As Lion’s Den Season 2 goes on air at KTN later in the year, there are 72 Kenyan entrepreneurs competing for a very scarce asset in this town, capital.
Over the past decade, economists have been torn on whether to classify Africa’s youth as a ticking time bomb or latent opportunity.
In fact, there is a book published by my colleague faculty at Strathmore Business School, Dr. Monica Kerretts-Makau, the youth unemployment as a ticking bomb. There are 200 million people aged between 15 and 24 (the youth bracket), Africa has the youngest population in the world. The current trend indicates that this figure will double by 2045, according to the 2012 African Economic Outlook report.
The Kenya National Bureau of Statistics does not have statistics on unemployment rates. However, various publications have inferred that unemployment and underemployment in the country stands at between 25 and 40%. According to a trend analysis done by UNDP (Kenya’s Youth Employment Challenge, 2013), the age range of 18 to 25 represents the years that unemployment is highest.
As redundancies and retrenchments become the order of the day, more and more pundits are touting entrepreneurship as the key to enhancing job creation and a sustainable future. But this is not a ‘build it and they will come’ model. From the statistics on small businesses, only 5% make it to their 5th year.
Success rates are significantly predicated upon capital access, product-market fit, and management expertise in key areas. KCB Lions’ Den, Kenya’s biggest business reality television show is coming soon and around 72 entrepreneurs have a chance to either go home with what they have been looking for the most or walk away hopeless to contribute to the many business ideas that haven’t attracted enough capital to see the light of day. The KCB Lions’ Den television show allows entrepreneurs all over Kenya a chance to pitch their business to a panel of five of the country’s most dynamic and adventurous investment leaders. So, what does it take to walk home with that coveted cheque?
I believe that there is no clearly articulated great business idea that doesn’t have money around it. I have done consultancies for organisations that have so much funds streaming to them not mainly because they have great business ideas but whatever the idea, they articulated it clearly, concisely and in a compelling manner. These are the cardinal values of an elevator pitch. These can be delivered through the following seven steps of preparing an elevator pitch.
First, define the problem your business intends to solve. If your business doesn’t solve any clear problem, it doesn’t have a compelling value proposition. Businesses exist to solve human problems and make money.
Second, what is the solution to the problem? It must be an actual problem with an actual solution. You cannot sell a security solution to a property in the moon.
Third, the target market. Don’t generalise, but be as specific as possible. How many people are in each of the segments of interest and how much are they likely to spend on your product.
Fourth, the competition. Once you have decided your target market, you must establish who is trying to reach out to the same. If you don’t think you have competition you aren’t thinking hard enough. Competition can be direct or indirect. For instance, in as much as EABL’s Tusker beer is a direct competitor to Keroche’s Summit Larger, airtime or internet bundle can also be a greater competitor to both since the beer drinker at a bar in Imara Daima can be debating whether to take the next bottle of beer or buy internet data bundle from his M-PESA.
Fifth, your team. You may not be having anyone in your payroll yet but you ought to know the job roles, the strengths, competencies and skills needed. Know that the investors know well that the business doesn’t succeed because of a business plan but because of the team behind it. You must first win at the workplace before you win at the marketplace.
Sixth, you need to get your financial summary. It doesn’t have to be complex but it should be well thought out. The best way investors distinguish good business ideas from bad ones is that bad ideas are revealed by unrealistic expectations, inaccurate calculations or complete lack of business knowledge. It will be hard to convince Bill Gates of how much you want from him and his return on investment without a clear financial summary.
Seventh, Milestones. What goals do you want to achieve and when do you plan to achieve them? If your idea is to start a day care for middle-class Kenyan women, investors would want to know whether you have bought the land or signed the lease and your next steps. In the end, even with the seven steps, how you present it will matter, find the hook for the investors. Grab your investor’s attention with a compelling hook. Make it funny, compelling, shocking — whatever genre, just be sure there are clear tie-in and transitions to what your company’s doing. Ensure you can deliver this in 60 seconds.
Dr. Fred Ogola is the Academic Director MBA programs, Director of the Institute of Strategy and Competitiveness and Senior Lecturer of Strategy and Decision Making at Strathmore Business School. Click here to read Dr. Ogola’s full profile.