Entrepreneurial Mindset: A Critical Success Factor for the 21 st Century Professional

Transcription

1 Entrepreneurial Mindset: A Critical Success Factor for the 21 st Century Professional Speech by Bode AGUSTO to CIBN Graduates Lagos, 26 August 2017

2 INTRODUCTION Why does today s Professional need an entrepreneurial mindset? Population growth is rapid. The rate at which the economy is creating jobs is not keeping pace with population growth. Therefore, today s Professional is less likely to to find employment than 40 years ago.

3 INTRODUCTION 3 This means a lot of you will need to set up businesses of your own. What then does it take to succeed in business? An entrepreneurial mindset.

4 POPULATION 4 POPULATION GROWTH!9.0!!!8.0!!!7.0!!!6.0!! Times&!5.0!!!4.0!!!3.0!!!4.0!!!3.0!!!2.0!!!1.0!!!&!!!! UK! France! Japan! Spain! USA! S!Korea! Canada! Argen?na! China! Morocco! Brazil! India! S!Africa! Singapore! Egypt! Malaysia! Nigeria! Ghana! Kenya! S!Arabia! 1960&2015! 2016&2070! Source: populationpyramid.net

5 POPULATION 5 POPULATION!600!!!549!!!500!! In#millions#!400!!!300!!!200!!!100!!!*!!!!!182!!!52!!!65!!!80!!!45!! 1960! 2015! 2070! UK! Nigeria! Source: populationpyramid.net

6 UNEMPLOYMENT & UNDEREMPLOYMENT 6 UNEMPLOYMENT & UNDEREMPLOYMENT 35%$ 30%$ 25%$ 25%$ 25%$ 27%$ 30%$ 30%$ 20%$ 15%$ 10%$ 5%$ 0%$ $2013$$ $2014$$ $2015$$ $2016$$ $2017f$$ Sources: NBS and our forecast

7 POPULATION 7 Even though the large fast growing population is a problem, it also presents significant opportunities for the entrepreneur who can provide solutions to segments of the population that have the capacity and willingness to pay.

8 WHAT DOES IT TAKE TO BE A SUCCESSFUL ENTREPRENEUR? 8 Innovation Knowledge of how to run a business Capital Viable business model Using technology to scale up

9 INNOVATION 9 The Innovator s DNA By Dyer, Gregersen and Christensen identified the following five skills of disruptive Innovators. Associating/Collaborating Diverse ideas Diverse skills Thinking differently Questioning Why?, Why not?, What if? To find out what is and what might be Observing Customers and potential customers To learn from them

10 INNOVATION 10 Networking Learn something new Gain new perspectives Test ideas With people who are not like you Experimenting New experiences e.g. working in a different industry Take apart products, processes and ideas Test ideas through pilots and prototypes I haven t failed. I ve just found out 10,000 ways that do not work. Thomas Edison

11 BUSINESS MANAGEMENT SKILLS 11 Basic knowledge of macroeconomics Inflation Interest rates Exchange rates Real growth Employment

12 BUSINESS MANAGEMENT SKILLS 12 Knowledge of the industry you are in Size and relative importance of the industry Key players and relative sizes Key success factors Major risk areas Industry financial dynamics Outlook

13 BUSINESS MANAGEMENT SKILLS 13 How to do a quick viability test of your business idea Can I grow sales quickly? Are the profit margins in this industry good? Is it easy for me to collect my sales? Is it easy for me to obtain credit for my suppliers? Is the operating cycle of this business short? How dependent is this business on FX to buy trading assets? How dependent is this business on FX to buy fixed assets?

14 UNDERSTAND BASIC FINANCE 14 There are three principal sources of finance to a business Non-interest bearing debt Owners equity Interest bearing debt Every business manager can decide on his choices of finance. If a business manager decides to borrow, he or she has another choice to make to borrow in local currency or in foreign currency.

15 UNDERSTAND BASIC FINANCE 15 The financing choices that business managers make result in the following finance costs or income Interest expense or income Exchange differences (gains or losses)

16 UNDERSTAND BASIC FINANCE 16 BEWARE More often than not, the group of creditors that foreclose on businesses are the providers of interest bearing debt When you are in a soft currency zone, you must avoid having net financial liabilities in hard currencies.

17 VIABLE BUSINESS MODEL Business focus 2. Value proposition 3. Target customer segments 4. Channels 5. Key partnerships 6. Human resources

18 VIABLE BUSINESS MODEL Other resources 8. Key activities 9. Revenue streams 10.Cost structure 11.Competition 12.Differentiation

19 KEY TAKE AWAYS 19 Products or services must be targeted at those who have capacity and willingness to pay. The long-term rate of inflation of the Naira is the average rate at which it loses purchasing power. Interest rate is the price of money and the rate at which the FGN borrows money is an important benchmark rate. A currency that has a consistently higher rate of inflation (e.g. NGN) compared to the USD is the weaker of the two currencies and will, in the long-term, depreciate by close to the inflation differential.

20 KEY TAKE AWAYS 20 To succeed as an entrepreneur, you should constantly innovate need to have basic business management skills viable business model An otherwise profitable business can be brought down by a poor financing structure, therefore avoid significant net liability positions is currencies stronger than the NGN e.g. USD, GBP, Euros only use interest bearing debt if the project you are investing in will yield a return higher than the cost of debt

21 KEY TAKE AWAYS 21 Innovation distinguishes between a leader and a follower. Steve Jobs

22 22 THANK YOU