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How bright is your business idea? By Nilooka
Dissanayake We do not want
Sri Lanka statistics to reflect the global statistics. As it is
we do not have the statistics about business failures to compare.
In a country that does not even have a properly agreed definition
of what a small business is, this should not come to you as a surprise.
Still, if you are dreaming of a business, this global statistic
cannot be ignored. Why do 95 out of 100 businesses fail? A study by
the Central Bank of Sri Lanka shows that in their sample, small
and medium enterprises found marketing and financing to be key problem
areas. One interesting observation the study makes is that the "problems"
are there because probably the entrepreneurs had not considered
the financing of working capital and marketing issues sufficiently
before going into business. Hence, my topic for today: How bright
is your business idea? As a would-be-entrepreneur,
you are entitled to be in love with your business idea. Certainly,
we do not recommend you to fall out of love. But, we want to make
sure you are going to be as passionate about it in six months into
your business or one or two years into business. If at that time
you are going to be more committed, we will be delighted. But, often,
the opposite is the case. So, how do
we measure the brightness of your business idea? As we discussed
early in this series, as a small business, your success is going
to depend a lot on you and often on your family and its commitment.
So, in addition to the idea suiting you and your aspirations, it
must suit your family, their lifestyle and their aspirations. It
must suit your own and collective family purse too. That alone
is not enough. Your idea must satisfy the needs of a group of customers
to a degree that sufficient numbers will give you business and keep
on coming back for your product or service. That is, you must have
an identified market that can give you sufficient volumes of business
to help you survive and then thrive. Does that seem logical? Still that
is not enough. There should be a good fit between you and the business.
That is where we talk about the Five Forces. According to the competitiveness
expert, Michael E Porter, there are five forces that are at play
in respect to any business, large or small. Management
gurus will argue with me about my interpretation of this model.
But, I specialize in using theories, models and management tools
for uses other than for which they were originally invented. So
much so that my MBA theses too was on how to use private sector
management tools in the public sector. I concluded
that they can be used very productively indeed-if sufficiently twisted
, distorted and tied into knots-or should I say in red tape? So folks, the
five forces all businesses and industries (and according to Porter,
countries) face are: customers, suppliers, competition among rivals,
threat of substitutes and something not that obvious - barriers
to entry. Now, Porter has written books about how countries and
industries can get on in the world and be competitive. Let policy
makers read them. There is a
USAID funded competitiveness initiative helping Sri Lankan industries
achieve this objective. They promote a concept called the cluster
concept and work in collaboration with selected industries and the
Ministry of Enterprise Development, Industrial Policy and Investment
Promotion. Let industrialists big and small join them. We, at Athwela
have developed a questionnaire to help entrepreneurs figure out
how bright their business idea is. While the questionnaire touches
on how suitable it is for you as an individual and for your family,
a dozen questions deal with how competitive you can be if you choose
this particular business idea. How much do
you know about the industry? How much do you know of competitors
and about substitutes? How much do you know your suppliers and customers?
Ask yourself. This sort of self-questioning will open your eyes
and help you see how bright an idea you are having. The questionnaire
can help you figure out where there are gaping holes in your knowledge.
It can help you turn your love affair with your business idea into
a long lasting and happy marriage! If you wish
to receive the questionnaire by email, send in your request to ft@sundaytimes.wnl.lk
. If you have specific questions on choosing a business idea, we
look forward to hearing from you. You can reach us on ft@sundaytimes.wnl.lk
or call us on 074-304112. The writer is the Managing Editor of Athwela Vyaparika Sangarawa (Athwela Business Journal), the only Sinhala management monthly targeting the small and medium sized business operators and its English version, Small Business International magazine. Kenyan honey producer wins international prize KENYA - Honey
Care Africa, an IFC-supported small business whose supply chain
has doubled the incomes of some of Kenyas poorest people, has won
a prestigious United Nations sustainable development award. The firm has
received the Equator Prize, a US$30,000 cash award honoring community-based
poverty reduction initiatives in countries on or near the Equator,
home to the worlds greatest concentrations of both biological wealth
and human poverty. "The Equator
Prize is an important recognition of the work that Honey Care has
been doing in partnership with the donor community," said Farouk
Jiwa, General Manager of Honey Care. "Our company has a very
simple vision that I know IFC shares. Its about people, the planet
and profits. We believe that they can all co-exist and not be mutually
exclusive." Honey Care
was launched in 1999 by a group of socially responsible Kenyan businessmen
who were seeking to capitalize on opportunities presented by Kenyas
underdeveloped beekeeping sectorboth as a way to launch a profitable
new consumer product and to raise incomes of the countrys rural
poor. Since then
the firm has introduced Kenyan small-scale farmers to commercial
beekeeping production methods used elsewhere around the world and
successfully built a market for their honey. This has been done
though close collaboration with Africa Now, a British NGO with long
experience of carrying out rural income generation projects in Kenya
linked to the private sector. "Investing
in . . . grassroots partnerships that reach the poorest via commercially
sound, market-based approaches is an important part of our SME strategy,
and Honey Care is a good example of positive change that can stem
from well-designed collaborations between the private sector and
NGOs," said Harold Rosen, director of the World Bank Group
SME Department. "Although small, its impact on the lives of
the poor people who supply it is large, and we are glad to have
supported it at this relatively early stage." Honey Cares business model enables local farmers to become beekeepers via a small-scale financing program whereby their roughly $160 cost of necessary equipment such as hives and protective suits is covered by future sales of honey. Though at times
there is individual ownership of hives, the firm prefers to work
via local community groups that enable farmers to collectively lease
or buy the equipment and receive Honey Cares technical and management
training. Its partner Africa Now is also working to develop this
financing program into a sustainable micro-leasing scheme. When these
relationships are in place, Honey Care then provides a guaranteed
fair and mutually-agreeable price for every kilogram of honey produced.
