30 Nov 2018

Should Startups Provide Free Services?

Last week I gave a brief account of how we began what is today Prolific Business Consultants. It all began with providing bookkeeping service for free and then we saw business grow out of referrals from those free accounts. Which brings us to an important question for startups: is it okay to offer your services for free?

There are many who will argue that it is not a good practice to offer your service for free. Proponents of this school of thought would not agree with the idea of providing free service in the hope that it would generate more business. 













There are good enough reasons not to offer free services. The first reason lies in the basic understanding of business's primary activity: sales. The most basic definition of a sale is providing a product (or service) that meets existing demand. You have no proven demand until you have enough people willing to pay for your product i.e. to part with money in exchange for the product or service you are offering. If all you have are willing consumers, but who are not ready to pay in exchange for the service or product you offer, you may not yet have found a sustainable business model. 

In short, the business will grow when it finds enough customers willing to pay for the provision of goods/service. If that is the case, it would appear a risky thing to provide free services. 

The second reason is that generally, people are ready to pay for what they attach value to. There are instances where we value something and genuinely cannot afford to buy it. However, we will mostly find ways to afford that which we value: we start saving to buy it at a later date, we sacrifice that which we deem of less value or look for an alternative source of income to finance that which we deem valuable. This means that if people are not willing to pay for a product or service, it may not be of great value to them. What does this mean to the entrepreneur?

It could be that the product or service is not sufficiently meeting a given customer need. As Uri Levine says, fall in love with the problem, not the solution and the rest will follow. As entrepreneurs, the main temptation is to focus on our solution. PM Paul says that the number one reason why startups fail is that there was no market need. Therefore, it could be that the reason customers are not willing to pay for our service is that we have not fully identified with their pain and therefore whatever we deem a solution actually is not so. The challenge then is to see the product through the eyes of the customer. If it solves a problem, who wouldn't pay?

Are we then advocating for startups to provide free services for their businesses to grow? Not necessarily. We are noting that there are good reasons not to offer free services, but also acknowledging that it got us started. The important thing to note is that we didn't merely offer the service for free so that we could get started. We were involved in something that we loved so much we were ready to do it for no pay, and we did it well enough until there were enough people willing to pay for it.

Now, it is not that we have attained all that we should be; neither have we reached perfection. We are not saying that we have it all together or that we have made it. No. We do not consider ourselves to have laid hold of all that we can be; but we reach forward and press toward The Goal. We do not count ourselves experts in all of this, we fasten our hearts to future accomplishments.

24 Nov 2018

Prolific Beginnings

Today I had the very great honor of sharing my thoughts and experiences with the Sinapis Business Aspire class at the Mint Hub as a guest speaker addressing record keeping for small businesses. As an alumnus of the Sinapis program, it was quite nostalgic. This class features aspiring and early stage entrepreneurs and it brought to mind the starting days of what is today Prolific Consultants

How we began
Having gained some experience working at an audit firm and armed with the vision of one day running a consultancy firm, I approached my friends who were also starting out in business and offered to provide book-keeping services for them. The standard answer (probably because they were also starting out in their respective businesses hence bootstrapping) was: 

"I cannot afford the services of a bookkeeper." 

My response at the time was always the same: 

"I did not ask for money. I simply offered, if you are so interested, to be your bookkeeper." 

...and thus the journey began.













Now these initial clients proved to be very useful to our growth. First, they enabled us to build a company profile. We could now say we had done accounts for so and so and this in a way built the much needed credibility in those initial days. Secondly, they provided referrals. As a matter of fact, our first major client happened to have heard of us from two of those clients and couldn't wait to meet these prolific guys. As such, even if they did not initially pay, these first clients became instrumental in directing paying clients our way. 

So, are we in this for the money?
In a recent article, Sunny Bindra poses this question: what kind of business might you run if making money was not its only aim?
We discussed this question at our business and found it is a very balanced question. Sunny does not completely disregard the profit motive. He shifts our thinking to consider money as one among many success metrics that a business would have. Money is important, but we agree with the wisdom posed by Sunny that there is more to the business than just making money. There is deep fulfillment in providing service that offers value to our clients. There is joy in living our passion, serving our gift to humanity and money following as a reward for exemplary service. 

11 Jan 2018

STARTUP: The Good, the Bad, the Ugly (A Movie Review)

Happy New Year!

This year I'll start my writing with a first: a movie review! Yes. Over the holidays, I got an opportunity to watch a series recommended earlier to me: STARTUP! - (starring Kenyan-born Edi Gathegi). 

