Building a Business

by Leke Alder

Genevieve and a figment of imagination

Empowering Women Entrepreneurs
01.03.2008 2
Butterfly, Owl, or Snake?

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Take a few
minutes to look Butterfly Snake
through the list. Ant Frog
Cheetah Lizard
Which of these do Bee Eagle
you think you Owl Dragon
identify with?

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Butterfly Metamorphic and transformative

Ant Group minded, patient, active and industrious

Cheetah Swift, insightful and focused

Bee Organized, industrious, productive, wise, social,

celebratory and enthusiastic about life

Owl Deceptive, clairvoyant, insightful, informative, detached,

wise, changeable and silent
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Snake Impulsive, shrewd, transformative, healing, and
energetic

Frog Cleansing, transformative, undiscernibly beautiful

and powerful

Lizard Conservational and visionary

Eagle Sacrificing, intelligent, courageous, spiritually

illuminated and daring

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Dragon Enduring, infinite, wise, powerful and fiery
While you may or may not have actually
identified with some of the qualities of
these creatures, you were just compelled
to make a self-assessment; you had to
contemplate who you are as individuals—
your essence.

Likewise, we shall today be looking at

certain fundamentals that define you as a
business. 7
Let’s begin

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Construction area:
hard hat required

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A typical
construction
process
Building up your business can
sometimes seem as intricate
and mindbending as the
process of building a
skyscraper all by yourself.

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To build a skycraper, you need
to design the tower, factor in
wind pressure, calculate
regulatory requirements,
estimate construction and
financing costs, coordinate a
host of subcontractors, calculate
rents…and these are just the
straight-forward considerations. 12
In much the same way, the
process of building your
?
business could seem to be
plagued with questions and

?
unknowns.

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n How do I get competent staff?
n How do I finance my desires and vision?
n How do I balance growth and profitability?
n Will I ever have a chance to reward myself?
n How do I acquire assets?
n How do I gain access to capital?
n How do I manage the risk associated with
getting capital?
n Where DO I get an orange mouse for my PC? 14 
As with building a skyscraper,
building your business is as much
a science as it is an art and
requires a well-defined and
systematic approach.

This will determine whether your

business can withstand the wind
or if it will topple over with the
slightest breeze. 15
There are therefore
certain fundamentals you
must understand, the first
of which is your situation
and resources—and I
don’t just mean money.

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2 types
of entrepreneur

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We could say that the ability to secure financing
divides all entrepreneurs into 2 categories:

1. Credibility-enabled entrepreneur (CEE)

2. Credibility-deficient entrepreneur (CDE)

Certain factors affect access to capital,

such as interest rates, loan term, equity
and collateral—all of which are strict,
exacting and unaccommodating in Nigeria. 18
1. Credibility-enabled entrepreneur (CEE)
Imagine your bank CEO who decides
to start a business. He has credibility
and therefore access to financing;
investors want to invest in his ideas
because he has a proven track
record of resource management.

He therefore loses little sleep over filling out

a loan facility form. 19
Such entrepreneurs therefore have a business
model that assumes income growth from day 1:

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This model assumes perfect cash
flow/income growth from business
start-up.

Such cash flow would therefore

result in a loan pay-off of, say N30
million in 12 months.

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2. Credibility-deficient entrepreneur (CDE)

Most of us will fall into this category.

There is no MD status.
There is no inheritance or wealthy parent.
There are few, if any, connections.

We may, therefore, already have insomnia.

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For your credibility-deficient
entrepreneur, the CEE model is
highly unrealistic and unattainable.
Yet most young businesses
assume this virtually impossible
model.

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There is therefore an obvious
disconnect between the reality of
getting capital and the demand for it.

The CDE sees capital as his Achilles’

heel—a fatal weakness in spite of
overall strength—because the CDE
business model is different from the
CEE model:
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Here, there is a period of negative
growth during start-up, i.e., a
period of financial, spiritual,
physical and emotional loss.

When confronted with the reality

of growing a business, most
entrepreneurs either become
overwhelmed and give up or try
to rush growth. 27
Both are the responses of impatience.

Neither will lead to business success.

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If you rush the day,
you risk all
- Minding Your Business

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You must develop patience,
dedication and endurance
to reach a point where
losses ebb and profits
begin to flow—the break-
even point:

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It is at break-even point that dreams
begin to be realised. For the
entrepreneur, getting to this point
requires a substantial time and
resource investment.

Hence, the problem is not just getting

capital but developing patience,
dedication and a methodical
approach to growing your business. 32
The building process

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Persistence is the twin sister
of excellence. One is a
matter of quality; the other,
a matter of time.
- Marabel Morgan
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The processes of building a business is
undergirded by 5 principles:
Phase I: Design
The concept

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To accomplish great things we
must not only act but also
dream, not only plan but also
believe -Anatole France

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In building your business, you
must also know who you are as
a business and what you aim to
achieve.

You must be able to define

yourself.

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Corporate
essence

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It is the fundamental reason
for existence beyond just
making profits

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Examples of
corporate essence

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Corporate essence Corporate essence
Low prices Rebellion and adventure.
Quality at lower prices

Corporate essence Corporate essence

Contest between Poetry in product design
intelligence and
ignorance
The need for
corporate essence

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Within your value chain lies your value
proposition. It is the reason customers
come to you. It determines vision, product
development and culture.

