These four stages can be likened to an airplane’s flight stages. The preparation stage, the take-off -stage, the cruising stage, the preparation-for-landing stage and the landing stage and each stage is locked almost seamlessly into the preceding and the subsequent stages.
1. The Ideation and Planning Stage: This is the preparation stage. At this point you have not started the business yet. But you are either thinking about whether or not to do business or you are thinking about what kind of business to do. The business is either not yet formed as an idea or it is just getting formed gradually. It is also the stage when the business idea is just formed and fresh in your mind. It is not yet tested nor tried to determine its viability.
You are probably very excited about the idea or not very sure about its viability. However it may have become a very dominant thought in your mind. This is also the stage when you have a burden in your heart. You are frustrated about a problem which is either personal or general. There is just this burden to proffer solution to that private frustration which you know others may also be suffering or there is just this nagging thought to provide solution to a known public problem which you know others will be glad and willing to pay you for.
In a nutshell, the ideation and planning stage is that stage where a business idea is just forming and the effects on you is like the symptoms of early pregnancy in a woman. Some women who get pregnant will start developing all sorts of symptoms and discomforts without knowing what the cause is. So too is when business idea begins to form in people. They often don’t know why they feel the ways they feel about the problem on ground. The fact that you are too concerned about a problem more than other people are is a sign that you may have to do something about it.
However, many people do not get to do something about such thing because they are busy with other employments until such occupation or employment is threatened or removed from them. Others may not have any excuse. They are simply not hungry enough to think of starting a business. Hunger here include spiritual, emotional or physical. It may be the psychological or physiological hunger that makes people realize the need to start a business enterprise is not yet strong in such person. Once they need is realized the idea will always start developing or forming or in some cases, given attention to. At this stage, a rough business plan should go down on paper.
2. The Trading (or Trader’s) Stage (the practical school of business): this is the take-off stage. Trading is (usually) a process of buying and selling. Trading is the stage in an entrepreneur’s life when he or she sells his or her ideas, first and foremost, solicits supports, communicate his/her ideas, markets and sells his skills, talents, products or services; seeks helps, supports and patronage. He trades ideas, talents, skills, experience and expertise for resources so as to further his business ventures.
Care must be taken here not to turn into a full-time hustler. This period is that period when, even though you do not want to be seen as a hustler, you will do some form of hustling. Trading stage of entrepreneurship is a schooling stage when you learn from all business stake-holders in the value chain. But keep working on your business plan and keep improving on it at this crucial stage. The trading stage is like an airplane’s take off stage great deal of force and momentum is required.
A trader is one who often does business at retail scale. He buys from the producer or manufacturer or distributor or whole seller in large or small quantity and resells to a final consumer. Often he buys from other bigger traders or distributors who are not themselves producers. Trading is a form of business that schools you as an entrepreneur on varieties of issues and matters in business adventures. You learn from the producers and get to understand their pains and gains.
You learn from the wholesalers or distributors and get to understand their challenges and advantages. You also, but more importantly, learn from the final consumers or end-users. You get to learn a whole lot about their tastes, preferences, emotions etc. The lesson here is, no matter how much fund or capital you have for the business you do not just put everything into the business at once. Enroll in the school of trading first, even if it is just for six months. Trading helps you do necessary due diligence and feasibility studies before going full scale. Put a small amount of the capital into small scale trading first.
For example, if you plan to go into bakery business and you already have all the capital to acquire state-of-the-art equipment. Before building your factory and buying those machine, why not go into buying and selling first. Either go to bakeries that are already in the business and buy wholesales and supply retail shops and kiosk or buy from whole sellers and sell as a retailer. Either way you will learn so much and avoid a lot of costly mistakes before going into production. By so doing you are learning from all sides and sections of the industry, market and business.
The trading stage will help you learn practical street smartness, negotiation skills, local markets and their emotions and behaviours that would as well bring you closer to feeling their pulse, purse and pain. You will learn street language, "street PR" techniques, marketing and selling skills in ways that will astound and out-stand you. You will gain network and relationship skills that will endear you to the market. You would have located, created and connected the important links before going full scale either as a manufacturer or as a distributor. Do not be in a haste to be big. Think big, start small!
