When Should You Start Spending on Your Business Idea?

Hello and welcome to the show. Today I'm going to give you guys some advice on how to spend your two million naira, which is not to say I know for a fact that you have two million naira. So the reason why I'm making this broadcast episode actually is because I had a mentee, I had someone that I was bound to give some business advice. The person was part of the Faith Foundation. You'd have mentioned on the podcast that Ioffer free mentoring services to Faith Foundation.

They are a, how I put it, like an NGO charity type business that is concerned with entrepreneurial development. So they're based in Lagos, but of course they do a bunch of stuff online and and with the marvels of WhatsApp and Zoom and everything, those of us who are based in Abuja and other parts of the country can also offer our services, mentoring young Nigerian entrepreneurs in whichever part of the country that they are.

There's also another platform that ioffer free services on. I can't remember what that one is called, but that one is much more international based. So I've mentioned in the past that if you are interested in getting free advice, these would be the kind of resources that you guys should be paying attention to. So yes, one of my mentees was a part of the Faith Foundation program and Faith Foundation recently got in partnership with the OCIF.

That's the Orange Corners Innovation Fund or something like that. I can't remember the full name. And I think the OCIF is sort of like a similar organization, kind of like the like the British Council of Denmark or Netherlands or I can't remember which country, forgive me. But if you just go online and type in OCIF Orange corners, if you just hit orange corners, the, the things should come up. Sophia Foundation has been in partnership with the OCIF and they've been running a bunch of programmes, you know, incubator sessions, you know, stuff like that for Nigerian entrepreneurs.

And the fellow that I was mentoring from the 2024 cohort got a 2,000,000 Naira award. And the programme was wrapped up about two weeks ago as at the time of this recording, and there were other prize winners, people winning different amounts, you know, lots of juicy amounts in dollars and dollars and EUR and stuff like that, you know, real juicy money. You know, makes me want to call them up and say, you know what, how about cutting us a cheque as well, You know, instead of, you know, those of us who are offering the mentee mentoring services, you know, might as well cut us a cheque too.

So anyway, that was that. Yeah. So my guy got a 2,000,000 Naira award to other prize winners. And like I said, all these opportunities are available, especially now that money is expensive and it's hard to come by. And this is one of the reasons why I keep telling you guys over here on the show that if you're worried about career development, business development, personal development, all these sorts of things, that LinkedIn is the place to be.

So if you get on LinkedIn, connect with people, shine your eyes, open your eyes, be connecting with people who are involved with business incubators, people who are involved in venture platforms, Angel networks, those sorts of things. So if you shine your eyes and you connect with these people, you know you'll be able to see these opportunities because people say, so these things are here, money's flying around. How come?

I don't know. And this is the answer to your question. You don't know because you're not putting yourself in opportunities where you can get access to these sorts of things. So please, if you're not on LinkedIn and surprisingly, a whole bunch of you are not because at the conference, the, the one that was handled by Coca-Cola, where I spoke about how you can use artificial intelligence to grow your business and to grow your career.

You know, I was surprised by the number of people. I mean people my age and younger. I mean, there are some people, I mean people between the ages of 20 and 40, some people have never even heard of LinkedIn. And I was shocked. I just assume that at the very least everybody knows about LinkedIn, but some people just think it's not worth their time. So yeah. So I'm surprised if half of you listening to the podcast right now, you guys don't even know about LinkedIn.

So one check it LINKED and then in IN next to it as one word. So you should be on this. Don't waste all your time on OK, well, tick tock Instagram. They're not a waste of time. It's all contextual, depends on what it is that you're trying to do. But please, you guys, go get a LinkedIn account, connect with people, shine your eyes, the opportunities out there, take advantage of them because these things are not going to last forever because these things come and go out of fashion.

So I guess for now it's fashionable to throw money into Nigeria, not just Nigeria but Africa, because there's this whole thing that, you know, you're not really going to get outside returns by throwing venture money in the US. So people are looking for other places, India, Africa, where can we throw a couple mil, grow something big and then, you know, cash out. So that's not always going to be the case. So shy eyes, take advantage of these things while they last.

