 600 x 90px.jpg)
“You can’t make an omelette without breaking a few eggs”. – Lenin
By Ola’ Jacob Ajayi
VENTURES AFRICA - I recently attended The Mobile Money West Africa Summit at Orientals Hotel, Lagos. While the summit was going on, I noticed a white chap in his late twenties replying mails and receiving calls on Samsung galaxy tab. He kept going in and out every 20 minutes with a big bag.
At the end of the summit, we exchange pleasantries and he went on to explain his mission to Nigeria. The dude is from Ukraine and works with a top Ukrainian company that focus on developing end user hardware for homes and businesses.
“In Nigeria, you people have the market, imagine 150,000,000 people? My CEO gave me a task to sell this product (pointing at his big bag) to just 1,000,000 Nigerians at N2400 each” – Please do the maths
Every day, we hear stories of foreign investors coming to the country to invest. They prefer to pump their money here. They see us an emerging consumer-economy that can cough out billions daily.
One sad thing about Nigeria is that the same masses that complain there is no money are the ones giving out the little they have due to our “all-consuming” habit.
Dangote recently emerged as the 76th richest man in the world with a net worth of $11.2 billion. What the heck does he do? He is into retailing. He sells consumables to every man on the street. Hmmmm, so Mr. Dangote feeds over 50 million Nigerians daily at an average cost of just N100. – Do the maths again! He makes billions daily.
Another good study are the telecom providers. Do you think they make larger chunk of their money from their postpaid subscribers? No! They make it from you and I, the prepaid customers.
About 90 million phone users, cheapest top up card is N100, average of 20 million users recharge their phones daily. Another business scooping billions from Nigeria, right?
As it is with every profit-oriented venture, making money is like breaking bricks with your head. Nobody wants to do it but everybody wants the reward. You don’t expect to cash in if you are not able to make the sacrifices. Dangote didn’t start as a billionaire; he started as a thousandnaire solving people’s need in the north. The need expanded to more people in the six geo-political zones of the federation.
A secret about Nigerians is that we so much love the Abraham Maslow’s theory of need in no particular order; we love self esteem, belongingness, safety and psychological needs. Just solve any of these and be on your way to scoop your own money.
I spent part of my last vacation in Ghana with a business mentor who told me two ways to dip your hand into the masses market to make your money. “Jacob, there are two ways to make money in this world. 1. Sell a million naira product to one person/company. 2) Sell a one naira product to a million people. Any which way, you become a millionaire but the best method is to have product that sells for N1.00 and sell to 1 million people. Through that everybody can afford your product without breaking a safe”.
I thought deeply about this and discovered it is the same weapon being used by the rich men in our nation and continent at large; masses foot their bill unconsciously. They keep spending kobo by kobo enriching some people. Since they can’t innovate, they keep paying to use innovations. No wonder the holy bible says we shall collect from the hand of the poor and give to the rich.
Apparently, you don’t just swing into action without having a thorough plan of how you are going to hit the market right and leverage on our population to make a fortune. These steps will be of great values in helping out;
- Take a deep breath and ask yourself if you are truly ready to go into a business – don’t deceive yourself.
- Identify your strength in terms of what can you do to help people out – a flash back on your past could help.
- Create a niche market out of your strength – don’t be a general merchant, at least for now.
- Research into the field; SWOT analysis – Strength, Weakness, Opportunity, Threat, Competitors etc of the business,
- Map out you strategy
- Gradually execute your action plan.
- Go into the market with the mind of rendering service, not making money. Late Steve Jobs once said and I quote; “we don’t sell gadgets, we sell comfort to people so they can live life easier”. Apple is presently the most valued company just by making lives easier.
- If you are going to bootstrap the project, start small. Pushing 10% of your saving s into it won’t be a bad idea. Never inject al your life saving s into a business.
- Start selling to friends, family, colleagues etc – charity begins from home
- Package your brand- 2 years ago, a friend requested for a logo design from a business center and a mini ad agency. They charged N500 and N760,000 , The business center did a better job with N500. We could have paid him a million if only he knew how to package his ability.
- Don’t be scared to hurt your fingers – Yes, this is business. Some things would go wrong along the line, try to sort them out instead of quitting.
- Expand fast but slowly – starting a business means sharing ideas with competitors.
- Blue and red ocean - as it is in life, it is always good to be a trailblazer, get to the market before others, build loyal customers, enjoy monopoly for a period and get set for a stiffer environment
- Pump your profit back into the business – this helps for sustainability
- Measure your growth.
Let’s get started now because the land is greener here than there. What do you think? Feel free to drop your comments below.
Image via moneyproduct.net
The Author
Patrick Tasiyana said on February 18, 2013 [4:29 pm]:
That’s cool
Bafana said on February 18, 2013 [11:20 am]:
Great article indeed.
