To start and sustain a successful technology business in Africa like in any other continent, a techpreneur requires a compelling vision that will drive execution of all the activities required to bring it to life as a successful business venture.
The life of that venture is measured by progress towards the realisation of that vision. It is this journey to the successful delivery of the vision by the techprenuer that the innovation hubs and angel investors seek to join and help along the way with space, time and money for reward from the expected outcomes in the years to come.
Because angel investors, innovation hubs and techpreneurs alike are primarily interested in the commercial potential of the venture, focus must be on how its product/service offer makes money by solving a problem or meeting a need for a specified set of customers and delivery of the technology as a product/service offer that satisfies such customers is achieved.
The POEM Framework ® is a simple model that helps you as a Techpreneur, Innovation Hub Owner or Business Angel meet your needs of structure, understanding and communication as you journey together to commercial success with your venture through each of the stages of the life of your business.
Stage 1. Seed/Incubate Stage
The seed stage of your business life cycle is when your business is just a thought or an idea. This is the very conception or birth of a new business hence incubation. Most seed stage companies will have to overcome the challenge of market acceptance and pursue one niche opportunity. Do not spread money and time resources too thin. At this stage of the business the focus is on matching the business opportunity with your skills, experience and passions. Other focal points include: deciding on a business ownership structure, finding cofounders and professional advisors, while business planning. Early in the business life cycle with no proven market or customers the business will rely on cash from the founders, friends and family. Other potential sources include suppliers, customers and government grants. The goal of this stage is the creation of a Minimum Viable Product (MVP) that can be put to the addressable target Market.
Stage 2. Start-Up Stage
At this stage, the business has been born and now exists legally. Products or services are in production and you have your first customers. If your business is in the start-up life cycle stage, it is likely you have overestimated money needs and the time to market. The main challenge is not to burn through what little cash you have. You need to learn what profitable needs your clients have and do a reality check to see if your business is on the right track. Start-ups require establishing a customer base and market presence along with tracking and conserving cash flow. The founders, friends, family, angel investors, suppliers, customers and grants provide the funding as the business looks for Product-Market Fit (PMF) in an accelerator program with a hub.
Stage 3. Growth Stage
At the growth stage, your business has made it through the toddler stage and is now a child. Revenues and customers are increasing with many new opportunities and issues. Profits are strong, but competition is surfacing. The biggest challenge growth companies face is dealing with the constant range of issues bidding for more time and money. Effective management is required and a possible new business plan. Learn how to train and delegate to conquer this stage of development. Growth life cycle businesses are focused on running the business in a more formal fashion to deal with the increased sales and customers. Better accounting and management systems will have to be set-up. New employees will have to be hired to deal with the influx of business. Banks, profits, grants, partnerships, angels, venture capital, and leasing options become available as the business increasingly acquires repeat customers and breaks even.
Stage 4. Scale Stage
By the time you get to scale, your business has matured into a thriving company with a place in the market and loyal customers. This later stage of the ventures development is characterized by a new period of growth into new markets and distribution channels as the business chooses to gain a larger market share and find new revenue and profit channels. To compete, you will require better business practices along with automation and outsourcing to improve productivity. Moving into new markets requires the planning and research of a seed or start-up stage business. Focus should be on businesses that complement your existing experience and capabilities. Moving into unrelated businesses can be disastrous. Add new products or services to existing markets or expand existing business into new markets and customer types. At this stage, joint ventures, banks, licensing, new investors and partners provide the required funding.
Stage 5. Pre-Exit Stage
This is the big opportunity for your business to cash out on all the effort and years of hard work. Or it can mean shutting down the business. Selling a business requires your realistic valuation. It may have been years of hard work to build the company, but what is its real value in the current market place. If you decide to close your business, the challenge is to deal with the financial and psychological aspects of a business loss. Get a proper valuation on your company. Look at your business operations, management and competitive barriers to make the company worth more to the buyer. Set-up legal buy-sell agreements along with a business transition plan. Find a business valuation partner. Consult with your accountant and financial advisors for the best tax strategy to sell or close-out down business.
The POEM Framework ® presents a model that meets the need for organising the business of any company in a form that can used on a day to day basis easily. Each letter in POEM acronym presents strategic guidance for execution by ensuring critical information is given consideration while leaving its users with freedom to determine level of detail required for each activity or peculiar situation be it operations, marketing, selling, soliciting for funding, recruiting resources or others.
POEM assessments provide techpreneurs, hubs, investors and other stakeholders with a tool that can be used with as much documentation as required to give a holistic snapshot of the venture’s commercial health at any time.
Let me know how you get on!