I know this is a cliche, and everyone knows what it means, but most of the time we become too familiar with a saying or a statement, and this over-familiarity causes us to underestimate the actual meaning.
I was talking to someone yesterday, and he mentioned his desire to start the business of his dreams. Apparently, he already had the skill set and was running a small business, but it was not making enough money to make him a full-fledged entrepreneur.
He needed funding and felt that this was the final puzzle. He had everything planned out in his head, and he did not mention any potential challenges. It seemed like he would be very wealthy one to two years after starting this business, which worried me a little.
I asked him who his target audience was, and he was not sure. Then I proceeded to tell him about one of my business plans if I had money. I went ahead and told him who my target audience would be and how I planned to make money.
I told him this so he could refer to my target audience and possibly find his own, but there was no specific target audience. We were still talking when someone called his phone and asked him to do a job for him. When I asked him how much he wanted to charge, he said he was not sure if the person wanted to pay.
It occurred to me that the target audience is people who are unwilling to pay for the work he would do for them. My concern stems from the fact that he did not anticipate this as a potential problem. When your target audience is unwilling to pay at least 90% of what you charge, you will have a problem.
A Target Audience That cannot pay is a big problem
This problem prompted me to ask questions such as: what if he got the money he wanted but the business did not work? What if he got into debt and could not continue, especially after quitting his 9-to-5?
Pessimism Or Realism?
I understand that I sound pessimistic, but pessimism is simply the art of being overly realistic. Miracles do happen in business, but what if they don't, and you are back in debt after making a large investment, and the company fails after a year?
However, he was optimistic about his plans, and as a friend, I had no choice but to wish him luck. In fact, as a friend, I would give him money if I could afford it, but as a potential investor, I doubt I will. Investors are not sentimental people; they are realistic, and they want to make back every penny they invest in any business, including profits.
Friend Or Investor?
As a friend, I am inclined to support him even though I am aware of the risks, but I would not do so as an investor because that is where my line is drawn.
Business problems have ruined friendships.
Many of them
There are people who started out as friends and business partners and ended up destroying their friendship because of the problems and challenges that the business faced, which is why business should not be run on sentiment, but rather on figures, facts, and what is possible and impossible.
Raising Money Is hard
Now let me discuss how difficult it is to raise money. So I asked him how much he had saved up, and he said he did not have anything yet. I then asked him how he intended to raise that money, and he said he did not have any.
He earns an average salary, and in order to realize his dreams, he needs to save his salary for two years or so without spending a dime of it.
This is extremely unrealistic because he must feed, clothe, pay rent, electricity, water, transportation, and other expenses. On a monthly basis, these bills consume approximately 70% of his earnings, with the remainder consumed primarily by unexpected expenses.
What's Harder?
Raising funds for a business is difficult, but putting your plans into action is even more challenging. On the surface, money appears to be the most significant barrier, but this is an illusion.
The most significant barrier is the pressure to succeed.
This is why we have big plans even when we do not have any money, but some of these plans start to seem crazy once we have some. Many businesses fail after two to five years not because they were unable to raise funds in the first place, but because they encountered storms they were unable to weather.
I have experienced a lot of failures, and you will be exhausted after you have had your share. It is true that without money, you can not make more, but you can have all the money in the world and still fail.
Interested in some more of my works
Is it Easy To Make Money?
Nigeria: A Unique Business Market & Industry
Virtual Bank Apps In Nigeria: An Experience Of Gamification
How To Find The Next "BIG" Meme Coin
Personal Finance: Achieving Intentional "Saving" Goals
Playing The Survival Game: Human Nature In Introspection
"Un-PAYING" The Debt You Owe
Interested in some more of my works
Is it Easy To Make Money?
Nigeria: A Unique Business Market & Industry
Virtual Bank Apps In Nigeria: An Experience Of Gamification
How To Find The Next "BIG" Meme Coin
Personal Finance: Achieving Intentional "Saving" Goals
Playing The Survival Game: Human Nature In Introspection
"Un-PAYING" The Debt You Owe
