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Entrepreneurs:Be Brave and let go of that BIG UNPROFITABLE CLIENT!

work-management-907669I have worked with many entrepreneurs for over 10 years now. And I have come to see a trend that many of us seem to believe grows our businesses while in actual fact, it may cause a lot more harm than good to our growing enterprises. I have occasionally fallen prey to this trend myself. That trend is that for some reason, many entrepreneurs   strongly believe that killing yourself to have that big brand company as a client is good for growing a small business.

Naive entrepreneurs believe that having that big brand company, that posts billions in profits yet pays you 120 days later, will add untold value to their growing companies even if the relationship with that big brand company or organisation is loss making. We believe that this abusive relationship we give into will attract all those another big brand clients (possibly future unprofitable clients as well) and make them come to us because we already have that one signature name client on our company profiles under the “Our happy clients” page or tab on our websites. It’s a hard belief to shake off that can cause a vicious cycle in your business and the pain and cost of maintaining such clients as you grow only becomes worse. It takes a long time to learn this hard lesson, that such clients are really not worth the effort we put in to maintain them.

I have also come to believe that there are some senior  executives in big brand companies who know this little fact about entrepreneurs and milk our efforts for as long as they can. They know that you can’t take them to court because you don’t have the money to hire lawyers and yet they have an entire contingent of legal officers hired to deal with the likes of you, should you dare to take them to court. They know they can bully you, they can call the shots, they can milk every drop of energy from you, they can make you bend backwards and make you pull stunts that no big company would dare do for them.They can keep dangling a fictitious carrot that they will give you bigger business in future, or if necessary, they can bring out a big stick with threats of taking away the business from you if you don’t play ball.  They can make you go the extra mile,usuall 1000 miles. And then when you have learnt your lesson and they are done with you, they move to the next naive entrepreneur and begin the cycle again.

The bitter truth is, they create an illusion of success for you. The brand building value they give your company is way less than the headaches they cause you in making you  chase for payments that come very late. They make you incur financing costs from overdrafts, penalties and loans. They have no idea the trouble you go through to manage very many unhappy employees that you have hired to deliver on the project that you are working on to keep that big brand bully client happy, and you are unable to pay them on time because of the late payments you are receiving. And finally, the health challenges related to the constant stress you face because  of solving the above problems drive your productivity downwards.

It is not worth it. It’s even worse when that client posts their profits publicly at the end of the financial  year and you see your unpaid invoices, constituting a tiny proportion of their profits,  contributing to the billions that they brag about,  with that bully executive taking home huge bonuses as you go back to negotiate with your bank manager not to repossess your car or house. You know that you are the reason they post such a hefty profit. You and another 1000 naive entrepreneurs. We need a law to protect SMEs in this country from these big bullies.

You are better off working with that unknown client who values the work that you do, pays you on time and refers you to other similarly small but valuable clients who are willing to grow with you as you work your way up the food chain. When you build a steady stream of small but respectable clients, your business undergoes an organic growth that enables you to make wise decisions at each growth stage, helping you to conserve the little money that you are  making and enabling you to only invest in something that is extremely necessary for your growth.

Entrepreneurs, be brave and cut off that big unprofitable client.

A county governors guide to creating jobs through entrepreneurship

So we now have county governments in Kenya. Most governors  state that youth employment, entrepreneurship and women empowerment are their top priorities.However, it seems that many counties do not have good  ideas on what to do with the groups mentioned above. Some are still struggling to figure out what do to with the county itself, so they do not have  time to think about entrepreneurship. Many have not been entrepreneurs.

I am here to help . Here is what they should task their county ministers who either handle the ministries of  industry, economic planning, youth matters or  the docket that has been tasked to develop a strategy for entrepreneurship. Here are some tips towards developing a county entrepreneurship strategy.

1. Analyse the county

Start by analysing what  assets, economic activities or  high potential sectors exist  that could present an opportunity to develop entrepreneurs . It could be agriculture, light manufacturing, mining or even services like tourism, financial services , hospitality etc. It could also be support services to your main activities which are lacking. for example, construction will always require food services close by . It could be unique products or services that your county can focus on due to its  geography,mining potential or cultural make up. Be sure to analyse the county’s history to pick out what the unique DNA of the county is. You will be surprised how something that has been a big weakness amongst your people could be turned into a globally attractive phenomenon. Oh , and crunch the economic numbers as you analyse your county.

