When launching your business and starting with your first marketing campaigns, it is often very easy to overestimate the results that you are likely to get from your campaigns, and so it is extremely easy to overspend on unnecessary things. Not having the correct expectations from your marketing and sales efforts will also have a significant knock on affect, meaning that you will plan (and possibly expend valuable resources) on something that never comes to fruition, or perhaps take much longer than expected.
To illustrate this scenario more clearly, I would use an example from my own personal experience involving an emergency call center that I launched in early 2000. Before launching I developed all the things I thought necessary for me to handle a significant volume of calls, including a major software system for handling of calls by anyone with access to the system. I also set up an office (fortunately as part of my home office at the time) and then proceeded to purchase a high end phone system, which could make it possible to handle large volumes of calls, with only one or two operators at a time.
Fortunately I was able to develop the software system myself, with no cost to me but my own time, and the office was already there, however, the phone system required a fairly sizeable financial commitment, which I bravely took on in anticipation of receiving hundreds of calls a day. Of course when I launched I did so with fan fare and bravado, knowing that I was prepared for many calls in a single day.
As it turns out however, though I was able to secure a fair number of clients over a fairly short period of time, the emergencies were much fewer than I expected, and I ended up getting perhaps 1 or 2 calls per month per 100 clients. The phone system also tied me to my office 24 hours a day, making life rather difficult. Getting frustrated with these issues I realized that I could easily run the calls off a cellular phone and a laptop (at least for a start), and of course proceeded to do so. This also put the very expensive phone system in disuse, even though I still had to pay for it every month.
And though I made a tidy profit on the subscriptions every month, the profits could have been significantly higher if I had been just a little more cautious, and did my planning and research a little better. Also even though the phone system would have become more important as the business grew, it was an unnecessary burden on the business at launch time.
Essentially my complete over estimation of the success of my marketing and sales resulted in an overspend, without any real immediate benefit. And though I was fortunate that this was not a situation that put me in personal financial distress, it could have proven a major issue. Irrespective it ended up just being a waste.
The most important lesson that I learned from this experience is that though it is always essential to be properly prepared for your success, it is very important to realize that more often than not there is a cheaper and simpler solutions that will work just fine. It may not be pretty but it will work fine. Then once you have actually earned some money, and achieved certain measurable milestones (also known as key metrics), start spending money to meet the needs as they develop.
Focusing on this, it is very important to ask yourself what are the things that need to be achieved before you make certain key decisions on expenditure. Simply put, do not rent the office if you can work from home and meet a client at a local coffee shop. And as my wife always tells me “Please do not buy another phone system“. Fortunately in hindsight it is somewhat amusing, but at the time it was less than that for sure.
In conclusion I would suggest that when you make decisions on how and where to spend money, be sure that you define your decisions based on specific and measurable milestones. Do not make the mistake to live in a dream world and then spend yourself out of a business based on that.
I wish you all the best with your ventures and invite you to share you questions and comments here.
Several parts of the Nigerian economy, particularly the telecommunications and technology industries, have experienced booms in the past few years that have created a more favorable business climate for small-scale businesses. Nigerians have, at the same time, also become more demanding consumers. Several types of small-scale businesses stand a good chance in the current Nigerian business climate.
Braiding Hair/Salon Business
Nigerians are very fashion-conscious, so any business that capitalizes on this fact is bound to make it. Women, in particular, are a good target market because of the frequency with which they patronize such businesses. Although a worthwhile investment, the downfall to opening up a salon business in Nigeria is that the market is currently over saturated.
Trading has always been a staple in the Nigerian business economy and hasn’t lost steam in the past few years. Items to be traded range from clothing, shoes, bags and makeup to Christian books, technological equipment like flash drives, laptop bags and rewritable DVDs. In addition, providing telecommunications and technological services to Nigerians at reasonable rates are worthwhile business ventures.
Event Planner/Coordinator (e.g., Wedding Planner)
Event planning is big business in Nigeria. It is a difficult industry to break into, though, because of the high standards that have been set by its current practitioners. An event planner would have to begin by building a clientele and making a name for himself before being able to command high fees.
A club promoter brings exposure to any night-time event. Their duties might include making posters, organizing advertising and media coverage, inviting guests and generally ensuring a desirable atmosphere at the event. Club promoters are often more successful in big cities like Lagos than elsewhere in the country.
Makeup artistry in Nigeria is becoming more recognized as a bona fide career path. Beginning makeup artists can command a modest sum of money and generally fare better if they can perform other duties like styling head-ties and outfits for traditional weddings.
As the fashion industry explodes, so does the demand for highly stylized clothing. In metropolitan cities, highly professional tailors can command an impressive amount of money for every outfit they sew but generally have to meet relatively high standards. Fashion design requires more start-up capital but is a reachable goal for a motivated individual.
The various aspects of event management that used to be managed by families and friends are now being outsourced to professionals. A caterer would not only prepare an assortment of dishes for occasions but also make adequate preparations for dishing out and serving the meals at the occasion. Nigerians are used to, and expect, a very high quality of service in this area.
IT Consulting Services
One niche market that is quickly expanding in Nigeria is the IT business field. As more and more people begin to use technology, the demand increases for tech-savvy consultants to solve various IT-related problems. This business depends more on knowledge and expertise than outright capital, which makes it a good small-scale business to begin.
Web designers are in high demand because of their ability to bring exposure to any business. Potential web designers must be experts in their field.