So while it's fashionable now that people are looking towards Nigeria and Africa as a whole, try and take advantage. OK, so my mentee got some in house advice from a marketing person. When I say in house, I mean somebody who's part of the faith foundation framework, but the person is much more from marketing background background. And the person was like, look dude, spend this thing on marketing because we're giving you this money.

What we want to see is we want to see things grow. So take this to M and just blow this thing on marketing. Now the fellow had two businesses as my mentee 1 was a game. I was still in app development and he said the advice that he was giving was to promote it because it has more upside. And the second business was a business cafe around gamers and people in the tech industry. And it has some small traction and, you know, petty cash flow because, you know, in our Cyber Cafe, you know, you people buy airtime, people print, you know,

people buy drinks, somebody who buy meat pie, somebody who buy rice, you know that, you know, so it's not sexy. It's small, small, small, small money. It's not sexy, but not an attraction. So yes, in theory, the game has more upside. In theory, you know, develop this thing, promote it, get millions of people on it, advertising revenue or you know, however it is that people monetise games these days. I am not a gamer. I mean, I play chess online, but then people look at me and say,

look, you're not a gamer as I'm playing chess online. It's not games. But, and I don't know what you guys are talking, I consider myself a gamer by my definition. So, but there are ecosystems out there of people playing games online, Fortnite, metaverse games, all kinds of things. So yes, in theory, there's bigger upside there. So that was the advice that the guy was given, spending all on marketing, especially to market the app.

Now, this was my own advice to the guy. And by extension, this is going to be my own advice to those of you who have happened to come into some good money in 2024 and you're wondering what am I going to do with this money and how am I going to use it to promote my hustle? Now, you might not be in this situation where you have two things to consider. Option AI have this thing that is going. Option BI have this thing that is going, you know, so how am I

going to spend this 2M? What am I going to do with it? So this is for those of you who might be in that sort of situation. By the way, I don't think 2 M is a lot of money. It's not going to buy you much these days because think about it with the fuel situation. I mean, now with the recent increase, every time I go to the filling station now I'm putting close to like 40K in my car and that's not me filling the tank. So run that math, doing it twice a week, multiply the weeks by the month, multiply that by the year.

You see that actually 2M is not going to solve your problem. But The thing is, money is hard to come by these days. So actually, if you take part in one of these things and people drop 2M in your lap, it's it's not bad. It's not bad. At least if you're using that two M to shock your business on one end, that's money that you don't have to remove from your pocket, you know, to start worrying about fuel and Internet and school fees and things like that.

SO2M is not much, but it's it's not bad. It's an OK start. So my advice to Mementi was this, go easy on this whole marketing thing. Relax on the marketing. There's a time and there's a place for marketing. Marketing is the business function that tells the whole world I'm here, this is what I do, this is how my product and service can help you. This is how you can reach me, this is how you can buy. So marketing, everybody must get there.

But there's a time and there's a place because like I mentioned for the app, the game, the app was still pretty much in development stage. That means this thing is not quite finished. Now I looked at the thing and to me it looked OK. But then again I'm a novice. What do I know? This is not my world. And when he did this off launch of the of the thing at was the Lagos Tech Summit something, something you think got some some mixed reviews.

So for ordinary people like me who don't know what's up, they think looked OK. But for the people who know what's up, people who are gaming every single day, they say anything is OK, but it has some comma here, it has some question mark there. So my opinion doesn't matter. It's the opinion of the end user, the target users that matters. So if the people that are going to be using this, your thing, say anything is OK, but there's comma here, there's question mark here, then it means you are not done yet.

And if you are not done yet and you throw money behind marketing something that is not quite finished, you are just wasting your money. You promote this thing, you will boost it. People will try it and they'll say it's OK, but it has comma, it has K leg, it has question mark. Because of the comma, because of the K leg and because of the question mark, they are not going to refer it to anybody else. They're not going to share it.

So you will just be wasting this money because you boost something that is not ready to grow just yet. So marketing is good. Please, those of you who are marketing specialists, can you just stop advising for you who just think marketing is a solution to everything like becoming down first. Sometimes there are substantial problems that we need to fix with the business before we start throwing money behind marketing. And this is the reason why I say we should validate a business first using a sales approach because our sales people, it's not hard to go ahead and be talking to people and blah,

blah, blah, and you know, all of this. So when the sales person goes out and the person keeps hearing the same thing about a question mark, about AK leg, about a comma, about something that is not blending, about something that is not driving, that is valuable Intel because our sales people will get told no all the time. It's not fun. So if we're going out and we're hearing no, no, no, no, no. And these are the reasons why then as a business owner, you don't have valuable feedback about what it is I need to fix first.

