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Building a Businessby Leke Alder
Genevieve and a figment of imagination
Empowering Women Entrepreneurs
01.03.2008
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4
Take a few
minutes to lookthrough the list.
Which of these do
you think you
identify with?
Butterfly
Ant
Cheetah
Bee
Owl
Snake
Frog
Lizard
Eagle
Dragon
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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 beautifuland powerful
Lizard Conservational and visionary
Eagle Sacrificing, intelligent, courageous, spiritually
illuminated and daring
Dragon Enduring, infinite, wise, powerful and fiery
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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.
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Construction area:
hard hat required
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A typical
construction
process
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Building up your business cansometimes seem as intricate
and mindbending as the
process of building askyscraper all by yourself.
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To build a skycraper, you need
to design the tower, factor in
wind pressure, calculateregulatory requirements,
estimate construction and
financing costs, coordinate a
host of subcontractors, calculate
rents…and these are just the
straight-forward considerations.
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In much the same way, the
process of building your
business could seem to be
plagued with questions and
unknowns.
?
?
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nHow do I get competent staff?
nHow do I finance my desires and vision?
nHow do I balance growth and profitability?
nWill I ever have a chance to reward myself?
nHow do I acquire assets?
nHow do I gain access to capital?
nHow do I manage the risk associated with
getting capital?
nWhere DO I get an orange mouse for my PC?
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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.
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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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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.
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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 impossiblemodel.
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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 CDEbusiness 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, mostentrepreneurs either become
overwhelmed and give up or try
to rush growth.
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You must develop patience,
dedication and endurance
to reach a point wherelosses ebb and profits
begin to flow—the break-
even point:
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The building process
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The processes of building a business is
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The processes of building a business is
undergirded by 5 principles:
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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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Corporateessence
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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 essenceLow prices
Corporate essenceContest between
intelligence and
ignorance
Corporate essenceRebellion and adventure.
Quality at lower prices
Corporate essencePoetry in product design
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The need forcorporate 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 focusand creates brand distinction. It becomes
an efficient income generator that reduces
marketing costs.
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Phase II: CostingBill 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 theconsiderations 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 Will
n Societal
n Anxiety
n Insanity
n Faith
It is in costing out your business both quantitatively
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and qualitatively that you are able to arrive at a
realistic assessment of yourself in terms of your:
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In addition to a self-assessment, you must alsoconduct 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 thatensures high advertising revenue returns? In
other words, your idea must be able to find
itself into the pocket of the consumer.
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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 productinnovation that became a dud:
Crystal PepsiA 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.
From these examples, the following commercial
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viability model becomes clear:
These 5 qualities will help determine your cost
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Once you can make this
assessment, you are
ready to proceed to thenext stage of building
your business.
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Phase III: ConstructionDesign conversion
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The journey of a
thousand leagues begins
with a single step- Adlai E. Stevenson
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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
nMission
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 theimpossible.
You must have faith to succeed.
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Nike
Crush Adidas!
NokiaTo be among the top
2 companies in its chosen areas
Examples
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MicrosoftWorking to help people
and businesses throughout
the world realize their fullpotential.
GoogleTo make the world's
information universally
accessible and useful
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Values
The core principles the
company holds dear andthat undergird its culture
and belief system.
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Virgin
n Energy
n Irreverencen Fun
GEnHonesty
n Integrity
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3. Human
resources
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It is advisable forHR/staff to have
these HR attributes:
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4. Capital/finance model
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You must assess what sourcesof finance are available to you:
n Personal resourcesn Family and friends
n Short-term loans
nLong-term loans
n Private equity
nNGOs, micro-finance institutions
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You must also developforecasts for:
nCapital expendituren Revenue
nCash flow/income
nDebt service
n Investments
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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: EvaluationThe brand
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The man who just wants to makemoney 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.
Minding Your Business
The brand is the 5th economic discipline. In
approaching brand definition, you must distinguish
between:
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Phase V: MaintenanceKeeping 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 keyfundamentals:
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Once you have imbibed thesefundamentals, and once your
business begins rendering
services to the public, you mustinitiate the last form of
assessment that will create your
product—feedback.
There can be no product without
feedback.
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In conclusion, building yourbusiness 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.
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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 thatyour own resolution to
succeed is moreimportant than any other
one thing- Abraham Lincoln
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Our website:
www.alder-consulting.com
For information on this presentation:
08050515791
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About Alder
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Alder is an ideas, strategy and brand consultingfirm. Our competences are in the following areas:
Alder Group
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London
Argo House
Kilburn High Road
London NW6 5LF
EnglandT. +44 (020) 7644 0487
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