Finance at your Fingertips by Moses Ayiku, Jr. MBA OP/ED
One of the most exhilarating experiences in life is that of starting a new business. People start new businesses for various reasons. One of them is the freedom it gives. One can set working hours and dictate the pace of activity. You are the boss!
Others start new businesses because they have identified opportunities that they recognize can be tapped for significant financial rewards. Steve Jobs saw opportunities in the personal computing space initially. Later, he identified the opportunity for a phone that would be sophisticated but easy to use. This foray by Jobs into the phone market was nothing short of amazing.
Consider the fact that at the time Jobs entered the phone industry with the first iPhone, there were several major phone producers that were adored by the market. These included Ericsson, Nokia, Blackberry and Motorola amongst others. It did not look like a field full of opportunities for new entrants. However, Steve did his homework well. A detailed analysis of the phone industry revealed to him that consumers would enjoy a fresh phone that had one unique feature. Easy to use.
The rest is history. We can learn from Jobs and his experience. Nothing is impossible. Research and good analysis are the fundamental steps in creating a new product successfully.
Bill Gates saw into the future and was accurate in predicting that the world would move to personal computing. In that analysis, Gates recognized that for a global computer ecosystem to thrive, there would be the need for an operating system that we all could use. Gates was right. Today, 73% of computers worldwide use Windows as their operating system.
Mark Zuckerberg is a rich man because of Facebook. He also identified a future for social media and human interaction. Say what you will about their practices, however, do note that Facebook would be the most populated nation on earth if it was indeed a country. In the first quarter of 2021, it was estimated that about 2.85 billion people used Facebook on a regular basis.
Jeff Bezos had to experiment with his business model for years before he eventually got it right. Today, he stands out as one of the richest men in the world.
From the examples above, we can safely note that success in business can come from having the foresight and developing products or services that people would be willing to pay for. Solving needs or problems of society is one key element of creating a profitable business.
Uber is a rich transportation company that does not own a single vehicle! Airbnb provides accommodation, yet they do not own a single room, let alone a house or building! Door Dash is a profitable business that provides transportation of food to consumers. This company also does not own any vehicles.
In the early stages of the pandemic in 2020, several technology experts predicted that there would be an increase in the use of existing technologies as well as the creation of new technologies. It was the pandemic that put an existing service like Zoom on the map. People could not move much, and we used Zoom as an alternative communication tool. Businesses used Zoom for official meetings and many individuals used Zoom for personal activities such as family meetings and get-togethers. Social media gained increased prominence during the pandemic. No doubt, we will see more products and services with a technology backbone going forward.
What can we learn from the above? First, research and observation are key elements of identifying a solid business model. A business model is simply the way in which your business will generate revenue. Facts and figures can form the basis of making solid predictions about the future. While some businesses became successful without any complex modeling or analysis, most did.
Nike has created to provide quality running gear for athletes and the public at large. By focusing on quality designs and utilizing unique marketing strategies, this company has gained a global following quite unmatched in the sports apparel industry.
We can develop a business focused on unique skills and qualities that we possess. For example, someone who is good at cooking can sell their skills. A computer programmer shared his experience during the pandemic when he kept on getting requests from people to let his mother teach them some traditional Indian dishes. His mother was a very good cook and loved sharing her skills and knowledge.
The programmer set up zoom classes and arranged for participants to pay for the sessions. His mother now cooks and educates people regularly while getting paid! The technology they used was Zoom. No physical interaction was involved.
A unique business that was created during the pandemic was the use of online babysitters. Some parents working from home needed a way to keep their kids occupied so that they could peacefully work. Online babysitters were hired to occupy the kids through conversations and activities. An adult interacting with the child was just what the parent needed to give them the freedom to work knowing that their kids were occupied constructively. Typically, the contract would be for a set period, for example 9 am to 12 noon on specific days.
There are many paths to developing a successful business. We have mentioned some of these today. Good research, sound analysis of relevant facts and figures, creativity, and foresight. These all can be elements of putting together a profitable and successful new business. Focusing on the skills that one possesses is also a very strong part of developing a new business. There are other elements to creating a successful business and we will discuss these in the coming weeks.
Please feel free to share with me your questions and experiences on stocks and investments. I will do my best to respond, and, in some cases, I will write on some of these questions.
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