2. Analyse the gaps

Clearly identify the gaps that are present and what the economic potential of closing those gaps could be . Also analyse the gaps present in skills , education or infrastructure for the industries identified . Those gaps in themselves could be opportunities. I hope that someone in Turkana is setting up an oil institute with practical intern-ships.

3. Define your county strategy

Once you are clear on where you are and what you have, you can now project into the future a strategy of how do develop the areas where gaps exist. You can develop a set of programs that address fundamental issues that will build up towards other higher level needs in future. Also be sure to build in some quick wins that will inspire and energize the county towards your plan.

4. Categorize

Make sure you categorise the entrepreneurs. Everyone seems to think that entrepreneurs are a homogeneous group and therefore they come up with a blanket plan towards all of them. I don’t understand this craze that governments have of  funding groups. I am yet to see an example of a great company in the world that was started by a group of 15 people. The norm is that  1 or 2 visionary individuals go ahead to build a team that helps them build a company. Fund individuals , not groups.

5. Develop programs

You can develop programs in line with your strategy like Small Business Development Centers,markets creation programs , capacity building programs, affirmative action procurement programs,subsidies , equity or debt funding, international linkages, investor matching or attraction, venture capital or angel investor programs, the list of potential programs is endless . You could also target partnerships abroad with other counties or regions that could be consumers of your products or services , or those that share similar goals with that of your county and hence they can help you build your entrepreneurs capacity. This is the point at which those  “benchmarking trips” can be converted into value adding trips,where you actually go to sign agreements rather than do a “shopping study tour”.

6. Track results (or  in government language , monitoring and evaluation)

Ensure you have a clear mechanism for tracking the success of your programs . Kindly note that how much money you have lent or given out is not a good measure of success. But focus more on how many jobs you have created, how much growth and wealth has been created as well as the return on the investment that the county has made . You can also start a program in a small way, which allows you to learn and grow it in future , becoming more and more effective with every step you take.

At the county government level, once your strategy is in place, you can focus on removing or lowering barriers  for your entrepreneurs. This is where you can develop policies that can help them address issues like  security,internet connectivity,   infrastructure, energy costs ,capital requirements ,red tape in your county ,market research amongst others that are beyond their individual reach but once done ,will benefit everyone. The list of barriers entrepreneurs encounter in a place like Kenya is long.

You can also set aside funds to set up Research and development  centers and  academic linkages   in institutions of learning. I still cant understand how Kenya has one of the best agricultural universities yet we still practice sub-optimal agriculture. There is a gap between our research, academicians and the market.

A final word to Governors and their teams , dream on behalf of your constituents.Move away from tokenism and focus on value addition and higher level opportunities  . Dont just be comfortable creating micro enterprises, dream of getting companies from your county listed on the NSE or even better NYSE! Dream of them going regional and global! Dream of your people not just setting up kiosks but growing them to be supermarkets and malls. Dream of your farmers selling branded products directly to markets abroad. Dream of setting up industries that are world re-known. Our soapstone carvings should be expensive monuments abroad, our bead work should be a globally competitive industry, our tourism can be more differentiated. And then don’t just dream, but execute.

Are creative artist(e)s Entrepreneurs?

I have had the rare chance in the last few months to be involved in a number of projects involving the creative arts industries. I have repeatedly asked creative artists( I will use this word to generalise all creative entrepreneurs, forgive me in advance) whether they regard themselves as entrepreneurs. The question is usually followed by blank stares and a pause. Eventually, after some thought,  they say an emphatic YES. However, the general conclusion of people who have dealt with creative artists is that they can be some of  the most difficult people to deal with, and the only business language many of them seem to understand is expenditure. Creative entrepreneurs can include Musicians, Painters, Poets, Photographers , actors and others in similar lines. My interaction with creative entrepreneurs has made me conclude that many of them do not see themselves as business people. Even fewer understand the dynamics of running a business. Creative entrepreneurs need to understand one thing. Many times , they themselves are the product or the source of the product that draws people to them. A product requires a business system that can propel it and maximise its value beyond the geographical presence of the person in question. A product requires to be marketed, branded , positioned ,sold,  distributed and the revenue generated needs to be managed in a way that it can be reinvested and accounted for particularly to the taxman. Many creative entrepreneurs ignore the business systems required to maximise the value of their products. This gets many of them into trouble with the taxman and generally causes many of them to squander wealth that could be used for greater things if well managed. What Steps would a creative entrepreneur take to building a great creative business out of their talents? Here is my take :

