Another Option To Raise Funds

November 24, 2009 by 2 Comments

When starting a business, sometimes one does not have enough money from his own personal sources to fund the business startup costs (‘capital’). There are two main sources of additional funding:

  1. Debt – basically you take a loan from a bank, or a friend, and agree how to pay it back.
  2. Equity – basically, you find someone to ‘invest’ in your business. They then get to own a certain agreed part of your business.

Usually, debt financing is much, much cheaper than equity financing. However, they are both sometimes unattainable for very young businesses. What to do?

Well, there’s a third source of funding. It’s not much different from debt financing but it is different enough. Basically, get someone who has some spare money and who is not a seasoned/experienced investor. Perhaps someone who retired recently and is looking for something to invest in (like a retired dentist).

You then offer them a deal: give me some money to launch my business and I’ll give you a certain percentage of my sales. Think about it – no endless meetings, punitive interest rates, complex accounting. You just pay a commission on your sales. It could work, ama?

Adapted from Seth Godin’s article.

Filed Under: Small Business Tagged With: , ,

Ever Thought Of Building An Online Community? [Interview]

September 3, 2009 by 2 Comments

For the readers that don’t know, our interviewee today, Francis, is the founder of The Young Professionals Google Group, a java guru, and a successful internet entrepreneur. He sells e-books as well as advertisements on his Google group. Bwana Francis is also the chairman of the League of Young Professionals – a club in which I am a member.

Q. You’re quite an achiever, tell us about you
I am a software developer by profession and a social entrepreneur by choice. My passion is to see how we can tap the incredible power of web 2.0 technologies (specifically on communication and collaboration) to create great communities and then harness their power and influence to create capacity to solve problems, produce ideas and valued products. There are various tools and applications that individuals, groups, organizations and businesses use/ can use among them message boards, blogs, websites and web portals, mailing lists, news sites, SMS solutions, social sites like twitter and facebook etc

YP Google group is just one of such tool we are using to create a community of passionate young professionals who have a shared purpose of developing themselves and building a better Kenya.

To illustrate the enormous power of such technologies and the online communities around them, one needs to look at the role they played in the election of President Barrack Obama. Voters were reminded via SMS to go vote, could follow the updates of their candidate on Twitter & Facebook, huge amount of campaign money raised online as well as having vibrant discussion of issues on blogs, message boards and mailing lists. We do also have fortune 500 companies who have companies’ weblogs for their staff to blog about the personal life and their companies’ products. The ascendance of free and open source software can also be attributed to this.

Q. How did it start?
It started when I was doing my BSC in computer science. I become passionate about programming by seeing it is possible to create applications which can be used to solve a real problem. Once I got into web technologies, through curiosity and experimentation I looked at the available tools that could be used to achieve the goal, and a Google group and facebook group were the entry points. With time, I and the team I work with, shall be churning out a more integrated platform of all the technology to build great web portal

Q. What challenges did you face and how did you overcome them?
Most of the challenges were intrinsic (within), and I mean the prejudices and bias that the environment taught me as I grew up. Mostly everyone believes after campus you should be employed and not to experiment with ideas and risk. To overcome such I had to unlearn what I have been taught so that I could absorb new ideas and perceptions.

Secondly, IT is a field that requires specialized technical expertise some of which is rarely taught in schools. For example, to build my programming skills I had to proactively learn the java programming language for over four years through self study.

Q. What are the challenges of being an entrepreneur in Kenya?
There are two sets of challenges, one uniquely specific to internet industry and secondly the challenges of any business startup or initiative.

With regard to 1st, the % of Kenyans who have access and use internet regularly is around 8.6% of the total population as compared to countries like USA who have above 46% usage. So a large percentage of the population doesn’t access any product, service or platform that is internet based.

With regard to the 2nd, among the top challenges I can pinpoint that cuts across all industries in Kenyan context are firstly getting funds to finance your venture, secondly fierce competition from established and large global companies and thirdly building a successful business requires a large investment of your time and needs patience and commitment

Q. What was critical to your success?
It’s hard to single out one or a few since I believe it’s a whole set of skills which I could call the winning combination, but they generally fall in 3 domains.

