In the last 3 months or so since the lockdown, Micro Small & Medium Enterprises (MSMEs) have been the worst hit. In a survey ( https://www. edc.edu.ng/publications ) conducted by Enterprise Development Centre of the Pan-Atlantic University amongst over 1650 MSMEs across Nigeria, 93% of them suffered revenue losses while majority were not able to pay salaries beyond the first month of lockdown. The light bulb moment for me however is around the 7% that actually thrived during this period. They did something right and we shall be looking at what they did right over the next few weeks. Many have wondered if this is a best time to start a business and for those already in business, if the time to remodel their business is now.
Over the next 4 weeks, I shall be walking you through some nuggets that address these questions and sharing with you some local examples that affirms my believe that enterprises can indeed thrive in any condition. Opportunity Recognition The starting point of any business venture has to be “opportunity recognition”. Whether in normal or challenging times, there is always an opportunity to be exploited. The mark of a true entrepreneur lies in his/ her ability to recognize opportunity which transcends copying others or going into a business that is perceived to be thriving just because others are there. What constitutes an opportunity under a particular situation may not necessarily be an opportunity under another scenario. For example, in a University environment, there are many student services such as accommodation, secretariat services, restaurants, etc.
However, the type of restaurants in the catchment area of University A may be different from that of University B based on a number of factors such as “financial capabilities” of the students, the student population, their social context and aspirations, what motivates them to go and eat in a restaurant, etc. So the restaurant, its product and service offerings must therefore be customized to fit the profile of the target market in each of the University environment. A few days ago, I spoke with one of our alumni member that is now producing face masks and I wanted to know why he wasn’t producing the cloth type. He admitted that while there was a market for the cloth type, he felt it was a transient market that would go away.
While this may be a great opportunity for fashion designers experiencing low patronage at this time, producing cloth face masks would keep their operations going, pay for their overheads and keep staff fully engaged. For him however who is into logistics business, face mask production is pursuing a new opportunity and he has to target that segment of the market that would not go away. While he recognized that some people may not wear face masks after a while, those traveling, going into Malls, Hospitals, Schools and certain institutions will still be required to wear masks for a long time to come. So, for him, this is where the opportunity lies. Opportunities must be carefully dimensioned so that the appropriate solution may be proffered.
This is what we refer to as Value Proposition. Customers must be willing to pay in exchange for the value you are offering them. Another alumni member finished as one of the ‘Top Ten” in the Forbes Digital Startup Accelerator program that ended recently, which had more than 5,000 applications. They are into logistics and started about a year ago. While they had one or two big clients up till March this year, during the lockdown, deliveries picked up and they recognized the opportunity to expand their network of “Big Clients”. In less than 3 months, they increased these big, reliable clients from two to ten. They offered to these clients a solution they could never have provided on their own.
While congratulating him and trying to find out why he left an oil and gas job to co-found the Logistics company, he told me that when he ordered for food, the great food company took 5hrs to deliver it! Rather than get mad, he knew he could do this better. Opportunity recognition is intrinsically connected to our day to day experiences. He offered the great food company the logistics solution which is being powered by technology and they became his first client. Opportunity recognition and value proposition go hand in hand. While one is the recognition of a gap, the other is the solution to that gap. As you go about your daily activities this week, try and open your eyes to your everyday experiences as their lies the opportunity waiting to be recognized. And when you do recognize whichever opportunity, proffer multiple solutions that the customers (like you) will be willing to pay for. Till next week, stay safe.
Peter Bamkole is the Director of Enterprise development Centre at the Pan-Atlantic University, Lagos.