  1. Build an audience- take every opportunity to showcase your work, even for free at the beginning . You can increase your fees as you build popularity. This also helps you get in touch with your fans and understand what they like about you. It also helps you improve your craft through regular practice. So do the rounds even if audiences are small at the beginning. If they love your work, its a sign that many more might just do the same.
  2. Be obsessed about feedback – be obsessed about what your fans like and dont like about your work. Look for ways to get formal and informal feedback. Find ways of analysing what resonates with your audience the most.Find out which type of people resonate with your work as they form your primary audience that will help you grow and be loyal to you.  Many artists think that by listening to their audiences they lose their creative juices and their art becomes less “pure”. However, I advice many people that there is no harm in beginning where your fans are, and when you have enough influence  over them, you can then take them to where you want them to be. To your vision of the future.
  3. Improve your craft – keep practising, innovating and improving what you do. Experiment every once in a while with something new. After all you are a creative, aren’t you?
  4. Grow your influence – steadily increase the scope of your influence. Begin in your immediate environment and slowly try to engage fans outside of your immediate sphere of influence. You can do this through collaborations, tours, visits and on-line. However, ensure you keep your primary audiences engaged, they are your lifeline.
  5. Manage the growth- work with great people and build a system around the increasing value of your work. Get good managers to work with. Only work with people who know what they are doing and are willing to be held to account for their work. Pay on commissions basis for example, so that the team proves their worth. otherwise you might just be dealing with an expensive entourage which will disappear at the first sign of dwindling fortunes.
  6. Diversify your investments – when you begin to make good money in your primary art, channel it to investments that can either keep the primary work growing(brand extensions) or into other investments that will ensure you have money well into your retirement and even leave something behind for your children. Investment advisors come in handy here, again, only take advice from people who know what they are doing and have a good track record.
  7. Keep doing good – use your influence to keep doing good things and to reinvest in society.

Needless to say, 1 person cannot do all the above. Many creative entrepreneurs always tell me that their industry is different. I always ask them , how? They say that they need to manage their careers at the beginning until someone can manage them. I tell them that every entrepreneur  begins that way. How big is the global market for creative artists? The global art market is estimated to be worth USD 11 Billion, the global music market is estimated to be about USD 16 Billion, the global Movie market is estimated to be USD 10 billion a year. How much does Africa contribute to all these industries? Less than 1 percent across the board Celebrity painters like a Gerhard Richters  painting depicting an Italian city square, which sold in May 2013  for $37.1 million (£23.3m)  the most expensive piece of art ever sold by a living artist. Musicians like Madonna and U 2 can get paid up to USD 125 million a year. Sculptures like Jeff  Koons’s Balloon Dog (Orange) sold at Christie’s Post-War and Contemporary Art Evening Sale in New York for $58.4 million. More about Jeff Koons Here Keanu Reeves made about USD 156 Million from the Matrix Movie Series.  I’m not saying money is everything, but for sure there is money to be made if you are organised. As an african artist, how will you tap into this vast money machine? Can you play your game at that level and compete with the best by being unprofessional? My final advice to local creative entrepreneurs in Africa? Learn about business systems, be a leader, get the best people, invest in your brand and company and watch it grow. And when you make lots of money, get good advisors to help you invest the wealth in order to create more and be stable into your old age. Oh and a word of caution, don’t fall into the stereotype that you need weed and hard drugs to make peoples lives around you hard, and “be in the zone” to create.  We all need inspiration in all our careers whether consultants, accountants or manufacturers. Inspiration comes from many sources, don’t use those that can put your life in physical or legal dangers. We have seen many creatives inspire themselves in those ways mentioned above to their graves. Is it possible to finish strong? A dose of humility can help deal with the pressures of fans idolizing you. Celine Dion seems to be able to hold herself together and succesfully avoid the crazy lifestyle that other musicians seem to think is the norm. So are artists and creative entrepreneurs as special as they think? I think they are. As a friend I met recently put it, they have a spiritual responsibility to inspire the rest of us and help us emotionally connect to progressive or deeper aspects of our lives .Many times its creatives who piece together messaging or inspiration that moves society forward. My response to his statement was that artists should  take their calling all  the more seriously and invest as much as possible to ensure their value , inspiration and impact  is spread out as far as possible and for as long as possible, with them living long enough to see the impact of their work on their grand children.