Startups as endangered species

Startups
as Endangered
Species?
By Tito Philips, Jnr.

Some Stats
2www.naijapreneur.com

Some Stats
Sub-industries with the most dead companies

Why Startups Fail?
• The Mindset:
how you think about entrepreneurship
• The Process:
what you need to build a business that
will last

The Mindset
• Survival Driven
(Seeking Money before Adding Value)
• I can do well all by myself (Insecurity)
• Inadequate Knowledge (Low Business IQ)
• Lack of Focus (Jack of all Trade)
• Lack of Vision (Shortsightedness)
• Fear of failure (Risk-Averse)

The Process
• Business DNA:
What KIND of company are you building?
1. Good Company:
“Business as Usual”
2. Great Company:
“Business NOT as Usual”

The Process
• Business DNA:
1. Purpose:
 “Why do we exist as a business?”
“What need or needs are being met by this
business?”

The Process
• Business DNA:
2. Vision:
 “What do we want to achieve using this business
as a tool?”
“How far do we want to go in pursuit of our
purpose as a business?”

The Process
• Business DNA:
4. Values:
 “What principles, standards and tenets must we hold to
be true and never compromise as a business?”
“How must we collectively think and behave as a business
in order to fulfill our purpose, achieve our vision and
execute our mission?”

The Process
• Business DNA:
5. Brand:
“Who are we as a business to the general public?”
“What is our promise to those we intend to serve?”
“How do we want to be perceived by our target
customers?”
“What do we want to be remembered, recognized or
respected for in the marketplace?”

The Process
• People:
who are your vision partners?
The
Visionary/Dreamer
• The
founder/leader
The Customer
Champion
• The marketing
person
The Innovation
Architect
• The technical
person
The Rainmaker
• The financial
person

The Process
• People:
How do you know the right people?
• The right people fit with the company’s core values
• The right people don’t need to be tightly managed
• The right people understand that they do not have “jobs”; they
have responsibilities
• The right people fulfill their commitments
• The right people are passionate about the company and its work
• The right people display “window and mirror” maturity

The Process
• Product:
How do you want to improve lives?
Uniqueness: the product/service your startup has
created must be significant differently than all the
existing options currently in the market.
– Usefulness: the product/service your startup wants
to offer her target customers must be capable of
meeting their needs and solving their problems.

The Process
• Business Model:
how will you get the right things done in
the right way?
•Target Customer
•Value Proposition
•Channels
•Customer Relationships
•Revenue Streams
•Key Resources
•Key Activities
•Key Partners
•Cost Structure

The Business Model
• Target Customer :
 Market Size: what’s the total addressable market? That is; what’s the total
number of potential buyers/customers/users for your proposed
product/service?
 Growth Rate: how fast or slow is this market growing? Is there an opportunity
for expansion?
 Demography: how well do you understand who buys your product or service?
 Psychography: how well do you understand why they buy your product or
service?

The Business Model
• Value Proposition:
What value do we deliver to the customer?
Which one of our customer’s problems are we
helping to solve?
Which customer needs are we satisfying?
What bundles of products and services are we
offering to each Customer Segment?

The Business Model
• Channels:
 Through which Channels do our Customer Segments want to
be reached?
 How are we reaching them now?
 How are our Channels integrated?
 Which ones work best?
 Which ones are most cost-efficient?
 How are we integrating them with customer routines?

The Business Model
• Customer Relationships:
What type of relationship does each of our Customer
Segments expect us to establish and maintain with
them?
Which ones have we established?
How costly are they?
How are they integrated with the rest of our business
model?

The Business Model
• Revenue Streams:
For what value are our customers really willing to
pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to
overall revenues?

The Business Model
• Key Resources:
What Key Resources do our Value Propositions
require?
What Key Resources do our Distribution Channels
require?
What Key Resources do our Customer Relationships
require?
What Key Resources do our Revenue Streams
require?

The Business Model
• Key Activities:
What Key Activities do our Value Propositions
require?
What Key Activities do our Distribution Channels
require?
What Key Activities do our Customer Relationships
require?
What Key Activities do our Revenue Streams require?

The Business Model
• Key Partnerships:
Who are our Key Partners? Who are our key
suppliers?
Which Key Resources are we acquiring from
partners?
Which Key Activities do partners perform?

The Business Model
• Cost Structures:
What are the most important costs inherent in our
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?

The Process
• Capital:
How do you want to fund your startup?
The 7Cs of Credit
• Capacity
• Cash flow
• Capital
• Collateral
• Character
• Conditions
• Commitment

The Process
• Capital:
Capacity
• Do you have experience running a business?
• Have you had this business for more than one year?
• Do you know this industry well?
• Do you have a good team working for you?
• Is the business operating well?

The Process
• Capital:
Cash flow
• Is your business profitable?
• Do you have a bookkeeping system that will allow you to
demonstrate this to the bank?
• Can you produce financial statements from this data?
• Is your cash flow sufficient to make the loan payments?

The Process
• Capital:
Capital
• Do you have sufficient reserves, or other people who could
invest in the business, should unexpected problems or hard
times arise?

The Process
• Capital:
Collateral
• Do you have collateral (business and/or personal) which you
can offer?
• Is the property you own yours, or do you share it with your
husband or family?

The Process
• Capital:
Character
• Can you show the bank that I am honest, and keep your
promises?
• If I've had a loan or supplier credit before, did you always pay
on time?
• Have you always paid your personal bills on time?
• Can you prove this to the bank?
• Do you have good references?

The Process
• Capital:
Conditions
• Is the industry that you are in a good one?
• Do you have a unique product or service which makes you
different from your competitors?
• Is there growing demand for my products? Does a loan make
sense for my business?

The Process
• Capital:
Commitment
• Are you committed to working hard so that your business will
succeed?
• Do you really want it to grow?
• Have you put your own money into the business?

Startups as endangered species

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