The number one most important basic skill a self employed entrepreneur must have
Understanding the numbers. Yes, that’s it. If you want to be a successful self employed entrepreneur now or in the past, you must be willing to understand the numbers. By definition, a successful self employed entrepreneur is someone who can scale successfully – that is expand the business either in situ or by opening branches at various locations. Let’s dive into the numbers a successful self employed entrepreneur must understand.
1. Market structure
Recently a friend asked if me I could advise her on a business idea she could start with shs 1 million. Obviously, the first question I ask such people is where there interest lie, for many businesses fail simply because they were setup in seemingly lucrative markets, but markets where the proprietor has zero interest in. “Makeup and hair dressing”, she said.
“Do you know the current market structure of that business? The number of players, potential customer numbers per day? How much you’d charge them for the services you intend to provide? How much you’ll have to spend to get and retain those customers? Any solutions you intend to provide that current market players are not providing?” I asked her. “Am I supposed to know all that?”
Yes you are supposed to know all that and much much more. Question such as:
- What are the general trends in this market segment in terms of product and service offerings. Are the changes drastic? Disruptive? Or slow?
- What demographics will I be serving? What’s their pocket size in this location?
- Are the businesses in this market segment succeeding? If no, why? Are the barriers to success things I can overcome?
- What are the laws and other government regulations that guide this market? What are the licenses and permits? Does the government want me to be certified before I can operate a business in this market segment (pharmaceutical, medical, security and other sensitive businesses will require you to be qualified to offer services in those sectors).
Those are very important questions that you must be ready to answer satisfactory, and not just in your head, but in a blueprint – something we call a business plan.
2. Understand the numbers needed for a powerful business plan
As someone striving to become a successful self employed entrepreneur, the questions you ask yourself as you attempt to understand the numbers associated with the market structure you want to venture into are questions that are supposed to guide to draw a powerful business plan.
Randomly pick someone from the streets and ask them what they do. 80% of the time you are likely going to get “I do my own business” as the answer. Next ask them if they have a business plan, and even if you get a yes for an answer, digging deeper will reveal that what they think is a business plan is some unstructured thoughts they have in their heads that they call a business plan.
But why have a business plan? For starters, scientific research has determined that the existence of a business plan by itself accelerates the growth of a business by 3000% (yeah, that’s 30 times faster!). As indicated in this article, businesses that have structured business plans are not only more successful, but are 30 times more successful – and this success are quantified in terms of continued growth in sales by up to 92% year in year out.
Now that you know why you must have a businesses plan, here are some numbers that must be put in that business plan before you come up with some half baked document you may want to call a business plan:
- A complete description of what your business is, what it does, services and products it offers, mission statement and how your business plans to grow.
- A thorough market analysis, showing the current market structure and the gaps that structure has created. The deal will be to demonstrate how you intend to bridge that gap.
- Bridging the market gap requires your input. How are you qualified to bridge that gap? What other human resource talents do you intend to work with to help you bridge that gap? Be sure to attach their CVs.
- Then be particular on the services and products you intend to offer, and how your customers will find those services and products more suitable than what the competitor is already offering.
There are other elements of a good business plan that are not any less important such as market and sales projections, funding options, and financial projections. The numbers behind those headings must not be guessed, but must be numbers that reflect the reality of the market segment and realistic projections if the steps you intend to take to bridge the market gap are put in place pragmatically.
3. If you don’t see yourself using Big Data, then forget about success
Going forward no one will be able to scale without taking big data seriously. Understanding customer trends, market needs, and future projection cannot be done through the traditional sampling techniques we are all used to. Since the emergent of smartphones (one may argue that it is since the advent of the Internet), data that is needed for one to make business have been available in abundance online and within customer premises.
As you intend to move forward to becoming a successful self employed entrepreneur, the things you must have in mind is how to capture (mine), shift through, and gain insight from big data. That is, your business might be small today, but if you cannot get to see yourself in the framework of taking advantage of big data, then it will forever remain small.
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