Corporate essence is quite distinct from

business focus; it qualifies business focus
and creates brand distinction. It becomes
an efficient income generator that reduces
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marketing costs.
Phase II: Costing
Bill of quantities

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Opportunity follows
struggle. It follows effort.
It follows hard work. It
doesn't come before.
- Shelby Steele
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There are 2 types of costing
involved in growing a
business:

nQuantitative costing

nQualitative costing

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Quantitative costing

Your business plan model

encapsulates all the
considerations of quantitative
costing—administration,
staffing, financing, premises,
etc.

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Your business plan will require you to
make an assessment of your customer
base in monetary terms:

n Who am I targeting?
n Why should he/she pay for
what I offer?
n How much can I command for
one unit of product?
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Qualitative costing

Building a business will also take a toll on the

entrepreneur in many non-palpable ways:

n Emotional n Anxiety
n Will n Insanity
n Societal n Faith
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It is in costing out your business both quantitatively
and qualitatively that you are able to arrive at a
realistic assessment of yourself in terms of your:
In addition to a self-assessment, you must also
conduct an assessment of your idea:

How commercially viable is your idea?

What is the value of being able to eat really fast

unless you can do it on your own TV show that
ensures high advertising revenue returns? In
other words, your idea must be able to find
itself into the pocket of the consumer. 52
Your idea must be commercially viable

Innovation without functional value is simply

perspiration.

Perspiration without viability is spelt

F-R-U-S-T-R-A-T-I-O-N.

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Consider the following product
innovation that became a dud:

Crystal Pepsi
A colourless, caffeine-free soft
drink developed by PepsiCo,
the albino imitation of Pepsi-
Cola with a lime twist failed for
one fundamental reason: it
tasted like any other soda. 54
From these examples, the following commercial
viability model becomes clear:
These 5 qualities will help determine your cost
model:
A business plan is therefore nothing
without a sound idea.

If your idea is wrong, your business

is wrong—no matter how many
spreadsheets and charts you have
in your business plan.

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Once you can make this
assessment, you are
ready to proceed to the
next stage of building
your business.

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Phase III: Construction
Design conversion

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The journey of a
thousand leagues begins
with a single step
- Adlai E. Stevenson

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The Construction phase
involves taking the business
concept and translating it into
the building blocks of your
business.

Here, you will need to define

certain key elements:

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1. Brand
fundamentals
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Our lives are
determined by our
aspirations
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Brand fundamentals

n Vision

n Mission

n Values

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Vision statement

An articulate expression of a desired

tomorrow.

It is linked to the company’s own

goals, desires and dreams.

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Vision needs faith and
dedication to come to fruition.

Faith is an irrational belief in the

impossible.

You must have faith to succeed.

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Examples

Nike
Crush Adidas!

Nokia
To be among the top
2 companies in its chosen areas
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Mission

An assignment, calling,
duty or charge.

It is directed at the
market or customer.

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Microsoft
Working to help people
and businesses throughout
the world realize their full
potential.

Google
To make the world's
information universally
accessible and useful 70
Values

The core principles the

company holds dear and
that undergird its culture
and belief system.

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Virgin
n Energy
n Irreverence
n Fun

GE
n Honesty
n Integrity
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2. Brand
translation

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Once you have defined the
fundamental elements of your
business, the next step is to translate
it into recognisable media:

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3. Human
resources
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It is advisable for
HR/staff to have
these HR attributes:

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4. Capital/
finance model

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You must assess what sources
of finance are available to you:

n Personal resources
n Family and friends
n Short-term loans
n Long-term loans
n Private equity
n NGOs, micro-finance institutions
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You must also develop
forecasts for:

n Capital expenditure
n Revenue
n Cash flow/income
n Debt service
n Investments

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5. Systems

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This involves business
organisational structure,
administration, accounting,
licensing, location, etc.

You must strike a balance

between your systems and
costs. Developing an efficient
system takes time because it is
an evolutionary process. 82
6. CEO

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This is perhaps one of the more vital
components of the construction phase and
involves the development of the traits that
define a Chief Executive Officer:

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Phase IV: Evaluation
The brand

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The man who just wants to make
money is not really concerned about a
business structure. He’s not concerned
about creating an enduring institution,
or a strong brand...The man who wants
to build a business, on the other hand,
has scruples and is particular about his
name.
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- Minding Your Business
The brand is the 5th economic discipline. In
approaching brand definition, you must distinguish
between:
Phase V: Maintenance
Keeping your business
alive
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This 5th stage is crucial to staying
relevant as a business.

In order to maintain your business

and good customer relations, you
require a number of key
fundamentals:

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Once you have imbibed these
fundamentals, and once your
business begins rendering
services to the public, you must
initiate the last form of
assessment that will create your
product—feedback.

There can be no product without

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feedback.
Conclusion

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In conclusion, building your
business can be a scary
proposition. However, it is not
an insurmountable feat.

By understanding the art and

science of building a
business, the vast
possibilities of your business
can be realised. 94
A systematic approach to
assessing your resources and
strengths is important.

More important, however, is the

vision you nurture, your faith in
your success, and your
dedication to getting to where
you want to go.
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Always bear in mind that
your own resolution to
succeed is more
important than any other
one thing
- Abraham Lincoln
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Thank you!

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Q&A

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Our website:

www.alder-consulting.com

For information on this presentation:

yemi@afigmentofimagination.com
08050515791

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About Alder

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Alder is an ideas, strategy and brand consulting
firm. Our competences are in the following areas:

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Alder Group
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London Lagos
Argo House #1 Ajose Adeogun Street
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T. +44 (020) 7644 0487 Nigeria
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E. alderuk@alder-consulting.com F. +234 (01) 270 5409
W. alder-consulting.com E. alder@alder-consulting.com
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