  1. My ability and the passion to learn. Generally I buy & read at least 2 books (mostly on business & management) a month.
  2. Technical expertise. My programming skills are very good and I never cease to try to become even more qualified. I am always sharpening my saw, learning new skills and craft I need to get something done, being more competent either in programming or any other roles
  3. Emotional Intelligence. Mastered myself, can manage myself and my relationship with others. Can easily understand my emotions and the behavior of others.

All the three orchestrated together, I can say they are what is critical to my success.

Q. What about the competition and marketing, do you need to advertise, print flyers participate to conferences or is it mostly word of mouth?
Mostly through word of mouth and email marketing.

Q. Do you think that in order to “make it big” online you have to live in a Western country? Or does Kenya offer more or less the same opportunities?
Definitely that is a myth. Making money online is possible since I am making quite a lumpsome. You just need to have the right product, well priced and packaged and target the right audience.

Q. Where do you see yourself and your business (es) in the next 5 years?
I believe we shall have built the required competences and products to provide communication & collaboration solutions, be it to political parties, large organizations, community groups, NGOs, Small and Medium Enterprises and well as having flagship enterprise applications for mass usage.

Q. If you had to do it all over again, what would you do differently?
Not really, same direction but different routes. With experience I have come to know which works and which doesn’t work. Definitely I would avoid the latter, while only keeping the former.

Q. What advice do you have for internet business entrepreneurs in Kenya?
I will quote Charlotte Bunch who once said “We do not need, and indeed never will have all the answers before we act…… It is often through taking action that we can discover some of them.” Lets not be afraid to try and fail, it’s through trying, failing, having false head starts that we can only make great reaps ahead.

That’s all for today readers. If you’d like to hear more of Francis, please join the YP Google group and The League of Young Professionals. You can also reach him at the following:

Email – francis.mwangi.chege[at]yahoo.com
Alt – francis.mwangi.chege[at]gmail.com
Phone +254 721 663 208
On Twitter – https://twitter.com/francismwangi
On Facebook – http://www.facebook.com/profile.php#/profile.php?id=1579110764&ref=profile

PS Francis has a very good deal on a package of 800+ ebooks.

Filed Under: Interviews Tagged With: ,

How To Actually Start A Business

July 22, 2009 by 2 Comments

If you have read a lot about starting a business, you’ve probably seen over and over that it’s not so difficult. It just takes determination, hard work and patience. This is all true. For most people the problem usually comes in actually starting. You know like when you really want to do or say something but you just don’t know how to start? I put together a couple of steps to help starters get past that starting point.

Decide what you want to do – This should be fairly simple. You must have had some idea in order to want to start a business. Something that you are good at and you actually enjoy doing. It can be writing, marketing, advertising, selling, chocolate bunnies, pretty much anything sells these days. Most people have the idea in their heads, how they are going to make millions, start their own ‘apprentice’ show or something like that. You basically need a plan, not many go as far as Scofield by getting it tattooed all over their body but you get the point, decide what you want to do and have a plan.

Do the research – Check out the field you want to join and even better know the ‘who is who’ in it. Who is likely to be your mentor, who is going to be competition, who can help you out, who to look up to, who to aim to beat. All of these different people will come in handy at different points later on. Through this research you also get more insight and maybe new ideas on how to operate that you had not thought of or maybe even discover things that are not already offered that you can bring in.

Get a website – A website is becoming increasingly crucial in running any kind of business today. It is very important to have good stuff on your site, stuff that people will want to know, don’t just copy and paste from some other sites or pick up other people’s articles. I’ve seen many people complain about the state of Kenyan websites and how they are not up to standard, and seen even more people ripped off by cons selling clone sites. To save you any misfortune I recommend Nickel Pro for your website design, management, hosting and all your web needs.

Get clients– This is the part that needs a lot of hard work and patience. You have everything set, your website running, all that is left is getting clients. You need to let people know that you are out there, what you have to offer and why they should get it from you and not your competitors. There are many ways to do this. You can start a blog of your own, leave comments on other peoples blogs, get into forums, chat rooms, write articles, send emails, do everything. Even the old school African way, tell your family, friends and neighbors and tell them to spread the word.
A big mistake most people make in this part is doing this blindly. Before you start advertising yourself, decide who you want as clients, a target group. After narrowing it down to a specific people advertising is easier and if you do it right most of it will pay back.

