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Chew on this before you consider scaling your startup @AremoFisayo

Published

3 years ago

September 22, 2017

If you have been hanging out with entrepreneurs and tech guys (they like to be called Tech-preneurs), you will come across a popular tech-preneur jargon called “scaling”. You see these days everyone wants to “scale”.

So let’s quickly define what “scaling” is

“scaling” is about growing revenue at an exponential rate while only adding resources at an incremental rate. Achieving scale might mean increasing your revenue to $2k, while cost moves from $200 to say $250. Sounds cool right?

Let’s consider this scenario, if it usually would costs you $200 to generate $1k, if you increased that $1k revenue to $2k and your cost moves from $200 to $400, you have not necessarily scaled! This is because you doubled your revenue while doubling your cost as well.

Scaling is not synonymous to growth. You can grow revenue and not achieve scale. You are not scaling if your revenue and cost grows at matching rate. This means that scaling involves careful planning, if you will ever get the chance to brag. “ We have scaled”

We would look at two major ways scaling is achieved;

Product/Service Expansion
Geographic Expansion

Product expansion typically involves layering on additional product lines to further engrain your position within your product value chain and of course capture a wider target audience.

For instance, an online retail business selling mobile phones – say www.mobo.ng can expand its product offering to include PCs and accessories. This product expansion drive will position this mobile phone retailer within the computer electronics value chain while expanding its customer base.

So rather than www.mobo.ng just being known for just mobile phones, the business then has a reputation for offering a wider product range. If www.mobo.ng successfully implement its product expansion plans, the likely outcomes will be an increased revenues and a wider target market.

However, it is important to note this revenue increase would only make business sense in the event that the revenue increase outstrips the cost of providing this additional service (in terms of percentage increase).

Scale can also be achieved via geographic expansion. For instance, our case study online retail business – www.mobo.ng started its operations from Lagos, Nigeria.

As a result of appreciable demand from other parts of the country www.mobo.ng might decide to make its services available in both Port Harcourt, Onitsha, Abuja or even go “international” to place like Ghana and Kenya (Nigerian Techpreneurs have a thing for these places)

Surely this will address demand from these additional locations, but www.mobo.ng must also take cognizance of the cost of providing these services in the new locations, for the geographical expansion to make sense it should be lower than the benefits of such expansion.

In Nigeria, amongst techpreneuers there has been a craze for massive geographic expansions in the name of scaling. I have seen articles on building a Nigerian Startup or a Startup from Nigeria, essentially pressuring founders and entrepreneurs to “scale” to other African countries because Taxify has “scaled”.

Let me clearly mention here, the fact that your business began operations in Ghana and Kenya does not necessarily mean that you have scaled! You might just be digging the grave for your business. Scaling must never be an emotional decision, it must be a business decision.

Operating efficiently in Nigeria alone is tough! Nigeria is large (183 million people strong and counting). I reckon that before you consider a regional expansion, you should have conquered a certain market (especially your local market).

DON’T SCALE WITH YOUR INEFFICIENCIES! You must understand your local market, gain control of all (at least most) of your business dependencies. Understand and address your business problems first before thinking expansion.

In fact, I advise that businesses should start with a single product line to learn about the market, then layer on additional complimentary products before thinking of geographic expansion.

Learn to take your punches on a small scale. Trust me, the market will punch you! It will be a disaster to get punched at the same time in 3 different countries.

Trust me, Nigeria is large, but very diverse. Your strategy in Lagos won’t probably work in Kaduna and you would have to tweak your approach in Abuja.

Ask entrepreneurs, Lagos is fast paced, the traffic is killing. But Abuja is a lot slower and complacent (at least from the Lagosian perspective). If your value proposition is convenience for instance, the way an Abuja resident thinks of convenience is way different from the Lagosian view, hence you must find a way to tweak your product offering or delivery method to suit both markets, let alone Kenyans and Ghanaians.

So, thread with caution. The slow steps of a Tiger should never be interpreted as cowardice! Once you have a full hang of your business and you strike, No one will be able to stop you!

Happy entrepreneuring

Fisayo Durojaye

Coronavirus

Covid-19 Update in Nigeria

On the 25th of May 2020, 229 new confirmed cases and 7 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 8,068.

Published

50 mins ago

May 26, 2020

Samuel Oyekanmi

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to rise as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 8,068 confirmed cases.

On the 25th of May 2020, 229 new confirmed cases and 7 deaths were recorded in Nigeria.

To date, 8068 cases have been confirmed, 2311 cases have been discharged and 233 deaths have been recorded in 34 states and the Federal Capital Territory having carried out 45,683 tests.

Covid-19 Case Updates- May 25th 2020

Total Number of Cases – 8,068
Total Number Discharged – 2,311
Total Deaths – 233
Total Tests Carried out – 45,683

The 229 new cases were reported from 15 states- Lagos (90), Katsina (27), Imo (26), Kano (23), FCT (14), Plateau (12), Ogun (9), Delta (7), Borno (5), Rivers (5), Oyo (4), Gombe (3), Osun (2), Anambra (1), Bayelsa (1).

