By all means, venture in business you understand. This has been my message in the past 15 years in all publications and public presentations. Africa’s leading entrepreneur Aliko Dangote just confirmed this assessment a couple of weeks ago when he jointly appeared in a discussion forum with another businessman, Strive Masiyiwa.
Asked if he had failed in business before, Dangote confirmed there were businesses they had to abandon. He stopped the banking business because no one in the team understood it. He says (as much as I recall), ‘If I find that no one among my ten-member team knows how the business we are involved in operates, we do not do it.’ He does not believe someone else has to explain to him about how the business makes money. He attributes his business successes to investing in ventures he understood.
This view validates my long-held belief that entrepreneurs succeed on the back of mastery of the businesses they run. I first read about this position from Warren Buffet. I believed it immediately and started spreading the word. However, not many local entrepreneurs take this view seriously; most of them pointing to someone they knew who had excelled in some hospitality business in which they had little knowledge. I do not buy it.
I go further advising individuals to avoid investing in stocks they do not understand. If you do not know how a telecommunications company makes money, do not buy shares in it. All listed companies start by providing you with a prospectus outlining the strategy of the business. The information is all about how the business operates, how it makes money and what the potential threats would be. That information is for prospective investors who should take time understating the prospects. If your knowledge of the telecom business is very weak you will not know when to buy additional shares or sell. Always remember:
BUSINESS IS YOU: Two weeks ago, I made the same statement that business represents your ambition, character, personality and life goals. Entrepreneurship is an expression of your life passion and desires. When you sell mobile phones, you are simply selling your personality that values communication. The gadget you are selling is an expression of your inner self: love for communication. That is why when you are marketing, you are presenting what the gadget does and how it will enable the prospective buyer reach out to more networks.
The mobile seller’s possible question will be, ‘How many people do you communicate to daily and how do you communicate to them? I can help you reach out to more people with better clarity of voice if you accessed this gadget.’ You are marketing efficient communication because that is what you value in life. The gadget is the efficient communication you are marketing.
When addressing entrepreneurs in Ndola recently, I asked one lady why, among all the many people in the audience who had tried network marketing, she was the only one still doing it; for five years at the time. Her response was a perfect fit to my expectation, ‘I love networking; I value people and enjoy meeting new friends.’
Certainly! The products she was selling were riding on her entrepreneurship; which was natural networker. In other words, her entrepreneurship was based on an inner infrastructure, personality or character she possessed- which was love for networking. This was the vehicle she was using to transport the products that go with network marketing and that explains why she enjoyed it and was successful. She never sweated or struggled one bit, because she was in the right business; the business she understood. The rest had abandoned the network marketing business because they may have been motivated by money.
BUSINESS IS A SYSTEM: As much as you love flying, you cannot fly the plane unless you know how it functions. Even those who train via simulation will still have to fly the actual plane to be competent. A simulator and actual flying are different. The simulator may have exactly similar conditions as flying an actual plane, but the difference will still be that you are in a simulator and you are aware you will not die.
We all have imaginary ideas about the businesses we want to run. Like a small boy who fights for the steering wheel, we all have the belief we can run any business. However, business is a system. You must understand the entire process of running it.
I love telling the story of my niece who invested significantly in fish farming because it looked simple and lucrative from the outside. Everything went well – the fish breeding healthily and even had orders from many people. When it was time to harvest, she could not catch a single bream, ‘Uncle, the fish hides in the mud every time we want to catch it!’
You will succeed in business if you know where to source the raw materials cheaply, how to store the products, how to negotiate the price, where to sell and at what time of the year; when to borrow money and when to start paying. You need to understand the entire value chain and lead time because business is a system. This is the point Dangote was driving at – it is confirmation to my long-held views.
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