So marketing people, you guys should be calming down first. Try and figure out if there are any substantial things that we need to fix before you now start telling everybody marketing, marketing, marketing, and by the way, marketing people, this is something I need to tell you guys, you business owners listening. Marketing people are paid a percentage of the total spend. So if the budget is 2 M, the market person is going to receive a percentage of this 2M.

And to be honest, it just means that, you know, a marketing person just wants to move now, now, now, now, Sorry I'm bad mouthing you guys. Maybe when people are having your association meeting, you know, Nigerian Marketers Association or something, these are some of the ethical issues that you guys need to talk about. So because of that, if the budget is 2 M, people are just thinking or more budget budgets. How much is 10% of 2 M?

That's the one that went into my pocket. So when you're talking to the average marketing person, please bear that in mind. That is how they're compensated or like sales people that are compensated on. We did a previous episode maybe 2 episodes back about how sales people are compensated, you know, base plus performance or 100% Commission or something. So for sales people, the calculation is a whole lot different. It's more about how much did I

bring in, how many people did I bring, you know, all those sorts of things. So that was my advice to him. Relax on marketing 1st what we need to do is we need to establish product market fit. We need to establish validation for the game. The whole thing behind product market fit and validation is this. We're trying to see is there demand for this thing? Do people like this kind of game? Will people play this game or the people that play the game?

How many people will come back or the people that will come back playing the game? How many people will refer to somebody else or to share the links to the other people? And so I tried to get the guy so that we can come up with a plan where apart from that soft launch while reaching out to other people on his mailing list because that's also something the guy did. Well, he had a mailing list, which reminds me, I should set up my own mailing list.

Yeah. So he had a mailing list. So I told him once in a while, let's release, you know, you walk on a patch, release it to another set of people, you know, do small, small testing. I told him 10 is too small. If you can be releasing it, you know, hundred hundred, you know, that would be good because for something like this, you can't just get the opinion of 10 people. And I think that you've gotten good Intel. So yeah, that's what I tried to get him to do.

So you develop it, you release it, small people will play it. People who say are correct, this one is good, this one is good. All the places where people are saying this one, this is good, this one is good, keep it double down when people say this one has command, this one has K leg, this one is rubbish, Delete the command, the K leg and the rubbishes. And this is how we achieve product market fit. This is how we build something that people want and this is how we get validation from the market that all modest thing is good to go.

So it's only when we're done with all of this in our business now, we can now start pouring money behind the marketing because we now know that as we are flooding the market, you know, with our app without whatever, we know that these kinds of people will like it and there's going to be room for growth. So I told the guy marketing yes is good time hasn't reached yet. There's no yet time. Take some money from this two M

and put it behind product development. So right now, if you're currently doing this thing by yourself, I guess now is the time to start looking for other tech Bros and tech sisters out there. Let's see how you can spend more money on product development. Make sure that you finish this thing. You have a final, final finalized fully functioning product. So excuse me, fully functioning product before you now try and throw this thing into the market.

So that was my advice #1 calm down on the marketing, do product development on the app, make sure this thing is solid first before we now start spending money behind it. Then I also advised him that look, this cafe, I know the cafe is not sexy, but to be honest, cafes is showing growth potential. So it's not sexy. But The thing is, there's validation. I assumed that in 2024, cyber cafes would be dead. That is what I assumed because back when I was 18 and we were all discovering the Internet in Lagos and things like that,

there was a need for cyber cafes. If you wanted to browse, you could not browse on your phone back then, you just could not. MTN OK. There was MTN There was a Econet and I can't remember the other companies like you. You just couldn't do it. You had to go to the Cyber Cafe. You take your laptop to the Cyber Cafe, they would unhook the cable from the wall and then they would plug it into your laptop and then that's how you browse and then you pay for time.

