The the question that one who has the intention to start a business has to ask before commencing with the registration of it or working around the idea/ product is, do I wanna be famous or be rich? This is how Abednigo Tau of Tuta-Me see it:
Recently I came across a South African Entrepreneur who was being interviewed about some of the challenges and failures he had experienced in his clothing retail business, the business is mainly from what I can gather a consumer facing business. Right after watching the interview I went onto social media to see his Instagram account, and there it was , his title , •Celebrity Entrepreneur• , this lead me to ask an introspective question to myself , do you want to be famous or do you want to be rich? In my mind celebrity entrepreneur is a paradox , and oxymoron , two contradictory words that should not follow each other. Look-at my English , Mrs Meyer, my English teacher would be proud .
You see as a big movie star, musician , rockstar, you get to have your cake and eat it, you get to be both famous and rich , but in the world of entrepreneurship , very very few entrepreneurs are both rich and famous, and when I mean very few, it’s just Jeff Bezos, Zuckerberg , Elon. There are no Robert Downey jnr in Entrepreneurship, there is only iron and hard steal that you have to chisel through. I think the reason people want to be famous or well known entrepreneurs is because they haven’t understood their business models and what it will take for those models to work.
You see 2 years ago if you had said to me , Abed are you a fan of B-C or B-B models , I would have thought you are talking about… well hmm, all guys know what I was thinking here. You see I was not familiar with this lingo of business to consumer or Business to business models, however I have come to believe this is the epicenter of all business and why businesses fail. Very few people apply their minds to ensuring they not only understand their business model but understand who the customer is for their product and service.
Quick summary, business to consumer models , you sell your product directly to a consumer who uses and enjoys the benefit of your service or product. Business to business models, your customer is typically another business here. Examples here are , when you buy clover milk from Pick and Pay, pick and pay is in the business to consumer market , they are selling a product directly to you , the end consumer of the carton of milk. When clover sells the milk to pick and pay, they are in a Business to business model , their customer is Pick and Pay, even further , a farmer who produces the milk is also in the business to business market, he sells his milk to clover , if you want to take it a little further , the packaging company , the delivery company for the milk , the company that adds preservatives, all these businesses are operating a business to business model with clover or pick n pay being their customers.
The problems with a business to consumer model , in my minds eye are simple , you have to build a brand , which means years of spending advertising budget, people need to know you exist , you need social media campaigns, billboards , google ad words, you need to become famous. you see business to consumer businesses are hard , no one tells you that, they are driven by volumes because mostly you are targeting a larger number of consumers. These markets also very competitive , any product that you can think of that is consumer facing has fierce competition from established monopolies and oligopolies, 98% of the time you cannot compete with their marketing teams, budgets , and balance sheets and their bloody bill boards, imaging launching a retail bank currently with all of Absa’s billboards, I swear next week they doing a color run for South Africa and they painting the sky red, I digress.
What fascinates me the most though is that when people quit their jobs or think of entrepreneurship they want to do a business to consumer model, they want to open a restaurant , a hair and beauty salon , a food product business for consumers, a bar, then next cool Chesa Nyma , these are the businesses that I call famous businesses . I know this because I too was a part of this. (Nothing wrong with these businesses but know the challenges upfront)
You see at the braai , everyone knows the guy who is in a business to consumer business , if I asked everyone who is the owner of Saint , Gemelli , 75% of the people would know the answer , but if I asked you who is the biggest tooth pick provider to all the restaurants in the country you don’t know that man or lady, yet I can tell you right now without even meeting the owner they are richer than any restaurant owner. Who is the biggest supplier in the country of those small sugars and salts you have at all restaurant tables ? I could go one.
You see no one will ever invite the guy who manufactures tooth picks and straws to come give a talk at the next Finance Indaba , they would rather have a business to consumer entrepreneur , why? Because they famous right ? We all know them , they on TV, their brands are in our face , you see while your favorite chef and restaurant struggles to pay the rent and employees , he is still sending the R3000 per month to the tooth pick manufacture, here is the secret , so are all the other 200 restaurants in that area , that your favorite chef and restaurant has to compete with , because he is in a b-C market , and when the restaurant closes down eventually , the tooth pick manufacturer is not worried, soon a new tenant will take up the lease to attempt his business to consumer restaurant business and continue to send him the R3000 that the previously failed restaurant was sending. All the while , you and I haven’t heard of this tooth pick manufacturer.
Don’t get me wrong, business to consumer markets can work , there are many examples of successful restaurants , “Uber of “ businesses , nail and beauty bars etc, but they are hard core , this does not mean that business to business markets are easy , but you generally don’t need a lot of clients in the business to business space, the tooth pick manufacture needs 20 restaurants and he is a R60-80k Business per month, the restaurant needs to seat hundreds of clients per day to get to the R80k, he has to sell his product hundred of times to achieve the result of the business to business model. And he also has to deal with the patrons who buy 1 coffee and sits there for hours for the free WiFi . I have done this plenty times.
Business to business has its own challenges too, the sales cycles are longer , you need to demonstrate problem solving solutions rather than experiences and features such as in the consumer markets , however it’s bigger Cheques and more sustainable earnings because generally its contract driven. You cannot contract your patrons to have dinner at your your restaurant every night, yet the tooth pick and straw manufacturer have retainer agreements with the restaurant.
You see I have boiled it down to this , the human experience wants to be famous , we want to be invited to speak, as a guest speaker , we want to be Zuckerberg , we want to be in the front. The older I get I want nothing to do with this , I have learnt the biggest secret , the most successful business owners are the ones we haven’t heard off mainly because they don’t service a consumer market , you see we all have heard of Roy Croc , and Mac Donald’s , but if I woke you up in the middle of the night and said “who is mac Donald’s biggest lettuce supplier , or tomato supplier “ you wouldn’t know , because they are not famous , they are in a business or business model but you can find them on Malibu beach guaranteed.
This is a long way of saying, understand the challenges of the markets your operate in , are you a consumer facing business or business facing , and do you understand the pros and cons of each? I certainly don’t have a blue print , but I think it’s important to know upfront what you in for
As a true test always ask yourself when you wear your favorite Levi’s jeans tomorrow , I wonder who provides Levi’s with their buttons for their jeans, yip thought so, you don’t know, but that owner is sitting somewhere on an island.
Do you want to be famous or do you want to be rich ? Go and find youth tooth pick solution.