Writing this article brings so many memories, most of which are funny. When my friends and I wanted to start our business in the university, I approached a serial entrepreneur and showed the financial plan with a budget of N8 Million Naira. He laughed so hard I could not for the life of me understand what was so funny but I think now I do. The business idea was to start a chemical company that produced liquid wash, hand sanitizers, toilet cleaners etc. It was a brilliant business idea, brilliant vision and a great team but that budget was just outrageous. After spending a few minutes with this serial entrepreneur friend, he explained to me how we needed to start small and grow the business.
We went back to the drawing board, strategized and came up with an idea. With a team of ten friends, we agreed to each contribute N2,000 which made a total of N20,000. The university we attended usually held Trade Fairs (exhibition organized to showcase products and services) and these gave us the opportunity to make some extra money. We decided to bring in the most sought after caterer from a restaurant outside the university. After the Trade fair we made a profit of N40,000 and that is what we started our business with. Although we later suspended business activities because we had to go back for our final year but the business grew and we were able to make deliveries inter-state.
Listening to Billionaire Sara Blakely (founder of Spanx) on her Masterclass Brief she talked about how she went from door-to-door sells of fax machines to launching her company with just $5,000. In USA that is enough for a Holiday but not enough for astronomical investments, so it is fair to say she had enough seed money to start in a small way especially if we factor in production and service delivery. If I ever get to meet her, I would like to find out how many pairs of Spanx she did on her first production; probably a few pieces. Mind you, in her interview with her husband she mentioned that $5000 was the amount she had set aside from her previous job to start the business.
She also spoke about how in her company, they have a yearly zero budget base whereby they start the year with zero budget and as the year progresses they spend based on the needs that arise. In her words, it prevents them from overspending.
Most of us want to achieve our business dreams with a million naira or more but most successful businesses start with a few thousands and sometimes even hundreds. There are so many factors that determine when and if a business will grow and become successful, however it is advisable to start with the available capital to minimize loss. In cases where there is a bullet-proof business idea and one is a high risk taker, then it is fine to start big especially if the capital is available. We all know on what spectrum our business idea is and we can tell if this is the one that will catapult us to the next level. I believe the level of belief in the idea should be equal to the level of risk. I have seen people start businesses with millions and tripled the capital, however, this is in very rare cases.
I once read the story of a sausage roll seller on the streets of Lagos who became a millionaire selling the popular sausage roll . As at then the sausage roll cost about N50 or N100 for one and he made so much money that he began going back to his hometown to bring other sellers that filled the streets. With time, most of the people selling the sausage roll on that major road in Lagos where working for him and that was how he built his business and became a millionaire. Meaning he started his business with a few thousands. Even if we look at those individuals that sell roasted plantain by the road side and how they train their children and build houses; it is from a few thousands of naira they grow their business into something much larger. Not saying this is the path of everyone as I mentioned earlier, all I am saying is do not be too quick to take that loan or borrow that lump sum for that business idea. Start small but aim high!