So back then we used to pay 100 naira for one hour and then the Internet was slow. Auto focus as in slow as as in to check your e-mail self. You're surprised that you have to buy like 2 hours just to respond to common Yahoo e-mail? Back then there was no Gmail. So. So it was a Yahoo. I think it was Hotmail, Yahoo, Hotmail and I can't remember which one. So you spend like 2 hours just to respond to your e-mail For those people who had emails, I

mean that's another story. I refuse to open an e-mail account. So what was I? So there was a time when you needed a cyber cafe, you wanted to print, go there and print. You want to browse the Internet, go there. But now that we're in the, you know, we're in 2020 something, everybody has Internet on their phone, blah, blah, blah. I just assume that if anybody's going to Business Cafe, it's just to go and print. That's all.

Because that's what I do. Pretty much all my invoices are submitted online, but there are some people who require physical invoices. So I just go there, print the invoice, put it in an envelope and then drop it off at the client's office. So I assume that cyber cafes will be dead. But this guy has an interesting thing going on here. The cafe is built around because this guy's a gamer and he's a tech person. So he knows how them them, how they all behave and how they think.

So he has set it up nicely. It's nice, it's homey. It's, you know, it's for gamers, it's for tech people. It's not the kind of place I will go to. But The thing is, for those kind of people, oh, they go there, they do movie nights, eat popcorn, have business meeting, do this, do this, do that, networking. So The thing is making traction, small, small, small traction. But it is not sexy. Fintech is sexy, app is sexy, website is sexy.

Web 3, anything Web 3 is sexy, you know, so everybody chasing sexy, sexy, sexy. But The thing is, this Cafe, well, it's not at a loss. And the money is, you know, small, small, small. So imagine what you can do if you come up with a marketing plan around this one instead. So that was my advice. Get product market fit validation for the game. The cafe is already showing signs. It's showing small traction. You are not running at a loss.

And you started this in several months ago or more. It's a good place to be in because a lot of people open up the cafe and they start losing money from day one and losing and losing and losing because they can't get people in. Then my advice again was, yeah, two M is small, but say you can spread that money over two years if you can, because money is expensive and money is scarce. So if you get money from these sorts of programs, it doesn't mean you're going to get this money again next year or the year after that.

And if you want to go and get from the bank, or if you want to go and get from a Loan Shack, in fact, from a bank, there's no guarantee you'll write business case tier then from Loan Shack. They'll give you the money. The interest will be crazy and then before you know it, they'll start sending text message to your uncle, to your father, to your pastor, to your girlfriend, to your in laws. As in to everybody to say that Chukudi came and took a loan from us and he owed us and he hasn't paid as in to harass your life.

So money is scarce and money is expensive. So in my own opinion, spread this over as long as possible. If you can do this thing two years, we can see how. One year spend 1M next year spend 1 M. You know will be good because you gain you they'll give you a runway for the cafe. It gives you time for the cash positions on the cafe, the cash, the cash flows on the cafe to stabilize and to go up because it's making money. It's just small, small money.

It's not it's not it's not shawarma money. We're just making like ground nuts money. So give it time to for a cash flows to mature. And the reason why I said spread out over time is because he was talking to some other marketing people, another big marketing firm and they were talking about a three month ad campaign. And what they were promising was brand exposure. You marketing people. Anyway, sometimes I want to break your heads.

You see someone in this sort of situation and your honest advice to him is brand exposure in three months? Really. I'm here to tell you guys very, very. I say unto thee, there is no meaningful brand exposure that you can build in the short term. It is just not possible. It can happen. Meaningful brand exposure is built long term and it's expensive. It takes a long time and takes a lot of money. So the example that I give to my mentee was like this.

I took one step back. Everybody knows Amazon now, Amazon big boy in the retail space, online retail space. So we did some research and it turns out that Amazon to get the kind of brand exposure, if we can call it that, Amazon was the biggest advertiser, I think on Google. I can't remember for over a decade. So this is how long it takes. Amazon don't want to be big boys in the space. They come up with advertising campaign and branding campaigns that lasts over a decade.