Keep clients – Now you have a running business and a bunch of clients yay! It’s not yet time to relax though. In fact, it’s sometimes harder keeping your clients happy than it is just getting them. They came to you because they think you can do the job right. All you have to do is prove to them that you are better than everyone else and make sure they don’t regret picking you. How you treat your clients is very important. Update your website with information they need to know, reply to their comments on your site, answer their emails in time, give them high quality products, timely deliveries and do everything you can to make sure they are comfortable.

Launches – Yes launches, not lunches. One reason why a lot of on line businesses do not succeed is lack of stimulation. If you offer the same thing, over and over, after a while it gets to be kinda boring. To keep your business alive you need to have a launch maybe once every two or three months. Depending on what your business is.
What is a launch? It involves bringing in something new, a fresh idea to your business. For example we had Host a Charity a while back and Biashara30 right now, which is starting soon by the way so sign up if you haven’t yet. These new and different things that you bring in give your business a little spice. Launches also give your clients something to look forward to, makes your duty interesting too since you have to find something new every so often plus it offers an opportunity for you to get new clients due to the new additions to your business can be services or products.

So stop thinking about how you are going to do it and postponing, the sooner you start that business the sooner you start becoming rich 🙂

Filed Under: Make Money, Small Business Tagged With: , ,

How To Find Profitable Internet Business Models

June 29, 2009 by 1 Comment

So, the much-hyped fibre optic cables are finally here! I don’t know about you, but I’ve been waiting for them for years… Why? The cables are very likely to change the way the internet is accessed and used in Kenya. The main benefits are going to, eventually, be cheaper and faster access to the internet. This probably means that:

  1. There is going to be a sharp increase in the number of people who access the internet
  2. There exists a big HUGE opportunity to make money online in Kenya and this opportunity shall increase as the number of internet users increases.

So, the big question (apart from reading Like Chapaa regularly – subscribe for free if you haven’t yet) is: how do you make money online? There exists big opportunity, but how do we take advantage of it? What can you do to make money online?

How To Find Profitable Business Models
When thinking of starting a business, any business, the part where most people struggle is the conceptualization of the business model. They don’t know what kind of business to start, what market to target, where the revenues are going to come from and so on. The same applies for web businesses, perhaps even more so. People often do not know what sites to create, or how they are actually going to earn money.

Wouldn’t it be great to have a place where you can go to and study, in detail, successfully employed web business models? Is there any place where you can go to to generate web business ideas?

Yes there is, and it is: www.flippa.com

Flippa is a place where people buy and sell websites. The site has had a lifetime total of USD 24 million in sales so a lot of business gets done there! When you visit the site you will find lots of sites for sale. Obviously, some of them are not worth your time so you need a way to separate the wheat from the chaff, so to speak. You can do it in two ways: click on “just sold” or “browse all listings“.

Clicking on “just sold” will let you view websites that people actually bought. These sites are obviously built on sound web business models as they would not have been bought otherwise. You can click on each site sold to learn more about it and, possibly, why the purchaser paid for and bought it.

Clicking on “browse all listings” is even better. It lets you see a long list of sites up for sale but not yet sold. The thing to do is to browse through the list and check on the number of bids. If people have actually placed a bid on a particular website, it means that they are prepared to buy it. This probably means that the website in question is built on a good and workable web business model. You can click on each listing to learn more about the website.

Now, this is where things get interesting. Since people genuinely want to sell those websites, they will give all sorts of information about them, including details of how they built them, where they get traffic from, where their revenues come from and so on. Better yet, you can ask questions about specific points and the seller will gladly respond to them. Think of the possibilities: you can learn the ins and outs of a web business and then just duplicate it elsewhere.

Just today, I learnt that you can actually be paid for offering free magazines to your website’s visitors. I sincerely do not know anywhere else where you can learn so much detail about existing businesses for free. It’s a goldmine.