The latest numbers bring Lagos state total confirmed cases to 3595, followed by Kano (919), Abuja at 519, Katsina (335), Borno (255), Oyo (244), Jigawa (241), Ogun (240), Bauchi (232), Edo (191), Kaduna (189), Gombe (148), Rivers (121), Sokoto (116), Plateau (95).

Kwara State has recorded 79 cases, Zamfara (76), Yobe (47), Delta and Nasarawa (46), Osun (44), Ebonyi and Imo (33), Kebbi (32), Niger (28), Adamawa (27), Akwa Ibom (24), Ondo (23), Ekiti (20), Taraba and Enugu (18), Bayelsa (12), Anambra (10), Abia (7), while Benue state has recorded 5 cases.

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, President Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, and will take effect from Saturday, 2nd May 2020, at 9 am.

Date	Confirmed case	New cases	Total deaths	New deaths	Total recovery	Active cases	Critical cases
May 25, 2020	8068	229	233	7	2311	5524	7
May 24, 2020	7839	313	226	5	2263	5360	7
May 23, 2020	7526	265	221	0	2174	5131	7
May 22, 2020	7261	245	221	10	2007	5033	7
May 21, 2020	7016	339	211	11	1907	4898	7
May 20, 2020	6677	284	200	8	1840	4637	7
May 19, 2020	6401	226	192	1	1734	4475	7
May 18, 2020	6175	216	191	9	1644	4340	7
May 17, 2020	5959	388	182	6	1594	4183	7
May 16, 2020	5621	176	176	5	1472	3973	7
May 15, 2020	5445	288	171	3	1320	3954	4
May 14, 2020	5162	193	168	3	1180	3815	4
May 13, 2020	4971	184	164	6	1070	3737	4
May 12, 2020	4787	146	158	6	959	3670	4
May 11, 2020	4641	242	152	10	902	3589	4
May 10, 2020	4399	248	142	17	778	3479	4
May 9, 2020	4151	239	127	11	745	3278	4
May 8, 2020	3912	386	118	10	679	3115	4
May 7, 2020	3526	381	108	4	601	2818	4
May 6, 2020	3145	195	104	5	534	2507	1
May 5, 2020	2950	148	99	5	481	2370	4
May 4, 2020	2802	245	94	6	417	2291	2
May 3, 2020	2558	170	88	2	400	2070	2
May 2, 2020	2388	220	86	17	351	1952	2
May 1, 2020	2170	238	69	10	351	1751	2
April 30, 2020	1932	204	59	7	317	1556	2
April 29, 2020	1728	196	52	7	307	1369	2
April 28, 2020	1532	195	45	4	255	1232	2
April 27, 2020	1337	64	41	0	255	994	2
April 26, 2020	1273	91	41	5	239	994	2
April 25, 2020	1182	87	36	3	222	925	2
April 24, 2020	1095	114	33	1	208	855	2
April 23, 2020	981	108	32	3	197	753	2
April 22, 2020	873	91	29	3	197	648	2
April 21, 2020	782	117	26	3	197	560	2
April 20, 2020	665	38	23	1	188	466	2
April 19, 2020	627	86	22	2	170	436	2
April 18, 2020	541	48	20	2	166	356	2
April 17, 2020	493	51	18	4	159	317	2
April 16, 2020	442	35	13	1	152	277	2
April 15, 2020	407	34	12	1	128	267	2
April 14, 2020	373	30	11	1	99	263	2
April 13, 2020	343	20	10	0	91	242	2
April 12, 2020	323	5	10	0	85	228	2
April 11, 2020	318	13	10	3	70	238	2
April 10, 2020	305	17	7	0	58	240	2
April 9, 2020	288	14	7	1	51	230	2
April 8, 2020	274	22	6	0	44	226	2
April 7, 2020	254	16	6	1	44	204	2
April 6, 2020	238	6	5	0	35	198	2
April 5, 2020	232	18	5	1	33	194	2
April 4, 2020	214	5	4	0	25	185	0
April 3, 2020	209	25	4	2	25	180	0
April 2, 2020	184	10	2	0	20	162	0
April 1, 2020	174	35	2	0	9	163	0
March 31, 2020	139	8	2	0	9	128	0
March 30, 2020	131	20	2	1	8	121	0
March 29, 2020	111	22	1	0	3	107	0
March 28, 2020	89	19	1	0	3	85	0
March 27, 2020	70	5	1	0	3	66	0
March 26, 2020	65	14	1	0	2	62	0
March 25, 2020	51	7	1	0	2	48	0
March 24, 2020	44	4	1	0	2	41	0
March 23, 2020	40	10	1	1	2	37	0
March 22, 2020	30	8	0	0	2	28	0
March 21, 2020	22	10	0	0	1	21	0
March 20, 2020	12	4	0	0	1	11	0
March 19, 2020	8	0	0	0	1	7	0
March 18, 2020	8	5	0	0	1	7	0
March 17, 2020	3	1	0	0	0	3	0
March 16, 2020	2	0	0	0	0	2	0
March 15, 2020	2	0	0	0	0	2	0
March 14, 2020	2	0	0	0	0	2	0
March 13, 2020	2	0	0	0	0	2	0
March 12, 2020	2	0	0	0	0	2	0
March 11, 2020	2	0	0	0	0	2	0
March 10, 2020	2	0	0	0	0	2	0
March 9, 2020	2	1	0	0	0	2	0
March 8, 2020	1	0	0	0	0	1	0
March 7, 2020	1	0	0	0	0	1	0
March 6, 2020	1	0	0	0	0	1	0
March 5, 2020	1	0	0	0	0	1	0
March 4, 2020	1	0	0	0	0	1	0
March 3, 2020	1	0	0	0	0	1	0
March 2, 2020	1	0	0	0	0	1	0
March 1, 2020	1	0	0	0	0	1	0
February 29, 2020	1	0	0	0	0	1	0
February 28, 2020	1	1	0	0	0	1	0