Soumyadeep said on June 6, 2012 [10:58 am]:
This is a great article Jacob!! The maths of selling N10 worth of product to 10 million people also sounds great.. however, the reason that not many companies dare to tread this path is because of the increasing margin pressures!! It becomes increasingly difficult to sustain one’s growing turnovers YoY & then the organisation’s who cater to Sec A & Sec B of the food chain come out winners!! They play around in a niche market catering to the ever growing middle class & semi-urban individual & keep the flag high owing to descent margins!! True, that both the models will co exist & continue to grow, for example, Coke also continues to grow its volume vide the increaing PCC every year, so does Red bull by catering to the ever growing & aspiring middle class!! Your article stands true not only for Nigeria but for all growing economies!! Hope to see more of your work… Best Luck!
yinka adelani said on April 18, 2012 [4:42 pm]:
Nice piece! Keep the plane flying
Paul said on April 14, 2012 [12:43 pm]:
Well said. that advice from your mentor was short, simple and useful as advice from all practically successful men are
Denis kingori said on April 3, 2012 [8:31 pm]:
True inspiration to a young entreprenuer like me.
Thanx alot.
Sheyi said on March 16, 2012 [8:04 pm]:
Jacob,
this is a nice article and very thoughtful one as well.
I actually had a chat with a Nigerian on twitter who blames the govt on to the reason why Entrepreneurs are not making money in Nigeria.
Since we know the problem of our country and that there is n Govt to help start-ups, its better you start something that does not depend on the govt.
Sheyi
Ronald said on March 16, 2012 [7:45 pm]:
Great read, Jacob. Great read
Asoto Adeola said on March 16, 2012 [7:38 pm]:
Good read… @femi I d agree with your opinion and shedding light on the pros and cons of both method. Its about deciding whether to go B2B or B2C at initial stage of conceptualising your business. At the end of the day, I guess what matters is the bottomline. PROFIT
Thumbbs up Ajayi.
Deliker Mathieu said on March 15, 2012 [10:54 am]:
All about making money… $$$ Money makes the world go around… Business Business Business
Eyitayo Ogunmola said on March 13, 2012 [7:08 am]:
Oops.. Awesome.. How i wish i have d grace to bring you to one of my programmes… Awesome again
mayowa owolabi said on March 12, 2012 [9:35 pm]:
Hello, please what’s the Ukranian’s name and what company did he work for?
Daniel Chuke said on March 12, 2012 [9:14 pm]:
To succeed in business you must understand the theory behind volume turnover at comparatively small per-sale profits ~ J. Paul Getty
Femi said on March 12, 2012 [8:36 pm]:
I like this article and I think you’re generally right – African enterprises are yielding greater returns in terms of growth rates than business in the West. Two general caveats: the risk is higher (although decreasing); and the scale of the enterprises are smaller and thus so are the corresponding profit pools (although increasing).
Ultimately, if you are an individual with a good risk appetite, willingness to live on the continent and have good business acumen, Africa is fantastic.
I take slight objection to your Ghanian advisor’s statement:
“Jacob, there are two ways to make money in this world. 1. Sell a million naira product to one person/company. 2) Sell a one naira product to a million people. Any which way, you become a millionaire but the best method is to have product that sells for N1.00 and sell to 1 million people.”
This is the essence of BOP (Bottom of the Pyramid) economics. Its flaw is that it only looks at the revenue side. The cost side is equally important and the benefits are reversed. I.e. getting a product into a million people’s hands is much more costly and difficult than getting a product into one person’s hands.
Ultimately, one has to identify the businesses in which costs (especially manufacturing and distribution costs) scale very well (e.g. Coca-Cola, dirt-cheap phones, washing detergent). The second step is to understand exactly where between these two extreme poles (1 customer or 1 million customers) that your business is best suited.
Great article Jacob again and keep up the good work!
Victor Asemota (@asemota) said on March 17, 2012 [6:09 pm]:
The 1 Naira to 1 Million option is not only about BOP economics but about sustainability and “Value Innovation”
You cannot consistently sell 1 Million Naira goods to a market where there are a finite number of millionaires and except the person is a scammer there is no real guarantee that something sold for 1 Million or to which a value of that magnitude has been attributed has a relatively lower cost of production than a 1 Naira product.
Value innovation is about delivering beyond customer expectation consistently and sustainably. A one Naira product may not really have a higher cost of distribution if you have one million of it at one location where more than a million people need it and have access to it.
The operating word here is “need”. I may want a BMW but I will “need” to drink water. If a person brings it closer to me annd does not charge an arm and a leg I will always drink water until I can afford a BMW.
There are many economic arguments but ultimately a business exists to scale and be sustainable. There is more room to scale and be sustainable starting from the bottom while working towards the top than vice versa. You will still have your revenue base while you strive for quality customers who move up the Maslow’s hierarchy. China has learned this well.