This archive report was first published on 13 November 2019.
Starting a Business? Get These Queries Right ¶
Wednesday, November 13, 2019, marked a significant day for entrepreneurs and business enthusiasts as David Kabata shared valuable insights on the essential queries to consider before starting a business.
According to Kabata, approximately 60 percent of businesses fail to celebrate their third birthday due to various factors, including finance, access to market, and unfavourable legal frameworks. However, finding solutions to customers' daily problems ranks as the main challenge encountered by many start-ups.
Customers don't just buy products or services; they buy the value they get. Therefore, entrepreneurs must understand how to create, deliver, and capture value to build sustainable businesses and reduce the failure rate.
Value creation can be achieved through various means, such as offering low prices, making products or services convenient, saving customer energy and time, and improving comfortability. To succeed, entrepreneurs must go through four venture creation stages: generating business ideas, identifying customer needs, delivering value, and capturing value.
Business ideas can be generated from various sources, including people problems, government policies, the internet, hobbies, personal experiences, and creativity. Understanding how to generate and identify business opportunities is crucial in business development.
Entrepreneurs must learn to understand people's problems, emotions, and be ready to share and empathise with their experiences and emotions. This means that the idea generated must have the capability to solve customers' problems or create gains not available to them.
For instance, M-Pesa created value by providing a convenient way of transferring money, while Lipa Na M-Pesa relieved the pain from customers of first withdrawing money to pay for goods and services.
Value delivery entails developing systems that will help customers get the product or service developed easily, conveniently, and cheaply. Entrepreneurs may choose to deliver value through physical business premises, apps, websites, or social media platforms.
Finally, entrepreneurs must earn money to keep their businesses afloat. The last stage involves capturing the value created to the customer by developing a revenue stream for the business.
After understanding how to create, deliver, and capture value, entrepreneurs should embark on customer development strategies, which entail moving out of their comfort zone and venturing out to meet customers to gather more information and listen to their feedback.
As customers don't just buy products or services but the value they will gain from them, entrepreneurs should understand how to develop business models that will help them create, deliver, and capture value to build sustainable businesses.
Dr. Kabata is an Entrepreneurship and Innovation lecturer at Kirinyaga University. Email: [insert email].
