes of venturing into a product / service. There are several examples of businesses that identified a customer need, which had already been fulfilled. What set them apart was that they looked at the need from a different perspective than their competitors, to best suit prospective customers. Hence, while starting out, it is paramount to consider two views – the customer’s view and the investor’s view. A customer wants to understand what your idea does and essentially, how much value does it provide. In business jargon, your competitive edge and value proposition. This will then have you answer the golden question – Does the product create / serve a need? If so, is the customer willing to pay? To an investor, the critical questions are chances of success and return on investment.
Have you demystified your market?
Understanding market dynamics is easier said than done. One has to precisely divide the market into segments to analyze and identify customers. Several times, entrepreneurs’ have a one-dimensional focus where impetus is laid on building the product than building their customer base. Having a world-class product will not fetch you customers but a world-class understanding of consumer behavior will. This behavior can be understood in terms of age, gender, region, income level and cultural factors to name a few. Point to note - your customer is the main source of revenue, not your product.
Have you worked out your revenue model?
You can bill your product or service in terms of usage / subscription, licensing and advertising. Depending on your product and customer dynamics, this should be fairly straightforward. Try to compare your offering with existing competition to gain an insight into variances in terms of benefits, quality and performance, product reach and after sales if any. Bear in mind, cheap is another form of expensive!
Are you planning to hire?
Your start-up culture is a mix of your passion, vision and personality. To create a successful start-up, you need to gather talented people around you. People are your most expensive resource, both in terms of tangible and intangible value. At some point, you will need to disengage from various functions to dedicate your time to critical tasks. For most start-ups, the common hiring needs fall under marketing, sales and finance. In order to master the hiring process, identify individuals who share your business vision and tenacity. Find out what relates them to the business and vice versa. Having an entrepreneurial-minded employee brings a burst of gusto. However, retaining good employees is always a challenge. But your real challenge is to create an environment where employees’ nurture innovation and responsibility.
Understanding external barriers.
External barriers may exist in terms of governmental legislation or competition guidelines. For example, a tech start up may need to weigh technological advancements in relation to existing government frameworks in terms of data, sensitive information or privacy. For a non-tech start up, the most important might be rules governing importation or certain standards to abide by.
Nabeel Hassanali is an entrepreneur, management consultant and business coach based in East Africa.