I haven’t even touched on the very hot prospects of buying a web business and running it yourself, or improving it and selling it for HUGE profits. Therefore, stay tuned to this site…subscribe to receive free email updates. Or by RSS.

Have a question? Don’t hesitate to ask!

Filed Under: Cool Sites, Make Money, Small Business, Tips Hacking and Reviews Tagged With: ,

The 13 Principles of Starting a Start-Up

June 24, 2009 by Leave a Comment

Paul Graham shares 13 sentences on startups. (Click the link for more info).

1. Pick good cofounders
Cofounders are for a startup what location is for real estate. You can change anything about a house except where it is. In a startup you can change your idea easily, but changing your cofounders is hard.

2. Launch fast
The reason to launch fast is not so much that it’s critical to get your product to market early, but that you haven’t really started working on it till you’ve launched.

3. Let your idea evolve
This is the second half of launching fast. Launch fast and iterate.

4. Understand your users
You can envision the wealth created by a startup as a rectangle, where one side is the number of users and the other is how much you improve their lives.

5. Better to make a few users love you than a lot ambivalent
Ideally you want to make large numbers of users love you, but you can’t expect to hit that right away.

6. Offer surprisingly good customer service
Customers are used to being maltreated. Most of the companies they deal with are quasi-monopolies that get away with atrocious customer service.

7. You make what you measure
Merely measuring something has an uncanny tendency to improve it.

8. Spend little
Most startups fail before they make something people want, and the most common form of failure is running out of money.

9. Get ramen profitable
“Ramen profitable” means a startup makes just enough to pay the founders’ living expenses.

10. Avoid distractions
Nothing kills startups like distractions. The worst type are those that pay money: day jobs, consulting, profitable side-projects.

11. Don’t get demoralized
Though the immediate cause of death in a startup tends to be running out of money, the underlying cause is usually lack of focus.

12. Don’t give up
Though the immediate cause of death in a startup tends to be running out of money, the underlying cause is usually lack of focus.

13. Deals fall through
It’s very dangerous to morale to start to depend on deals closing, not just because they so often don’t, but because it makes them less likely to.

Filed Under: Make Money, Small Business Tagged With:

How to Start A Business With 3000 Or Less

June 10, 2009 by 9 Comments

Whether you’re starting a business on the side while still employed elsewhere, a student or homemaker looking for extra income, or unemployed and trying to figure out what to do, there are plenty of opportunities for you to start up a side business inexpensively. We’ll take a look at 10 such opportunities and, most importantly, tell you what to do with the 3K!

It’s unlikely any of the following will make you a living in the first few months, but they all have the potential to grow into full-time businesses.

1. Web Entrepreneur
It’s what everyone who’s ever surfed the Web dreams of — just stick a web site up there and watch the cash roll in! Well, that just doesn’t happen overnight, but the fact of the matter is it’s really not very hard to do. To do it right, start by picking a subject matter you know a lot about. Then get a domain and create a web site. It doesn’t even matter what technology you use — just make sure it looks good and provide plenty of original content. Now find some appropriate affiliate programs—that’s where your revenues are going to come from. Next, learn everything you can about search engine marketing and promote the heck out of your site. Last of all, set aside time every week to put new content on the site, delete dead links, and other maintenance. Now do this three or four times, and you’ve chosen your topics well, you might actually have some decent income from it.

Spend the 3,000 on: 800 or less for a domain and 1,000 for hosting. You can get cheap web design too (kitu 500).

2. Consultant
Getting into consulting is relatively simple. All you have to do is know how to do something better than most people do, and be able to either teach people how to do it or be willing to do it for them. Networking is the key to success in this business, so start by making a list of everyone you know and giving them all a call.

Spend the 3,000 on: 1,000 on a box of clean business cards and 500 buying your first prospect a cup of coffee one morning.

3. Housesitter /Babysitter
Nowadays, people feel an increased need for security, and house-sitting gives them some reassurance while they’re out of town. This one’s great because it basically requires no particular skills, just trustworthiness and reliability. Be sure to have personal references available, and you’ll also need reliable transportation. If you’re a baby lover, babysitting is an easy add-on.

Spend the 3,000 on: 200 on flyers to put up on bulletin boards and to pass around.

