We just concluded a 2-day workshop on financial analysis for non financial people and I would like to thank the great people from MARA who attended the workshop (well, it is an in-house workshop anyway). It was also great to have those who are directly involved in the development of entrepreneurs under MARA program. From the workshop we discovered the following interesting findings.
1. Entrepreneurs fail because they ignore and do not really understand their customers. When asked about their customers, most of them would begin to describe the people rather than the needs and care of the customers. They would start by saying that my customers are everywhere and anywhere. To me and to many failed entrepreneurs, that would be wrong. In order to check if you understand the customers, ask yourself this question instead. One “What does your customer need?”, “What does your customer care about?” and “What does your customer willing to pay for”. Get the real answers to these questions first. And when I say real answers, that should come from the mouth of your customers though interviews and surveys; not your pure guesswork.
2. The second common reason is that entrepreneurs do not know how to visualise their business model, the model that brings in money / profit. What is normally the root cause of failures which manifest itself or transforms into other symptoms like not enough cash, or not enough machinery. Using a business model canvas, with 9 building blocks of a business has proven to a a great tool to visualise the business in its entirely and identify any weakness or ‘hole’ / gap.
Building an account is not that difficult, at least for decision making purpose.
3. Passion about business must not be mistaken with obsession with your own products or one particular activity. A true measure of passion for business is in the discipline in building and running the business. Discipline to get up in the morning to run the business as a whole and discipline in manning the cash-flow of the business.
4. Accounting is the language of business and if you need to tell the well-being of your business, you need to have an account. In reverse, if you look at the accounts of a business, it should tell you about the business. But in order to do this, you need to learn the language. Learning accounting is also then like learning languages, it can be boring and only interesting if you need to use it, for example when you need to ask for funds. And just like language , you can survive with just some basic knowledge of the language, meaning you do not have to have an accounting degree or diploma to understand accounting. You just need to learn enough based on your business level and size.
5. Entrepreneurs must view failures or business hiccups as guidance rather than a quick run to the MARA office or bank for a loan and funding. They must assess the cause of the failure deeply, going back to the business model and finding what are the missing gaps or whole. They must identify and patch these holes by making a business ‘pivot’ or adjustments, including maybe changing the product itself. They must patch the hole before pouring more money into the business either from their own pockets or by borrowing. Putting in more money into a business model that still has the holes is like speeding up a leaking boat, it will just make the boat sinks faster.
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