In Nigeria, Look for the Profitability Path As Quickly As Possible in Your Business

I teach blitzscaling but I caution Nigerian startups NOT to do it mindlessly until we can have a more predictable economic ecosystem. The gestation period to profitability in a typical Nigerian startup is long. That long gestation is also the reason why many startups and small businesses collapse after a few years of founding. Typically, in startups, you raise capital, ramp up market entry, grow fast and then  attain profitability. But in our extremely volatile economy, if the timing is off by months during the ramp up phase, the company can collapse. You just run out of cash.

Yes, your new business problem in Nigeria is not just capital but the long gestation period required for profitability, affected by many factors at scale. Those factors include the fact that every business is a local government since you provide your light (generator), water (borehole), security (guards), etc. It is based on this that I tell founders – Do Not Blitzscale in Nigeria because if one core metric misaligns, you will struggle.

Many Nigerian startups and small businesses will struggle due to the apocalypse of the new Naira policy. That is a huge fudge factor which will affect the supply chain and many components of business.

There is a reason why the legends in markets like Ovia, Elumelu, Dangote, etc look boring on their speed of growth: they do everything to find paths to profitability. Profitability means that your customers are now the investors in the business, and not just the venture capitalists. With a profitable path secured, whatever the economy throws, they can handle.

But if you keep growing and keep growing thinking that one day you will own everything, you may not even live for that fantasy day. This is the state in Africa and we have to pay attention. Indeed, there is no absolute guarantee of that next fund and you have to have an internal gameplay to survive.

Blitzscaling within a stochastic system is an illusion and pure guesswork since the leverages cannot be put in order. Yes, the greatest entrepreneurs in Nigeria stay the course, go slow, and manage the state of our entropy. They look boring but there is a reason for that: you survive if you can find how to make profit rather than trying to go for dominance only to be tripped into oblivion.

Sure, in America, blitzscale because they have truck loads of funds, but in Nigeria/Africa, work towards a path of profitability because investors are not patient there (as in old Konga, Kalahari, Efirtin, Mall4Africa, etc).

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Comment 1: In summary, consider your environment wherever you do business.
In addition to SWOT/SOAR analysis, I do PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis to evaluate the business environment when consulting. This analysis helps businesses to identify factors that could enable or threaten their existence. If you ignore your environment, the quality of your product/service may not be strong enough to save you.

Comment 2: Valid, Sir. In as much as I found Reid’s Blitzscaling material insightful, I hardly encourage many in this clime to read; rather Jim Collins’ series- Good to great, Built to last and co., is a more responsible advice.

Nigeria is not as stable and buoyant to make certain decisions; and even if we were it would be irresponsible to make that a fist choice under peculiar circumstances- even the Big Boys SoftBank Group International are now sober.

If an elevator/rocket launcher shows up fine but have the mind of using the steps. #Grow Gradually.

Comment 2A: Whilst it is true that Reid’s book is somewhat strange and goes against reasoning, I still believe every founders should read it; not to apply the lessons in all situations, but at least be aware of its impracticality in some markets.

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