3. Business Structure (The Building Stage): this is the cruising stage. Continue with developing and writing your business plan – a more improved and better refined business plan. With the skills and experience gathered from the trading stage your business plan (which you must have being working on) will by now be more fine-tuned. A business plan will give definition and dimension to your business. Definition means definite goal.
Dimension means measurable quantity. With a well-written business plan these and many other valuable features will become prominent and observable in your business idea. Building a business means putting methods, models, processes, procedures, policies, people, structures and systems into the business.
Building business means designing a business to operate as an entity or better still, as a system. This means the business must exist separately from its founder or owner and designed and wired to be operated as a machine would be operated. No business enterprise can effectively and efficiently be managed without a good system and structure with models and processes. (See Part Two, Section 2).
Without a good business systems and structure, it is difficult to define and delineate or mark-out what jobs need to be carried out at what time and by whom. In such setting, anything goes. And that cannot be said to be an organized business. Even if the owner understands all aspects of the business, he cannot always do all or even know all, especially as the business grows and its demands increase.
A business that will truly grow as a business ought to must not be built around its owner, or any other person for that matter. The owner sure will have the major control and prominent position. But there must be places for others to work in the business organisation, hence there must be system and structure to accommodate others.
It must be emphasized that the building stage of a business is not necessarily the start-up stage, even though that is the primary building stage. Building continues all through the life cycle of the business. Building continues more intensely at the cruising stage. The fact that the business is cruising, that is making steady progress, is not the reason why the owner should relax about building it.
As the business grows so grow the rooms for improvement. This is the stage where you must design your management/operational systems and structures by creating the various departments of the business, put legal hedges around your ideas through trade marking, patenting, meeting regulations, obtaining licenses and other relevant legal documentations etc.
4. Business growth and ownership stage: the preparation-for-landing stage. Preparation for landing does not mean preparation to stop or end the business. Rather, it is a preparation to take the business to its next phase. Usually this phase may mean adding new line of products / services, realignment with or entering into new market(s) / new trend, re-branding, integration (backward or forward).
In a nutshell, this stage is that stage where the business must assume or take on newer responsibility(s) without which the demise or stagnation of the business is imminent. Business ownership stage is the stage where the founder will have to take better ownership or the responsibility of steering the business into unknown territory and be ready to take the blame or the credit for failure or success. Sometimes it is a case of a merger with other company(s), or acquisition by another business. Since our concern is with MSMEs we may not have to be concerned with merger and acquisition. But MSMEs also face similar things. It may even mean selling or franchising the business.
A bigger organisation may take interest in your business and may want to buy it or buy a big chunk of its shares etc. Most small business owners do not always want to sell their business or major shares. This is understandable. Entrepreneurs are so proud and so fond of their small business and its little beginning that they would say they will never sell it.
As an entrepreneur however, never say never. You may need to sell the business or its major shares in order to raise fund. That business is surely not going to be the only idea for money making that will ever hatch your mind. If the need be, sell more shares of the business and get the money to grow the business to the desired level or for other exciting ventures
The sole aim of this stage is business growth. The business must grow in this stage. This stage comes usually at the first two fives years of the business. It is said that most business enterprises die in their fifth year. And those that survive the fifth year hardly survive the tenth year. The demise of business enterprises at these two five years’ end is due largely to failures to take crucial decisions for the business to grow or the result of taking the wrong decision for the sake of growing the business.
5. Investment Stage: This stage occurs simultaneously with or as a consequence of stage four above. Both the enterprise and the entrepreneur should begin to invest in other assets, businesses and opportunities such as real estate, shares, bonds etc. Business is more than expansion in size and income. It must expand in assets and investments too. It should, if needs be, acquire even other businesses and grow them. It should have affiliates or subsidiaries. Where necessary, joint-ventures and partnership may be considered with other viable businesses. The business can obtain license to produce or market certain foreign products.
In conclusion, we see that at ideation and planning stage you are working for your business. At trading stage you are working in your business. At the building stage you are working on your business. At the business owners’ stage you are working with your business. At investment stage your business is working for you.
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NB: Before any or other similar decisions described in numbers 4 and 5 above are taken there should be extensive analysis and experts’ advice. |
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