The show has quite an interesting plot of this startup trying to secure investor funding. It starts as the story of one girl named Izzy; who has this brilliant idea to change the world by launching a digital currency known as GenCoin.  In quite a dramatic turn of events, Izzy is joined in her quest by two very different young men, but who buy into her idea; and the trio set out to build the world's next big thing! 

STARTUP is basically a reflection of our current world - there are those with ideas, and those with the money - and the challenge has been to match the two: on the one hand, those with the money are asking,

"Where do I invest this money for a good return? How am I sure it is a worthwhile venture?..."

On the other hand, there are those with ideas and they are asking,

"Where do I get the money to make this idea a reality? Where do I get the seed money to make this idea grow into a huge tree and even to a forest?"

So this is a very modern series, set in the current 21st century circumstances of matching money with ideas. I should note here the striking coincidence that as I watched this, Strive Masiyiwa had just started on a series of Facebook posts about financing for your business: very good practical stuff.


The Good, 1: Entrepreneurial Character 
Set in our present day, many businessmen will identify with the STARTUP. It is easy to identify with the entrepreneurial character exhibited by the team. The first thing an entrepreneur may encounter when they start out is ridicule from close friends and family, who wonder why the crazy idea to start a business - especially if you are young and just from school. This is not to say that we should not be employed after leaving school: in fact, the work environment may be very important to equip you with the skills and attitudes necessary to run your own business. Nevertheless, that ridicule is expected: whether due to the timing, the perception others have about you or even just how much "out of this world" your idea seems.

STARTUP also shows the many challenges a startup will face. As I have written before, starting a business is not a walk in the park and having started, you will almost certainly lose money.
STARTUP takes us through the important values of resilience, tenacity, creativity, ingenuity, teamwork and I think above all, genuine partnership.

The Good, 2: Business Language
Another very good takeaway from this movie is language. Great minds in the world of business will tell you of the importance of language. You have to learn the language of the world you want to operate in. Robert Kiyosaki for example says that to run a business, you have to learn the language of money. You have to be able to interpret financial statements. In the same way, STARTUP does a very good job in teaching the language of looking for financing: both literally and figuratively.

Startup. Angel Investor. Proof of concept. Hostile takeover.  Valuation. Buyout. Bootstrapping. Problem. Solution. Why You?

All those are words that a startup in the 21st century would want to be familiar with. It is the language of that world.

The Good, 3: Disruption
STARTUP, set as it is in our day, captures very well the times we are living in: times of great disruptions in almost every sector. This is a day of countless innovations. Technological advancements are coming at us at dizzying speeds. Indeed, there is no time for one to ever rest on their laurels. STARTUP exemplifies this very well. Even when their original idea is stolen from them, they go back to the drawing board and come up with another brilliant idea that brings their competitors back to the negotiating table.

STARTUP explores possibilities within new technologies particularly for digital currencies and Darknet markets. 

Speaking of disruption. STARTUP is in itself a product of Crackle. Now, Crackle is a video streaming distributor of movies and TV shows, owned by Sony Entertainment. The Internet brought about significant disruption in the movie industry; from purchases and rentals to online streaming. Sony could not afford to remain in the past, hence Crackle. # DisruptionGalore!


The Bad
Why is it that today's TV is so full of casual sex? I think STARTUP would still have been a very good show without all that "sexing up". I believe it is still possible to do a good show without all the sex. Breaking bad is a good example that comes to mind. Hardly any sex and yet a very compelling show.

The Ugly
Gencoin is stolen! The great idea that the three entrepreneurs sought to place on the world platform is snatched from them.  In scenes characterized of tears, the entrepreneurs' baby is taken from them. In a nutshell, they are conned out of their idea and basically kicked out of the company. In a heart rending discussion with her uncle, Izzy puts it thus:

"The lawyers called it a hostile takeover..."

I think this is a sad affair but it happens the world over. Investors come in and as they bring money, it is in exchange of control. The million dollar question is, how much control to give up, in return for how much funding? Also, what kind of funding - is it debt or equity?

A powerful illustration of this reality is Steve Jobs, kicked out of Apple, the company he had founded. Luckily for him, he was able to come back to Apple and at the helm. Not all edged out entrepreneurs are as lucky as Steve Jobs. This is neither to give investors a bad name, nor to discourage entrepreneurs from seeking investor funding. It is just a word of caution: it is important to find the accurate balance between how much you get in funding (without which the business may not grow); and how much control you cede. This calls for wisdom.