In its fourth week, the Cohort 2 class sessions of the Stanbic IBTC Founder Institute, Lagos, entered its 4th week, on Wednesday, February 26, 2020, at the premises of GoDo Hub, GRA Ikeja, Lagos.
In case you missed the third week, you can find it here.
The focus for the 4th week class was on “Revenue”. As usual, before the class kicked off, some founders, took turns, in a round of one-minute pitch sessions, with the Founder Institute mentors, listening in and giving objective critiques and offering corrections, where necessary.
All these, are in preparation for the bigger pitch session, coming up, later in the program and life after FI.
Speaking at the opening of the class, Atul Kshetry, Managing Director and CEO, Hoesch Pipe Mills, (Nig), Ltd, centered his session, on “Funding for your start-up” and how revenue can be generated around it.
He started, by asking fundamental questions that, need answers from the business founder, “Does my business really matter? Is it selling a N1 worth of an item, to one million customers, or, is it selling a N1 million worth of items, to one customer?”, Atul queried.
“You have to determine, if your business is, value-based, or, volume-based. This is what will make a difference, in how your revenue concept, really works”, Atul, further stressed.
According to Atul, founders must understand, what their business type is and what would keep driving them.
Atul noted five things that, determine the uniqueness of a business and these are: capital intensive, cashflow intensive, credit-based, volume-based and value-based.
He, also, mentioned, the ‘Important Statements’ that founders need to keep up with, at least, every quarter and these are: cash flow statements, fund flow statements, profitability, balance sheet and shareholding pattern.
Sharing his thought on revenue, Jean Marc Ricca, Managing Director, BASF West Africa, gave some valuable insights as follows:
- Don’t be predictable, open new spaces
- You may have the best strategy, but the execution may be, a recipe for disaster
- There are two ways of developing a business: It’s, either, you make it cheaper, or, you make it different.
Speaking on how difficult it can be, to define a price, as a start-up, Jean noted as follows:
- How much are your customers willing to pay?
- Value pricing does not mean trying to sell, at the highest possible price.
- Pricing must be in line, with the perceived value, of the product
- You are not alone. What is next, with your competition?
- Here again, do not second guess your customer.
- Pricing decisions are always, highly, sensitive and require dedicated team approach.
On setting the price for your products, or, service, Jean noted four generic methods. These are Cost-plus pricing, marginal pricing, market-based pricing and value-based pricing.
The third mentor, to share his thoughts on revenue, Ife Olatunji, Co-founder, Metamorph, spoke on, why start-ups fail.
“What you need to master is, the ability to talk about the problem you want to solve, the solution you have and simulating, how the cash flow would look like”, Ife stated.
He, also, noted the following:
- Investors want to buy future cash flow, at a discount
- Being a start-up means that, you are a set of business models.
- Sell the value, not technology. The transaction is, more important than the technology. Am I selling the concept and utility?
- Love the problem you intend to solve, not the solution. Step out, of the innovators’ bias.
The founders, thereafter, asked questions relating to revenue, to which the mentors and the Directors of the Founder Institute, answered satisfactorily, The Stanbic IBTC Founder Institute Cohort 2 classes, continues, next Wednesday, March 4, 2020.
Featured Image: Cross-section of founders
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