The more money you start
off with, the farther your breakeven point.
Jumia and Konga are two
of Nigeria's biggest ecommerce sites today, partly due to the huge funding
backup they have since they launched. They both have enjoyed over $ in
investments. However, both are yet to become profitable. Infact Jumia just lost
61m dollars in the last 6 months.
I
believe the business that can work in Nigerian harsh economic climate is a
business that should make profit as soon as it takes off.
The Nigerian economic
factors would frustrate any startup that wants to sacrifice for some years
before making profit. The recession and forex drought cost Jumia and Konga 70%
of their sales as most of their goods are imported.
For me, the key is always
start lean, make profit as soon as you can. For Pukena, I ensured we scale up
with as little capital as we can and make profit organically and from the
profits we can scale further. We don't mind going from house to house washing
cars and cleaning houses as long as the money keeps flowing in. Our services in
Pukena is an everyday need and our target market is all around our
neighborhoods. We are positioning Pukena to be the go-to for every middle class
Nigerian for his daily service needs. But we are starting small. Not biting
more than we can chew per time.
I learnt that as a Pastor
in Winners Chapel. We were taught never to spend more than 30% of the income on
overhead. So the lower your income, the lower should be your overhead. In
winners, your church branch can't talk about spending on capital project if
your project account can't afford it. Very strict financial principles.
Right now in Pukena, we
are targeting a gross monthly income of *** millions with as little marketing
budget as we can. Hence am teaching my team how to get results with little or
no money.
You have peace of mind
when you build like this. I have used this principle throughout my business
career till date. I always ensured I started small so that everything that
comes in is a profit. Its not the easiest way to do business. But its the
smartest.
You stand to maintain the
controlling shares in your company if you follow this path. Even when you open
your doors to investors, they are coming to join and scale an already thriving
business.
Most businesses that
fail, in my opinion, are businesses, whose owners usually start off with so
much fiscal liability, and they keep chasing the shadows to just offset the
liability before even talking about profitability, which in most cases, they
never do. That was the case of etisalat. When you borrow money at a particular
interest rate at a particular time, as time roll by, the value of that loan
interest increase and the more difficult is it to pay up.
Start small. Make profit
at your own pace. Build a great business
CULLED FROM WWW.PENUKA.NG
