There is a massive need to mobilise entrepreneurs and while there are many informational programs – there are few programmes that effectively address the most crucial aspects of entrepreneurship. Entrepreneurs need to be taken through a very practical process to start businesses.
Based on the PhD research of Riaan Steenberg, who lectured entrepreneurship at business schools for 10 years and extensively researched the subject, key challenges facing more than 2000 entrepreneurs in South Africa, were identified. Altovation designed solutions and tested solutions for the major constrains that were identified to assist entrepreneurs to get to the next level. The programme developed has been used by more than 1000 entrepreneurs.
The aim of Altovation is to develop 60,000 entrepreneurs across Africa (that is about 1,300 per country) over the next 10 years. The measure of success is a business that can make R 2 million per annum at 10% net profit after tax, that employs about 4 people. Developing such a business is aimed at designing it for success and then to focus hard to move the entrepreneur towards achieving their first sale. This is what we find is often the hardest, but once you get that in place, the rest Altovation can help you with. Altovation have developed a process that assists a business to move from an idea to this first sale in as little as 12 weeks. From there I have identified 30 areas in which businesses need assistance and we will be helping businesses with that, through the consulting services of Altovation.
The second aspect that has been identified as a critical constraint is to answer what businesses entrepreneurs should / can start, and Altovation has created development models that can assist communities to grow, using this approach. I want to create start-up nations in each African country. A little bit crazy, but then why not? Seems that there is some interest in this solution already. It is moving way beyond training to actual implementation of large communities of start-ups.
To support the entrepreneurship side – Altovation also started an Africa products marketplace (www.afrikap.com) and a job site (www.listcert.com and is working with other companies to create a training solution for entrepreneurs that is more focused on additional entrepreneurial skills development. Altovation also represents BizzBean – which is an online business planning solution, to assist entrepreneurs to grow their businesses through sound business models. These tools will assist entrepreneurs to achieve different parts of their plan, while fixing some challenges that we currently face in developing these. These products will assist entrepreneurs to plan their businesses (BizzBean), find people (ListCert), market their products (AfrikaP) and get cool skills based training. Altovation is also working on establishing a funding marketplace for entrepreneurial ideas that are worth growing.
Altovation did a comprehensive study of entrepreneurship development in South Africa through a process of training 1000 entrepreneurs. The following represents the methodology that was refined from this process.
Altovation focuses on businesses with a minimum turnover of R 2 million per annum and targets employment of 4-5 people per business to ensure sustainability. The approach focuses on businesses that have target markets of R 10 million per annum and actively encourages people to look beyond survivalist and “hustling” type business ideas. The approach also encourages extreme focus on an initial target market and discourages what can be considered as portfolio entrepreneurship. The approach is also not aimed at network marketing, passive income, import and landlording as money making methodologies. As such it promotes honest and hardworking business entrepreneurship with the creation of African products for Africans using local resources, labour and development.
To achieve this there are four phases of entrepreneurship that are addressed through the Altovation methodology
- Understanding entrepreneurship as a career choice
- Developing business ideas, but without necessarily settling on a single idea
- Building an entrepreneurial network or team
- Specific soft skills needed that can be classified as social, emotional and that deals with confidence and understanding of the context of business
- Identification of a target market and target market sizing
- Developing of a business concept and
- Primary market research
- Development of a market approach
- Moving from idea to realisation
- Systematic commercialisation of a business through identification and development of an approach in each of the major areas of business that includes accounting, legal, customer acquisition, sector specific approaches, product design, product development, product management, business model, pricing, scalability, finance, HR, leadership
- Development of specific skills that include sales, communications, dealing with adversity, negotiations, project management and strategy.
- Soon after starting up and starting to get traction, a range of issues present themselves that the entrepreneur may not have dealt with sufficiently in their learning/planning and time may be against them.
- The entrepreneur needs high level support.
These four phases are distinct and have different outcomes. Altovation’s experience indicates that there is a massive drop-off between phases and that to optimise the throughput of entrepreneurship programmes involves managing this drop-off carefully. We found that
- Phase 1: 50% of people that say that they are interested in starting a business, and may even have registered a company, is not at the correct life stage to start a business. They have generally not decided on entrepreneurship as a career choice, yet. Education aids them but they are still in inspiration stage. We sift these through an application process and have had great success with identification of serious entrepreneurs, using a self-selecting questionnaire process. The nature of the selection is to identify people at the correct life stage to be an entrepreneur and to assess their state of readiness.
- Phase 2: 95% of people that have indicated that have answered yes to entrepreneurship as a career choice have not developed their business concepts to a point in which they have identified all the necessary elements to complete a valid business model i.e. identified a customer, worked out what will be sold to them, created a plan for selling this to them and translated this plan into a product brochure, financial model and roll-out plan. 34% of participants had some of the requirements. After a one day seminar, all participants could identify and complete all the major requirements of a business model and 20% more completed all requirements. This increased the probability of success of a business concept by more than 66%. Altovation identified all the major elements required to complete this process.
- Phase 3: 75% of people that went through the second phase could create a business plan that had at least the basics. From there our methodology takes them through an intensive learning process with about 40 major areas of learning and practice that teaches a person the micro-skills necessary to start and run a business. These are designed as practical tools that are completed with a facilitator and discussed with teams of people. These tools are based on a combination of training tools developed by leading business schools that include MIT, Stanford, theory from lean start-up, start-up nation and adapted to local experience through training of a thousand participants.
The major areas of development in this phase of the curriculum include:
- Getting started
- Role of different players in a business
- The five people around you
- Innovation driven entrepreneurship
- What does an economy do?
- Understanding growth and minimum acceptable rates of return
- From strategy to execution
- Business concept statement
- Understanding the spirit of entrepreneurship
- Minimum business size
- Market context
- Thinking entrepreneurially
- First market
- Seeing entrepreneurially
- Ownership and leadership
- The end user
- Total addressable market for First Market
- Create the life cycle use case
- Product specifications
- Quantify the value proposition
- How will you get the end product
- List your first 10 customers
- Understand competitors
- Define your core business
- Chart your competition
- How does your customer decide
- How to get a customer
- Business model
- Customer life time value
- Sales process
- Cost of customer acquisition
- Key assumptions
- Testing key assumptions
- Minimum viable product
- Will you buy your own product
- Product Plan
- Designing your team
Through this process, the basics are in place for a person to do a thorough bankable business plan. We then support the participant through business planning tools to define and refine their business model to implementation level.
Phase 4: Soon after starting their business, business owners need support. The group and network that has been developed through the first four phases, and additional support and coaching, creates a support network of likeminded individuals that highlight enhance the probability of success and enables ongoing support.