Solutions for That Impossible SME Service



There is this wrong notion a lot of us entrepreneurs have that any business can be successful if we work hard enough or even harder. But there are many situations where this just does not work out as planned. That is why one of the requirements for building a successful and an enduring business is the passion of the business owner. Times will come that it seems your hard work at marketing, sales, product development and all that are not working. Many times, the entrepreneur wants to throw in the towel because of the seeming failure or delay in reaching anticipated projections or results. Consultants, business coaches, and other service providers often start a business believing that all they need to do is charge a “reasonable” fee and sell “enough” of their time. But unless you do the math to prove or disprove your assumptions, you may be creating a business that can never succeed. Below are two examples of how two service-related businesses were able to turn their impossible business processes to success:


Impossible Business Number 1

Amina is a young graduate of business administration who has this passion for beauty grooming business that also involved being an Image Consultant. She started a beauty salon in a small shop office in her middle-class neighbourhood. When she started her small business, she was selling her services to young professional Nigerian women as an image consultant who wanted an updated or more professional look. She charged N1,000 per hour and thought that was the most anyone would realistically pay to work with her. In most cases, she travelled to a client’s home or went shopping with her client at a little extra cost.


Including travel time and lunch meant that Amina could only make two appointments in one day. The average appointment was two hours long. So the maximum amount Amina could earn in one day turned out to be N4,000. But in order to earn that amount five days per week, Amina would have to schedule ten different clients, all of whose schedules were able to adapt to whatever times she had available.


This was hopelessly unrealistic. Even if Amina had been able to make the scheduling work, when would she have had the time to do the marketing required to land those many clients? It turned out that the maximum Amina could really earn using this model was about N10,000 per week. After paying her direct costs, she could not even cover her monthly living expenses.


Impossible Business Number 2

Another story illustrating the problems associated with an impossible business is that of Uche, an experienced software professional who had paid his dues working for a multinational IT company. Having put in about 7 years on the job, Uche decided to start his own business helping some of the clients of his former employer and mid-sized businesses to build their hardware and software architecture. He typically charged N2,000-N5,000 per hour, and when he landed a contract, it often consisted of 20-100 billable hours.


Because Uche’s earning capacity was so high and he disliked marketing, he spent a lot of money on marketing himself indirectly. He purchased display ads in industry journals and directories, mailed expensive brochures to large lists of prospects, paid to exhibit at trade shows, and hired a telemarketer to prospect for him. Uche also worked on contracts that came through agencies, who often took 20-30% of his earnings as their percentage. Uche was earning as much as N2.1 million per year, but he was losing about N300,000 per year in agency commissions, and spending N600,000 per year on marketing. In return for all his hard work, he was earning considerably less than he had at his last job.


Turning An Impossible Business Into A Possible Case

Many young consultants, coaches, and other professionals almost always overestimate how much they can earn and underestimate the amount of time and money required to successfully market themselves. They also forget that they will have to cover not only their living costs and business expenses, but also pay the relevant taxes, membership fees for belonging to professional groups, buy their own health insurance, provide for their own retirement, and allow for unpaid vacation and sick time.


If Amina or Uche had taken the time to sit down with a calculator before starting out in business or had written a business plan, even if it was a simple plan, they would have quickly discovered that they were on the wrong track. But both of these businesses were able to be rescued.


Amina and Uche sought the help of a management consultant who shared with them what they could do to save their businesses. Amina, for instance, began selling her time by the day instead of by the hour. She offered her clients a full-day package that consisted of a wardrobe review and consultation in the morning and a shopping trip in the afternoon. By charging N10,000 per day and scheduling three clients per week, she could earn more than double than she did previously.


She also began offering a monthly one-day image workshop as a way of bringing in more income while giving prospective clients a chance to experience her work. The workshop became her main source of new clients, and marketing the workshop turned out to be easier than marketing her personal services.


Uche on the other hand learned how to market himself less expensively through networking, speaking, and writing articles. Hmm, am I teaching someone some home truths? Instead of buying spaces at trade shows, he was showcased there as a presenter, and spent time networking with the other attendees. The same publications where he used to run ads now ran his articles. Rather than paying a telemarketer, he started picking up the lunch tab for people he thought could refer him some business. As a result, his expenses for marketing and commissions dropped from N900,000 per year to N300,000. At the same time, his income rose to N3,000,000 per year, because as his visibility and reputation grew, his services were more in demand and he could command higher rates.


If earning a decent living as a small business sometimes seems impossible to you, start asking how it could be possible. What can you change about how you are marketing yourself, how much you are charging, and how you are packaging your services? While it could be that success will come if you just work a little harder, it is more likely that you first need to start working a little differently. Someone said, it is insanity doing the same thing the same way and expecting different results. A little adjustment of the way you are presently handling that business could change your business fortunes.


See you in the next edition when we start an exciting new series. God bless Nigeria.


Bridget Olotu is the CEO/Lead Consultant, DeAim Innovative Resources Ltd. She can be reached on 08033036002 or

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