They did not do anything in three months and then become Amazon. It's just not done. Then we took another step back. Let's leave Internet, let's go back to TVI say Johnson and Johnson's, you know Johnson and Johnson's. Of course, my guy doesn't know Johnson and Johnson's because he doesn't have kids. I have kids. So anybody who has kids, we know Johnson and Johnson's, you know, diapers, baby wipes, Vaseline, you know, you know, hair cream,

shampoo, all those sorts of things, all the stuff that you need when you have babies. So Johnson and Johnson's, they were able to build theirs because of more than two decades of advertising on TV when TV happened to be the new technology. So I hope you guys are here. What I'm saying. Amazon a decade, Johnson and Johnson's 2 decades. If you go back and do some more research into the radio era, you will find that it's, it's my guess, you'll find that it's also possibly the case.

So these are the kind of investments in time and money that are required for significant and meaningful brand exposure. Marketing people, please stop talking to young entrepreneurs and telling them that in three months you're going to get them to blow or that you'll build brand equity, brand, whatever, whatever, whatever. And please, you guys be shining your eyes. There is no meaningful brand exposure that you are going to build in three months.

And even if you build it in three months, it is doubtful if you have the capacity to be able to execute on that because there are some people who run some campaigns and the thing pops off, it blows. And then lots of inquiries come in left, right and centre. But The thing is you haven't beefed up your manufacturing capacity. So you have 1000 people placing orders, but realistically speaking, you can only serve maybe 100 people a month.

That one is Walhalla because you're just wasting a lot of money. What's the point of having 1000 people knock on your door when you can only serve 100? It's a problem. So where was I? So basically I was saying spread this money out for as long as possible. This whole thing of three month ad campaigns is not going to work. And then my final advice that I gave him was this. If any marketing person or any salesperson or any other business vendor is if they ask you for money, this is how much it's going to cost.

But they did not ask you detailed questions about you, your business, your product, where you're coming from, where you're going to. I told them run because they're after your money and your money only. In fact, if it's for marketing people, I've told you how they are paid. They are paid a percentage on the total sum. So when you give them the two M, the first thing that they will do is to calculate their 10% or 15% or 25% or whatever it is and deduct that thing first.

They'll settle themselves before they now go and spend money someplace else. Please marketers, don't be annoyed, please don't be annoyed. I'm not saying all of you are you know, pieces of I'm not saying that. Like I said, next time you marketers, next time we'll have your meeting. If you guys have Association of Nigerian Marketers, Association of Nigerian Web Expertise, something something, these are some of the ethical issues you guys need to discuss.

So OK, obviously today's a rant or one of those rambling episodes. By summary, these opportunities are out there. There's money that is being put about in entrepreneurial development. If you don't know what's up, please make sure you're flowing in the right circles. Part of that means you should be on LinkedIn incubators be following them, venture platform, be following them, enjoy networks, be following them. In fact, if you see something like let's say you're based in Ibadan and you join LinkedIn and then you see something that says Ibadan Venture Capital Association, if you see that page, follow that page.

UNAS has seen updates on your timeline. Apart from following that page, you will see part of the tabs. There you see people, you see jobs, you see something, something you're looking for a job in the industry, then you're sure fine, click on jobs, whatever is there, apply, but if not, look at the people tab. You'll find people who work in that organization or who work in a similar field. Start following those people one-on-one.

This is how you now start curating your timeline so that when there's anything that is relevant in Ibadan, you know programs in Ibadan, grants coming up in Ibadan or whatever share useful stuff coming up in Ibadan. That's how you start seeing it on your LinkedIn. You open up your phone and you'll just be seeing opportunity after opportunity after opportunity. It takes a while to train the algorithm by the way. So I'm not saying that if you join LinkedIn today and you carry out this advice today,

tomorrow you start seeing opportunities. You know, it takes a while. The algorithm has to has to learn your preferences. Then when you come into this money, be mindful about how you spend it. Money is scarce and money is expensive. Don't just blow it on one campaign. I beg. Then before you throw money behind something, make sure that you validate the thing. Make sure that the market likes it. Make sure that there's demand.

Make sure that people want it. Make sure that people need it. Make sure this is something people want to pay for. They can start throwing money behind it if you have two options. One option is a, you know, has plenty of upside. Plenty of upside is good to pursue those things. By my opinion, plenty of upside is a gamble. It's not a problem. It's just that if you must gamble, be a professional gambler. Professional gamblers only gamble with money that they know they can lose.