After its "Money for Honey" system pays rural beekeepers
in cash on the day of collection, the firm processes and sells the
honey in Kenyan supermarkets for approximately $2.75 per jar. These
innovations together have resulted in much larger volumes of higher
quality honey made in Kenya than before, generating revenues for
Honey Care of about $110,000 a year. Through its work there are
now over 2,500 small-scale farmers involved in beekeeping, each
one earning between $200-250 per yeargenerally double their previous
incomes. With the success
of its operations has come a broadening of the companys goals and
together with Africa Now, Honey Care is working toward a private
sector driven expansion of services to new beekeepers, overcoming
trade barriers in the European Union, development of the market
for honey in Kenya, and seeking fair trade accreditation. The Equator
Initiative is awarded by the United Nations Development Program
in partnership with Canada, the World Conservation Union (IUCN),
the Nature Conservancy, and others. The jury awarding the prize
to Honey Care and 26 other recipients included Nobel Peace Prize
laureate Oscar Arias Sanchez of Costa Rica, 2002 World Summit on
Sustainable Development Preparatory Chairman Emil Salim of Indonesia,
and others. As a recipient
of the Equator Prize, Honey Care will be involved in a 2003 campaign
to improve community-to-community learning and the knowledge necessary
for advocacy and policy impact. In this way,lessons drawn from Honey Care will be used to create an enabling environment for the transfer and adaptation of its successful practices on a national and global scale. 2002 safest year for civil aviation On January 3,
2003, the Aviation Safety Network released the 2002 airliner accident
statistics showing that, from a passenger perspective, 2002 was
the safest year for civil aviation since 1946. The number
of fatal passenger flight accidents (20) was never so low. Africa
was considered relatively the most unsafe continent. In the year 2002 a total of 37 fatal multi-engine airliner accidents caused fatal injuries to 1,098 occupants. An estimated 78 people on the ground were killed. Focusing on
just passenger flights, 2002 achieved an all-time low of 20 fatal
accidents. The total number
of 37 fatal accidents, which includes cargo and ferry flights, makes
2002 the sixth safest year since 1946. The average number of fatal
accidents over the 1992-2001 period was 47 accidents per year. The 2002 fatality
rate (percentage of occupants killed in fatal airliner accidents)
of 82 percent was down from last year, but still much higher than
the 1992-2001 average of 73 percent. Trends show
a decrease in the number of fatal accidents for Europe, North, South
and Central America over the past five years. Africa on the other
hand shows a continuous increase from a 10-year average of 5.1 accidents
in 1993 to 7.6 accidents per year in 2002. Last year's
accidents again highlighted the four aviation safety priorities,
identified by the Flight Safety Foundation (FSF): * Controlled
flight into terrain: (CFIT)CFIT occurs when an airworthy aircraft
under the control of the flight crew is flown unintentionally into
terrain (mostly mountains/hills), obstacles or water, usually with
no prior awareness by the crew. Preliminary
investigation results show that CFIT accidents in 2002 were responsible
for almost 30 percent of all fatal accidents. Some 11 accidents
were CFIT-related, totalling 410 fatalities. * Approach
and landing: 2002 did show a rise in the number of approach and
landing accidents. In 2002 they accounted for 54 percent of all
accidents, compared to 38 percent in 2001. * Loss of control:
Approximately ten accidents last year can be attributed to a loss
of control of some kind. On July 28 for instance, an Ilyushin 86
crashed when the horizontal stabilizer spontaneously shifted to
the full down position two seconds after takeoff. * Human factors:
It's too early to tell in what cases aviation personnel were a causal
factor in accidents in 2002. However, the July 1 collision over
Germany seems an interesting case from a human factor point of view.
A Boeing 757 and a Tupolev 154 collided over Germany when the Tupolev-crew
complied with air traffic control instructions to descend instead
of following their Terrain Collision Avoidance System instruction
to climb. Please bear
in mind that human factors do not mean "pilot error";
in human factors it is important to determine which mistakes were
made, why, and under what circumstances. The figures
have been compiled using the airliner accident database of the Aviation
Safety Network, the Internet leader in aviation safety information.
The Aviation Safety Network uses information from authoritative
and official sources like the National Transportation and Safety
Board and International Civil Aviation Organisation. The goal of
the Aviation Safety Network is to provide everyone with a (professional)
interest in aviation with up-to-date, complete and reliable authoritative
information on airliner accidents and safety issues. (Compiled by Capt. Suranjan de Silva, aviation consultant and flight engineer)
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