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Entrepreneurial Mindset: A Critical Success Factor for the 21st Century Professional

Speech by Bode AGUSTO to CIBN GraduatesLagos, 26 August 2017


INTRODUCTION

§ Why does today’s Professional need an entrepreneurial mindset?§ Population growth is rapid.§ The rate at which the economy is creating

jobs is not keeping pace with population growth.

§ Therefore, today’s Professional is less likely to to find employment than 40 years ago.


INTRODUCTION

§ This means a lot of you will need to set up businesses of your own.

§ What then does it take to succeed in business?§An entrepreneurial mindset.

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POPULATION

!4.0!!

!3.0!!

!&!!!!

!1.0!!

!2.0!!

!3.0!!

!4.0!!

!5.0!!

!6.0!!

!7.0!!

!8.0!!

!9.0!!

UK!

France

!Japan!Spain!

USA!

S!Kore

a!

Canada!

Argen?na!

China!

Morocco!

Brazil!

India!

S!Africa!

Singap

ore!Egy

pt!

Malaysia!

Nigeria!

Ghana!

Kenya!

S!Arab

ia!

Times&

POPULATION GROWTH

1960&2015! 2016&2070!

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Source: populationpyramid.net


POPULATION

!52!! !65!! !80!!!45!!

!182!!

!549!!

!*!!!!

!100!!

!200!!

!300!!

!400!!

!500!!

!600!!

1960! 2015! 2070!

In#million

s#

POPULATION

UK! Nigeria!

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Source: populationpyramid.net


UNEMPLOYMENT & UNDEREMPLOYMENT

25%$ 25%$27%$

30%$ 30%$

0%$

5%$

10%$

15%$

20%$

25%$

30%$

35%$

$2013$$ $2014$$ $2015$$ $2016$$ $2017f$$

UNEMPLOYMENT & UNDEREMPLOYMENT

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Sources: NBS and our forecast


POPULATION

§ Even though the large fast growing population is a problem, it also presents significant opportunities for the entrepreneur who can provide solutions to segments of the population that have the capacity and willingness to pay.

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WHAT DOES IT TAKE TO BE A SUCCESSFUL ENTREPRENEUR?

§ Innovation§ Knowledge of how to run a

business§ Capital§ Viable business model§ Using technology to scale up

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INNOVATION

§ “The Innovator’s DNA” By Dyer, Gregersen and Christensen identified the following five skills of disruptive Innovators.

§ Associating/Collaborating§ Diverse ideas§ Diverse skills§ Thinking differently

§ Questioning§ Why?, Why not?, What if?§ To find out what is and what might be

§ Observing§ Customers and potential customers§ To learn from them

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INNOVATION

§ Networking§ Learn something new§ Gain new perspectives§ Test ideas§ With people who are not like you

§ Experimenting§ New experiences e.g. working in a different industry§ Take apart products, processes and ideas§ Test ideas through pilots and prototypes§ “I haven’t failed. I’ve just found out 10,000 ways that do not

work.” Thomas Edison

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BUSINESS MANAGEMENT SKILLS

§ Basic knowledge of macroeconomics§ Inflation§ Interest rates§ Exchange rates§ Real growth§ Employment

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§ Knowledge of the industry you are in§ Size and relative importance of the industry§ Key players and relative sizes§ Key success factors§ Major risk areas§ Industry financial dynamics§ Outlook

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§ How to do a quick viability test of your business idea§ Can I grow sales quickly?§ Are the profit margins in this industry good?§ Is it easy for me to collect my sales?§ Is it easy for me to obtain credit for my suppliers?§ Is the operating cycle of this business short?§ How dependent is this business on FX to buy trading assets?§ How dependent is this business on FX to buy fixed assets?

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UNDERSTAND BASIC FINANCE

§ There are three principal sources of finance to a business§ Non-interest bearing debt§ Owners’ equity§ Interest bearing debt

§ Every business manager can decide on his choices of finance.

§ If a business manager decides to borrow, he or she has another choice to make – to borrow in local currency or in foreign currency.

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§ The financing choices that business managers make result in the following finance costs or income§ Interest expense or income§ Exchange differences (gains or

losses)

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§ BEWARE§ More often than not, the group of

creditors that foreclose on businesses are the providers of interest bearing debt

§ When you are in a soft currency zone, you must avoid having net financial liabilities in hard currencies.

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VIABLE BUSINESS MODEL

1. Business focus2. Value proposition3. Target customer segments4. Channels5. Key partnerships6. Human resources

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VIABLE BUSINESS MODEL

7. Other resources8. Key activities9. Revenue streams10.Cost structure11.Competition12.Differentiation

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KEY TAKE AWAYS

§ Products or services must be targeted at those who have capacity and willingness to pay.

§ The long-term rate of inflation of the Naira is the average rate at which it loses purchasing power.

§ Interest rate is the price of money and the rate at which the FGN borrows money is an important benchmark rate.

§ A currency that has a consistently higher rate of inflation (e.g. NGN) compared to the USD is the weaker of the two currencies and will, in the long-term, depreciate by close to the inflation differential.

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KEY TAKE AWAYS

§ To succeed as an entrepreneur, you § should constantly innovate§ need to have basic business management skills§ viable business model

§ An otherwise profitable business can be brought down by a poor financing structure, therefore§ avoid significant net liability positions is currencies stronger than the NGN

e.g. USD, GBP, Euros§ only use interest bearing debt if the project you are investing in will yield

a return higher than the cost of debt

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KEY TAKE AWAYS

§ “Innovation distinguishes between a leader and a follower.”§Steve Jobs

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THANK [email protected]

+234 805 500 2200

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