4. Professional Organizer
People these days are simply overwhelmed by their “stuff”. While there is an ever-growing trend of people wanting to simplify their lives, most of us haven’t done it yet. It’s not that people really have no clue how to get organized, it just keeps moving to the bottom of the stack, both figuratively and literally. There’s a prime opportunity for people to come in at a reasonable rate and get houses organized. And mostly it takes common sense, organizational skills, and a familiarity with where to get frequently used items cheaply. You can also do this online.

Spend the 3,000 on: Classified ads.

5. Independent Sales Representative
Sales has to be one of the most well paying ‘jobs’ out there. Just find a product you know people will love and sell it on commission. You can try this product, look here, or just ask around – the people you know are very resourceful, trust me.

Spend the 3,000 on: Possible sign up fees, maybe some samples; the rest on advertising.

6. Personal Services – Shopping & Errands
Believe it or not, there are people who are just too busy(or lazy) to do their own shopping. In addition, running petty errands is quite in demand – things like delivering small parcels and paying utility bills. Again, trustworthiness and dependability are the key traits for this. Also, make sure you know your way around the town/city you live in.

Spend the 3,000 on: 200 on flyers and the rest on classified ads.

7. Desktop Publishing
It’s amazing how many people have a computer and still don’t know how to do really simple stuff! If you’ve got a good design sense, are familiar with your word processor, and already have a laser or high-quality inkjet printer, you can get into desktop publishing. You can make fliers and posters for people. Create a really great-looking portfolio for yourself and go door-to-door.

Spend the 3,000 on: Some high-quality paper to create your samples on.

8. Tutoring
There’s an unprecedented need for tutors these days for kids of all ages—even adults! If you’ve got a topic you can tutor in, contact the local schools, particularly private ones, and even try door to door, and offer your services. Don’t be worried if your topic is highly specialized—even those are in demand.

Spend the 3,000 on: 1,000 on a box of clean business cards and 500 on flyers.

9. Online Freelancing
If you have a certain skill or if you can just do something really well, chances are there’s someone out there willing to pay you for it. Finding such people online is easy and all you need is the skills, the right attitude and reliability. Try look here.

Spend the 3,000 on: A nice looking website and reliable web hosting. Try these guys.

10. Secretarial Service – Typing / Transcription / Proofreading
Many small businesses and individuals have a need for these services, but not enough need to hire a full time employee. Assuming you’ve got a computer, a printer, and e-mail (and the necessary skills), you’re all set. Be prepared to charge by the job, not by the hour.

Spend the 3,000 on: 1,000 on a box of clean business cards and 500 on flyers.

–
One last thing — beware of small business scams that promise overnight riches or ‘easy money’. Sure,one can get rich overnight but practically speaking, it just does not happen.

Be prepared to work, and work hard, for your money.

Note: This post was modified into Kenyan terms (as much as I could) from the original writing found here.

Filed Under: Small Business Tagged With: ,

Starting Your Own Business; The Gruesome Details

June 6, 2009 by 2 Comments

Inari Media has an interesting series of posts on how to start your own small business. The series of articles is really very well written and should be helpful to anyone wanting to step out into the world of entrepreneurship.

Here’s how Inari Media describes the series:

As a freelancer, I deal with a number of small companies who have grown from circumstances very similar to my own: rather than submit to life on the corporate treadmill, they have struck out on their own to see if they can make a go of things while still keeping a happy work-life balance and a degree of personal autonomy. We only differ in that they hire me, while I get ansty at the thought of getting help with my accounts (there may be time later in the week for my confession of control-freakery).

Nevertheless, it has to be said that self-employment or running a business is not for everyone. Just as not every infantryman makes a good general, not every worker makes a good boss. While there are a number of brilliant resources out there, I thought that it might be an idea to put a series of posts together that detail the ins and outs of starting your own business, and how to proceed.

Interested? Go check them out:

June 23 2009: Added the rest of Inari’s articles. Stephanie has addressed the topic of starting your own business at length in the above series of articles. She gives a wholesome, well rounded description of what you need to know. I highly recommend you read up on what she wrote.

Filed Under: Small Business Tagged With: