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Monday, August 28, 2017

Why Did Investors Turn Down My Business Plan?

If you are about to submit a business plan and/or about to face investors to defend the ideas and figures stated in it, then you should read patiently to understand why investors will likely turn down your business plan – this is from experience of others who have failed to convince investors.

I would like to make a simple comparison here with a job applicant who submitted his CV to a prospective employer. Your CV is a document which should sell you as a suitable candidate for employment likewise a business plan to an investor. The principle and strategy you put into wooing an employer in a CV works as well when putting your business plan except that in the former you are seeking employment and the latter you are seeking investment funding.

In this context you are working with the simple principle that a document can summarize your offering and woo an employer (in the case of a CV) or an investor (business plan) provided you can sell them the benefits they are looking to get.

But just because a business plan is designed to sell a business opportunity to an investor doesn’t mean we should exaggerate our claims or falsify figures in order to drive home our point. That would prove to be fatal to attracting funding. 

Institutional Investors or very successful angel investors are oftentimes highly experienced when it comes to assessing a business opportunity and its potentials so it is not advisable to try and woo them with lies and exaggeration. Just hit the nail on the head but make sure you cover the very important details.

This however is easier said than done as many entrepreneurs seeking funding from investors have made mistakes which cost them to lose valuable investments into their businesses. We shall get to see some of the key reasons for this.

Why Investors may turn down your Business Funding Request
Besides the fact that your business may not be viable or not profitable enough, if investors are to assess your business by your business plan, these will likely be the reasons along with several others which time will not permit me to mention.

#1 Your Business Plan was poorly written
If you write a poorly written business plan – one that has grammatical errors, poor layout and disjointed ideas – you are shooting yourself in the foot. The investor doesn’t need a naysayer to ruin your business offer for you. You have given him all the ammunition to turn you down without help from those who don’t wish you and your business well. Learn to write your business plan professionally or contact a professional business plan writer to do it for you.

#2 Presenting a Copied Business Plan
Some people are not aware of this but many investors get many calls from all kinds of people pitching different business ideas. They have read dozens of business plans before and may hire people to read and analyse business plans for them if they don’t have enough time to read it. So imagine what it would feel like to an investor when he reads your business plan and it is very similar to what another person tried to pitch him with say 6 months ago? You have displayed dishonesty, unprofessionalism, inexperience and lack of creativity which are reasons your business offer should not be taken seriously.

#3 You didn’t Answer Important Questions
There are subtle questions an investor wants your business plan to answer without ever asking you and it may not be your fault if you fail to answer these questions yourself if you wrote the business plan (you are not a professional). However experienced, professional business plan writers know the most important questions and answer them as best as possible by stating them at the right places within the business plan so that after reading it, the investor is satisfied albeit with additional questions which provide clarifications. In other words your business plan should not leave grey areas but should provided sufficient information pending when your investor invites you to defend or explain things better.

#4 You Failed to Capture The Main Ideas
There are also ideas that need to be captured under the right segments of your business plan. Some ideas will summarize key business processes, strategies, management hiring and selection process etc, whereas others must describe your financial strategies and plans in a way that already sells the full picture of what your business will do after you gain your desired funding.

#5 Your Business Plan Explains Much, But not How to Succeed
Even if you can explain everything you need to do and who will work with you to achieve it, how will you succeed in achieving your corporate goals and objectives? Most business plans are glorified company profiles, concept notes and business proposals wrapped in a single document. Investors want to know what you will do to succeed in your business and if your business plan can’t capture it, you can be sure they would turn you down.

You can get a professionally written business plan in Nigeria. Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com

Sunday, August 20, 2017

Do I Really Need a Written Business Plan to Succeed in My New Business or Not?

You can succeed in business without a business plan initially, Dangote and Doyin group of companies have proven this and likewise you can fail without a business plan like scores of community banks and micro finance banks that packed up shortly after coming into business. It ultimately depends on some factors but the most important of them is – the business knowledge of the arrowhead/decision maker of the business
There is this famous quote from a popular business leader in the USA in which he once said “a business plan is a piece of document which doesn’t replace your own knowledge of how to succeed in business”. The takeaway here is that you can succeed in business without a written business plan. This must tempt you to say a business plan is overrated and you may be right about this but it depends on some factors. The truth is you may or may not require a written business plan to succeed in business. Let us use a few examples to get at this question.

Imagine anyone who is successful in business today, let’s say a supermarket/grocery store business owner (with very little formal education) who started his/her business from scratch and has grown it into a respectable, profitable venture without ever consulting a business plan to guide him/her, you may conclude that you don’t really need a written business plan to succeed. But that is only true in that particular example and similar cases. 

Let us see another example. If you are about to start a Farming business in Nigeria and pondered on whether you need a business plan or not you may say definitely not, after all there are illiterate farmers who are making a lot of money from farming, did they read any business plan to succeed? But one question to counter this, what percentage of illiterate farmers is successful in business? Another question: what percentage of educated farmers are successful business people? You will likely discover that the educated segment tend to do better.

In the highly competitive newspaper business in Nigeria all existing players have business and strategy plans which they regularly refer to. This is because even with your thorough business knowledge the market is changing constantly and a strategic plan on how to succeed in maintaining or expanding your market share can only best be captured in a written document, what are the odds that you will succeed in this niche without a business plan?

Therefore as you can see the question of whether or not you need a business plan to succeed in business does not offer a straight forward answer because there are too many unpredictable situations that will make one answer seem like the wrong one.

When you start a business that you have a lot of knowledge about it terms of what the customers really want and how best to serve them, who to employ, what kind of business model to run etc you don’t really need a written business plan to succeed – if it is a small business and the market is not saturated. But what happens when the business is highly competitive and technical? 

Your business knowledge alone will not fly for your business. There are success factors which you know about (in your head but not in a written document) to guide you in making the right decisions and plan how to position your products/services in the market. But there are external factors which you don’t control that can affect the success of your business. How will you handle these factors? What’s worse is if you are even ignorant of some or all of these factors.

Once again do you really need a business plan?
The answer to this question can best be answered this way - if you are a sound business manager but don’t have enough market and technical knowledge about a particular type of business you want to venture into then you need a written business plan. If you know a business very well but you discover you have a lot of marketing issues to deal with and need to properly define your organizational setup and functions you definitely need a business plan. 

On the other hand if you are an encyclopedia when it comes to your type of business and can write books on it, you not only don’t require a business plan but you can actually become a consultant in that business itself. 

If you require a business plan for your business success and want it professionally written for your unique business opportunity, you can call me on: 0803 206 4106 or email me: Paulonwueme@gmail.com

Sunday, August 13, 2017

Sample Business Plan on How to Setup an Online Fashion Store in Nigeria

An online fashion store in Nigeria is a viable business venture but there are challenges which could potentially stifle its potential to be profitable, sustainable and ensure growth. Nigeria is one of Africa’s fastest growing and largest e-commerce markets and is expected to be worth at least N152 billion ($400 million) in annual sales by 2020. There are at least 150 existing fashion stores with online presence competing for a share of the ever expanding (16.1% annual growth) Nigeria target market. More of this breakdown will be explored in this article. 
An online fashion store is an online shop which stocks and sells a range of fashion items such as; hair products, clothing, bags, shoes, wrist watches, belts, cosmetic products, perfumes and designer fabrics among a host of other products. The online fashion store business hasn’t been around for very long with the major players in the market coming on board in 2011 with dealfish (now Olx.com.ng) setting the pace and the entry of other players such as; kasuwa now jumia.com.ng, konga, kaymu among others coming up at various times between then and 2015.

The Opportunity in Nigeria’ Online Fashion Market
In 2014, the Nigerian online retail market was worth at least N800 million per week in gross sales with fashion items capturing a sizeable 25 to 30% of that amount especially clothing and shoes. By 2016, the market has grown to over N1.5 billion a week with at least 105,000 transactions conducted on the two largest online retail stores namely; Jumia and Konga – despite an economic recession.

By 2020 when more Nigerians would have improved online shopping options with the expected development of online payments, the market would experience weekly sales of over N3 billion going by current market growth rates and expected market impact of technology and increased purchasing power of Nigerian shoppers.

The current demand level for online shopping is driven by several social and economic factors among which are; increasing urbanization, improved payment systems, increased brand awareness, cheaper internet access, stronger customer retention strategies and 12 other factors which will progressively increase annual demand by online shoppers for fashion items.

There are strong indications that less than 12% of Nigeria’s potential online market has been captured as at 2017 and this has implications for new entrants into the market as well as the top two market players – Konga and Jumia who currently control over 85% 
of all localized e-commerce transactions in Nigeria.

Challenges with setting up and running an online Fashion Store in Nigeria
There are at least 22 identified challenges that will adversely or moderately affect the success of running an online fashion store in Nigeria but here are a few to take note of;
  • There is very stiff competition in the market that new entrants must deal with if the hope to reach their target market.
  • Online scams in Nigeria is a major deterrent to online shopping among the potential target market
  • Cybercrimes like hacking, identity theft, phising and many others present serious logistical and financial challenges to online stores
  • How will customers in rural parts of Nigeria be served with their deliveries
  • The high incidences customer complaints which are left unattended to usually create negative backlash for online retail stores
  • Creating a trusted and respected brand is very expensive and many new startups must find less expensive ways of doing this which is painfully slow and inefficient

Financial Summary
The financial projections for this financial analysis is based on 5% sales conversion rate and average of N6,000 per transaction and 8 transactions per day for 300 days in a year, cost of sales 79.2% of gross sales.

Startup Summary
  • Premium e-commerce website: N250,000
  • Inventory: N500,000
  • Advertising Budget (6 months): N300,000
  • Operating costs (6 months): N630,000
  • Contingency: N300,000
  • Rent: N300,000
  • Other expenses: N600,000
  • Total: N2,880,000

Profit and Loss Summary  
  • Gross Sales:                 14,400,000   
  • Cost of Sales:               11,400,000
  • Gross Profit:                  3,000,000   
  • Operating Expenses:       1,260,000
  • Profit before Tax:           1,740,000
  • Taxation:                           522,000
  • Profit after Tax:              1,218,000
  • Return on Investment:       42.3%
  • Breakeven Period:           8th or 9th month
  • Payback period:              24th to 30th month

This is a challenging business to do but there are also plenty of untapped opportunities as the market is not properly served even by the big players. The success or otherwise of this opportunity depends on your ability to meet your sales target which in turn depends on having an effective marketing strategy and a thorough knowledge of market trends and consumer needs. Achieving these requires a detailed marketing plan and the right team to work with to make them happen.

Looking to setup an online fashion store in Nigeria and wish to have a professionally written business plan to help you accomplish setting one up? Give me a call: 0803 206 4106 or email me: paulonwueme@gmail.com

Sunday, August 6, 2017

The Business Opportunity in Nigeria’s Demand for Foreign/Overseas Education

There is a booming market for overseas Education in Nigeria. Nearly 1 million Nigerians study abroad and they spent over 1.5 trillion naira in 2016 on foreign education according to the speaker of the house of reps – Yakubu Dogara. What makes it interesting is that the figure has been increasing yearly since 2010 because of identified gaps in local Tertiary Education plus the fact that securing overseas Education offers better job opportunities both within Nigeria and abroad, increased skillset and access to globally recognized professional networks which could offer opportunities for future financial and technical partnerships.

The demand for foreign education is one of the main reasons the Naira is losing its value against major foreign currencies but sentiments aside, if a business opportunity exists, it remains a business opportunity and is open for savvy individuals to exploit.  

The Market Opportunity for Foreign Education Service in Nigeria
There are many reasons why Nigerians especially the middle class group seek foreign education opportunities. The main reason is that when armed with a foreign degree, the sky is the limit indeed. You can secure foreign employment and be paid in dollars, pounds, Euros which is much better than being paid in naira. Alternatively you can be employed and paid handsomely in naira by a multi-national company based in Nigeria (oil companies, telecoms operator, United Nations, hospitality operator etc) or secure a plum job in one of the top government institutions such as; NNPC, CBN, DMO or Nigerian Customs to name a few. This means a lot of Nigerians associate it with improved future standard of living.

