As we go into the New Year, I am reflecting on my experiences in 2016. It has been a great year for me, and the most transitional year for my business. Amidst all the ‘Buhari Economy’ rhetorics many of us braced ourselves for a challenging year as business owners. 2016 was very challenging to small and medium enterprises, as well as multinationals and large corporations. News of downsizing, salary cuts, unpaid salaries were the order of the day.
Challenges can be opportunities
Despite all these, I say 2016 was a great year because for many entrepreneurs it gave rise to innovative ways to solve problems and taught us some of the hardest lessons that will be of benefit to us for a long time to come. Challenges for one business are opportunities for another and sometimes the same business. I had a client in 2016 who was a manufacturer; some of her raw materials were sourced outside Nigeria. The first problem that hit was the hike in the cost of purchasing some raw materials, due to the drop in the international value of the Naira. The second problem was that she couldn’t source the money she needed to buy them. She later saw these problems as an opportunity to provide something that her entire industry required – and so the transition began.
Passion alone does not guarantee success
This is a lesson that many entrepreneurs learnt in 2016. Many people believe that if you are passionate about your business and you give it your all, you will be successful. Passion gives you the drive and resilience you need as an entrepreneur, but it took more to be successful in 2016. It is great to find something you are really passionate about, but to build that passion into a sustainable and successful business, the business principles you apply need to be sound. Our culture has a reverence for hard work, but in 2016 smart work won the day. Smart work involves solidifying a strategic approach to a task and identifying things that you need to do to achieve an outcome that is fit for purpose, with the least strain to your resources.
You need to be strategic about every aspect of your business. We must strive to keep costs low, and at the same time ensure quality isn’t compromised. If sales from the product you are most passionate about aren’t covering your costs, it works to develop new products for the market of the present day. We also learnt that it is okay to turn down some opportunities; to stay focused on our objectives and only take on work that moves the business closer to the goals we set for 2016. We learnt to outsource certain areas of the business, as this was the smart move at the time. Passion + Smart Work was the formula for success in 2016 and we are taking this into the New Year.
Transition is a painful process
I mentioned earlier that 2016 has been the most transitional year for many businesses. This is because implementing changes in your business is fraught with difficulties and uncertainties. This was very common in 2016 where many colleagues, clients and entrepreneurs had to implement changes in one area or the other of their organizations. In 2016 many entrepreneurs transitioned from full time employment with a ‘side hustle’ to leaving or losing their employment. So the ‘side hustle’ became their ‘main hustle’ by the end of 2016. It was no easy task for many. Making the decision to move from a job that gives regular income to build a business that may not be able to pay you for 3 months or more can be very difficult. Some people save up and prepare for it; but even at that, sometimes your projections can be way off the reality – especially with the Nigerian economy of 2016. The major key was to stay on course; remember why you implemented changes in the first place and don’t get knocked down by the pains and problems
Keep marketing regardless of your budget
2016 was a cost cutting year for many businesses; one of the areas that costs were cut was marketing expenses. With some companies it was reduced while in others it was completely removed from the budget. I understood why some businesses had to reduce these costs but I didn’t understand why marketing had to stop. One of the lessons we taught clients in 2016, and in fact built an entire product around, was the fact that regardless of your budget, marketing must continue. There are so many low cost ways to market your product: an active presence on social media, sending out samples of your product, networking regularly, a press release online, using ‘non celebrity’ influencers etc. Marketing is a must.
State your terms, Stand your ground – Money always follows value
2016 was also a price-cutting year for some, particularly with businesses that offer services. Some companies attempted predatory pricing to ensure they maximized what they perceived to be dwindling demand. Others were faced with the question of cutting prices to gain more clients like others were doing; others decided to stand their ground. For instance we came up with a product for companies that had lower budgets but our profit margin was not compromised because we have overheads to maintain. For our core consulting service our pricing remained the same – we even increased our pricing for business process re-engineering. Initially it seemed as if we were not getting new clients and we wondered if we had made the right decision. This was when I learnt the most important lesson of 2016 – Money will always follow value. Clients and customers want value for their money and that is the bottom line. If you know you deliver in value what you demand in fees then stand your ground. This lesson applies to businesses in the service industry in particular, because as we have repeatedly experienced – pricing of services is based on perception of value.
I will be sharing more hard lessons you can’t leave in 2016 in Part 2 of this article. Feel free to let us know a hard lesson you learnt in 2016 by commenting below.