Like all these venture capital people and, you know, VC people, Angel, you know those ones, they're professionals. They only drop money that they're willing to lose for us. You hear 2M10M, it sounds big. And yeah, it's a big deal for us, but for them, they're professionals in the space. They have done their math. They're only dropping money that they can afford to lose. If the two M doesn't come back to them and say, oh, well, to write it down as a loss, on to the next one.

Which one is going to hammer which I'll make us blow like the Facebook thing. The people who invested successfully in Facebook definitely lost money on other things. So they're professionals. They know the game. If you must gamble, then just do so with money that you can afford to lose. So if this kind of money, this kind of two M is you know it's nothing for you. You can afford to lose it no problem, then go ahead. But if you have a choice between plenty of upside in your left hand and then small traction in your right hand, my own opinion,

let's just be gassing up the one that has traction and see how we can get it to grow the plenty of upside one. Let's pursue the upside when you know your legs are strong and you know that if you throw money here, you lose it. No, a Hala, you won't cry. So that's it. That's my take for those of you who have happened to come into some good money this year in 2024, and you're wondering how am I going to spend this money between option A and option B?

And by the way, just to dissuade your opinions, 2M sounds big, but it is not a lot of money. Like I've told you guys. Just think about what I said about the fuel. You're buying fuel 3040 K. You buy fuel twice a week, Multiply that by 4, That's what you get in a month. Multiply the monthly thing by 12. That's how much you spend in a year. There are people who are spending just two M on fuel alone in Nigeria. Standard SO2M.

It's not really that big. It's a conversation I have with my boys right now because my sons will hear something. We had like 5 million an hour. Like, whoa, that's a lot of money. And I have to calm them down. And look, 5 M sounds big nominally. If you look at the zeros, the zeros are plenty. But purchasing power, what can the five M buy you? You will see that it is small by the time you do some small math. How much school fees?

How much is fuel? How much is house rent? How much is Internet? How much is a bag of rice? How much is meat? By the time you Add all those things, you will see that that five M this house big and the zeros are plenty, but it's not going to buy you much. So if you don't happen to come across this money, you get 2 M, you get 5 M, you know whatever, Thank God you know it's good. Put it to good use. But don't assume that your container has landed.

Your container hasn't landed just yet. We have high plant inflation in the country. And so that you know that money ain't going to do you much. So don't floss. Don't flex like you have arrived. You haven't arrived yet. Spend it wisely, spend it judiciously. We still have a lot of work to do. We still have to grow the business. The time will come when we can relax and when we can flex and let's see what else. Yeah. If you're going to engage any kind of consultants or specialists or things like that,

just make sure that your, what's the word? Make sure that your motives are aligned and your interests are aligned. And please don't be do business with people who draw up a proposal and they didn't ask you any question. They just say, Oh yes, Oh yes, this is what we can do for app development. This is what we can do for this is what we can do for that. You spend money here, spend money here, spend money here, spend money here.

Then they give you a proposal, but they didn't ask you for your app. Who is the target base for this? Who is the ideal customer profile for that? What projections are you trying to achieve for this? You know, they didn't ask you all these kind of detailed, detailed questions. Then please avoid those people. And yeah, finally, marketers, I beg Novix, I'm not throwing shade at you guys. It's it's normal. Even in the sales community,

there are some of us who are charlatans. So that one is, is normal charlatans, whoever lead the that one is, is standard. But marketers, I beg, don't be annoyed, Novix. I'm not abusing you guys. So that's all for today. If you happen to come across your two M, these are some ideas about how you can make it achieve something for you in 2024. So thanks for your time and attention. I'll catch you guys at the next episode.

Phone number 08064662140. The country code is +234. If you want to connect with me phone call WhatsApp. Just hit me up if you have questions queries, if you want some tricks insights, whatever, just hit me up let's talk then LinkedIn. The name to look for is Tavishima Aide. That's my name. I'm the host of the show. You can confirm the correct spelling of my name from the link where you're listening to this episode. So highlight, copy, paste in LinkedIn.

You'll see my handsome face connect. And well, even if you don't want to connect with me, definitely be taking advantage of LinkedIn. These opportunities are out there. Educate yourself, put yourself in the right space so you know what's up. So that's it. I'll catch you guys at the next episode.