Second reason is Nigerian degrees are not well respected even here in Nigeria not to talk of overseas. Imagine you have a Masters’ degree obtained from a government owned University in Nigeria and you have to compete with a Bachelor’s degree holder from one of the best Universities in the UK for a position, the foreign educated graduate has a huge advantage over you. Nigerian Universities are notorious for; money for grades, sex for grades, exam malpractice, certificate forgeries, industrial strike action, cultism etc which contribute to declining academic standards and many employers both local and foreign are aware of this. So Nigerians who can afford it prefer to offer their children quality education they can defend and use anywhere in the world which sadly most of our local Universities are not currently offering.

Third reason is the possibility of emigrating from Nigeria if things don’t improve career wise. After toiling for years with little to show for it many Nigerians leave for better economic opportunities abroad and the reality is Nigerians living abroad are the third largest contributors to Nigeria’s overall foreign exchange earnings. Meaning that if after returning to Nigeria with your degree obtained abroad, you can relocate if Nigeria becomes too hot for your career to bear.

Where is the Money in this Business Opportunity?
If you wish to exploit this business opportunity you may want to look into the following outlets;
  • Overseas Educational Consulting: provide prospects with information about the best courses, schools, and countries they can pursue their Educational and career dreams. You can also provide them with information about scholarship opportunities, financial aid programs and other sources of funding for their tuition or even countries that offer free tuition opportunities and how to secure admission into such opportunities. You make money here by signing them up for your consultancy services.
  • Exams tutoring: most overseas educational opportunities require candidates to write different exams, which usually have cutoff marks which they must score before their application can even be considered. Getting that minimum score is always a problem and you can charge them money to prepare for these exams
  • Seminars, workshops and Trainings: you can charge a token fee when you organize seminars, workshops and training opportunities for intending students which will open their eyes to different opportunities that will fit into their budgets or even preferences. These seminars can show them various; undergraduate courses, post graduate courses (Ph.D degrees, Masters Degrees, post graduate diplomas), technical education opportunities, professional training courses, employment opportunities, scholarships, free tuition colleges, endowment funds they are eligible for etc  

Top 10 Countries Nigerians migrate to for Foreign Education - based on cumulative national cost of School Fees
The following countries based on the estimated average sums and population of Nigerians studying in these countries;

Top 10 destinations for Nigerians seeking Foreign Education as at January 2016 with estimated amounts spent as school fees in 2015 in each country
  • United Kingdom (nearly 18,000 Nigerians studying in the UK spent over N104 billion on school fees)
  • Ghana (71,000+ Nigerians studying in Ghana spent over N72 billion on school fees)
  • United States (7,300+ Nigerians studying in the USA spent over N39.4 billion on school fees)
  • Malaysia (13,000+ Nigerians studying in Malaysia spent over N19 billion on school fees)
  • Canada (3,500+ Nigerians studying in Canada spent over N13 billion on school fees)
  • South Africa (2,500+ Nigerians studying in South Africa spent over N9 billion on School fees)
  •  Australia (1,400+ Nigerians studying in Australia spent over N7 billion on school fees)
  • Russia (3,300+ Nigerians studying in Russia spent over N6.8 billion on school fees)
  • UAE (1,500+ Nigerians spent over N5.8 billion on school fees in Dubai and other UAE campuses)
  • India  (1,200+ Nigerians studying in India spent over N2.5 billion)

To study abroad in most foreign Universities, the least amount you will likely pay when converted to naira is roughly 1,200,000+ and that is for Ghana whereas in US universities you may pay as much as $15,000 per annum depending on the University and course of study. Also this breakdown does not include other expenses such as consultancy fees, accommodation etc.

There are many agencies already operating in the field which is highly competitive but there are still other opportunities which are emerging such as online degree courses, educational affiliations with very sound but less known Universities, webinars etc. This is a multi-billion dollar opportunity for which nearly 1 million Nigerians stand to benefit.

Looking to exploit this opportunity and need a solid marketing plan or a business plan in Educational consulting? Give me a call: 0803 206 4106 or email me for details: paulonwueme@gmail.com