On Business Structure

I have spent the last decade in an organisation I watched grow from an entrepreneur’s idea (and start-up capital of N17.50k) into a structured company. This was done in one of the most hostile business environments on earth – Nigeria. I have also spent a considerable amount of time thinking about unstructured businesses and how the many fledgling & brilliant entrepreneurs in Nigeria can evolve into proper businesses (and perhaps even fast track their way there).

So, I decided to do a write-up on my observations and proffer my two cents worth on how a business can attain “structure”.

But firstly, a word on not having structure. You do NOT have business structure if:

People have money or a brief to give you but can’t find you because you never pick up your phone or promptly return calls.

You don’t have a backup or secondary phone line.

You don’t have another staff that’s equally as competent as you.

Your official email address ends with gmail.com.

You don’t have empowered leaders in your company, where leadership is defined as the ability to take wise, executive, binding decisions such as signing cheques and contracts.

Your office is your dining room table and a multinational won’t give you a job because you won’t pass the office inspection.

You’re not a registered company and have no clue about VAT registration and Witholding Tax.

You fall ill for 3 months and you don’t meet your company when you get back, or at most just a shell.

You can’t do FOREX transactions because you don’t have a credit card, Paypal account or a foreign bank account.

You won’t be granted a visa because your company doesn’t have 6 months consistent income and proper corporate registration papers.

None of your staff has a proper job contract with defined job descriptions, expectations, obligations and benefits.

You don’t have a business card.

You don’t have a website.

You don’t know how to knot a tie or dress properly for a business dinner.

You can’t stand toe-to-toe with your international peers.

And there are many more examples but I’ll stop here:)

From talking to many Stage 1 entrepreneurs, I have tried to develop a progression sketch for how to move from Stage 1 to Stage 2. (I will not speak about Finance, because an entrepreneur who cannot raise finance for his business is NOT an entrepreneur and should just get a job).

1. SORT OUT YOUR ADMIN AND REGULATORY ISSUES FIRST

Find and hire a competent Admin/Operations person. Also identify competent Support Service Providers.

OPERATIONS PERSON: You can have the most creative ideas in the Universe, but if you do not create an enabling environment for those ideas, properly manage & protect them, then present them to the world, you’re just creating inventory that will go nowhere. Administration protects your business and ensures you remain a going concern. You would be amazed what a properly filed letter or invoice can do for your business when a dispute arises with a client. You would also be amazed what a prompt response to a brief or a returned telephone call can do to your bottom line.

An efficient operations person ensures you let go of the mundane every day tasks that ensure business survival (e.g. buying generator fuel) so you can focus on the big picture. And please, do not get a boy to do a man’s work. Never get an immature, cheap minion to run your operations. You will destroy your company. Find someone you can comfortably send out to take a brief on your behalf – someone very intelligent and responsible. Someone you can trust.

REGULATORY ISSUES: To deal with your regulatory issues, stop trying to do it on your own. There are competent individuals and firms who consult for small and growing businesses. Instead of banging your head against the wall trying to register your business at CAC, pay someone to do it. Sometimes, all you need is a little wisdom. It’s easier to register a non-English word that you coin, rather than an existing everyday name. For example, it’s easier to register Visix Enterprises, in Nigeria rather than Crusader Trustees Company. For growing businesses, you need basic templates to work with (and am not talking about letter writing or invoice templates). You need an HR Contract template for staff you’re hiring. For your accounts, you need to do your first Trial Balance and Management Accounts. You also need a basic Financial Policy and Accounts Tracking template, which makes your accounts audit so much easier when you start to pay taxes. You also need a Service Contract template for clients and contractors. There are LAWYERS & ACCOUNTANTS that specialise in helping growing businesses in these areas and it may be cheaper for you to retain them on an annual basis or get them to develop the basic structures over a project period of 3 months.

SUPPORT SERVICES: Unless you want to die young, there are some reliable and competent service providers you need to have on speed dial. Some of them will be useful for a short period only, others will stay with you throughout your business. They are:

Lawyer
Accountant
Insurance Agent
Visual Identity Designer
Printer
Website Developer
Marketing Agent
Travel Agent
Electrician
Generator Technician
Plumber
Carpenter
Realtor

2. YOU NEED A BRAIN TRUST

A growing business cannot afford to get a management consultant or commission market research. And sometimes the perspective of a single mentor is too narrow and limiting for a long term vision. You will need to put together a group of people you respect within and without your industry who will serve as a Strategy Board, Advisory Board or just Sounding Board. They are experienced, seasoned and wise but are approachable and will tell you the unvarnished truth. Their job is to meet every quarter, hear you out and provide market insight from a potential customer’s point of view. They do not make decisions for you but simply advise and counsel. They are your ad hoc focus group and help you shape ideas into marketing propositions. In some cases, they can also provide links and networks. You may decide to pay them honorariums for this service or simply buy them lunch – it’s up to you.

3. MARKETING

Besides having a good brand, website, brochure and other tools of marketing; you need a hands-on person or agent to physically sell your product to the market when it’s ready. Somone who has the personality and drive for it. If it’s too expensive to hire someone, get an agent you trust and pay them on a commission basis. But you need someone to physically write proposals, attend meetings, do presentations, seal the deal and most importantly follow up to collect the money – all those things you’re not predisposed to doing. Remember, when the idea is developed, someone has to look for sponsors and business partners. Preferably, someone who speaks good English, please!

4. GET AN OFFICE

Instead of trying to bear the cost of an office alone, identify 2 or 3 other people like you and share office space for at least the first 2 years of the rent period. Split the cost of diesel and other bills, have a common reception and meeting rooms but keep separate work spaces (because of confidentiality issues). After 2 years, some people will be able to afford their own office space and move out, while others will join. Having a shared office also gives you economies of scale on office supplies.

5. TRAVEL, READ, MEET PEOPLE

Move beyond being a local champion or competing with local champions. Broaden your perspectives and learn about/meet the best, internationally. Traveling does wonders to your world view. Do it. Also meet people particularly outside your industry. Spend more time with potential clients rather than your industry professionals. It will help you begin to reason from the customer’s perspective and develop products from that perspective. Also, customers prefer to do business with people who understand them not people who speak industry language.

ONE MORE THING...

In the spirit of providing real solutions and not just mouthing off, if you really want to move from Stage 1 to Stage 2 and would like some referrals to credible service providers in any of the areas mentioned above, inbox me...i know people who know people:)