Business News

U.S.A calls for an independent probe of AfDB president, Akinwumi Adesina

There were allegations of a certain number of appointments and departures deemed questionable and several contracts approved under Adesina’s leadership which were in violation of the bank’s statutory and ethical rules.

Published

16 hours ago

May 25, 2020

Chike Olisah

AfDB partners DFID to unveil $80m infrastructure financing for Africa, ADB launches $3 billion “Fight COVID-19” Social Bond, US calls for an independent probe of AfDB president, Akinwumi Adesina

This appears not to be the best of times for Akinwumi Adesina, the President of Africa Development Bank (AfDB), who is in the process of canvassing votes for a second term. This is because the United States Government is pushing for more investigation into his activities.

The U.S Treasury Secretary, Steven Mnuchin, has called for an independent probe into allegations by a group of whistleblowers against the AfDB President, thereby rejecting plans by the bank’s board to stop the investigation on the issue.

According to a monitored report from Bloomberg, a letter which was dated May 22 and addressed to the Chairperson of the AfDB board of directors, Niale Kaba, stated that the US Treasury Department disagreed with the findings by the bank’s ethics committee that cleared Adesina of any wrongdoing.

According to the US treasury secretary, “We have deep reservations about the integrity of the committee’s process. Instead we urge you to initiate an in-depth investigation of the allegations using the services of an independent outside investigator of high professional standing.”

It can be recalled that a group of anonymous staff had accused Adesina of multiple cases of abuse and breaches of the bank’s code of ethics. The allegations include various cases of alleged breaches of the code of conduct, unethical conduct, private gain, an impediment to efficiency, preferential treatment, and involvement in political activity, all affecting confidence in the integrity of the bank.

Although Adesina insisted on his innocence, having been cleared by the bank’s Ethics Committee of all charges brought against him, the whistleblowers expressed serious doubts about the ability of the African Development Bank to conduct an independent investigation. Therefore, they said they did not have enough confidence in the Ethics committee handling the case dispassionately.

The criticism by the United State Government, who is the biggest non-African shareholder, follows questions about the bank’s internal processes and comments by World Bank President, David Malpass in February that multilateral lenders including the AfDB tend to lend money too quickly, and in the process add to the debt problems in Africa. Adesina had refuted this claim, describing it as not fact based.

Economy & Politics

Nigeria’s GDP grows by 1.87% in Q1 2020, as non-oil sector weakens

Nigeria’s Gross Domestic Product (GDP) grew by 1.87%(year-on-year) in real terms, representing a drop of 0.23% points compared to Q1 2019 and 0.68% points decline compared to Q4 2019

Published

16 hours ago

May 25, 2020

Bamidele Samuel Adesoji

Covid-19, Conditional cash transfer: FG gives reason for disengagement of 2 Payment Service Providers, President Buhari asks the Chief Justice to release prisoners due to coronavirus

Nigeria’s Gross Domestic Product (GDP) grew by 1.87% (year-on-year) in real terms in Q1 2020. This is according to the first quarter (Q1) GDP report, released by the National Bureau of Statistics (NBS) on Monday.

According to numbers contained in the Bureau’s report, the performance recorded in Q1 2020 represents a drop of 0.23% points compared to Q1 2019 (2.10%) and 0.68% points decline compared to Q4 2019 (2.55%), reflecting the earliest effects of disruption caused by Covid-19 pandemic and crash in oil price.

Oil sector

According to the report, Nigeria’s oil sector recorded a real growth rate of 5.06% (year-on-year) in Q1 2020, indicating an increase of 6.51% points relative to the rate recorded in the corresponding quarter of 2019 (-1.46%).

However, when compared to Q4 2019 which recorded a growth rate of 6.36%, oil sector growth decreased by –1.30% points. The contribution of the Oil sector to aggregate GDP stood at 9.50% in Q1 2020, up from figure recorded in the corresponding period of 2019 (9.22%) and the preceding quarter (7.32%), as the share of the non-oil economy declined.

During the first quarter of 2020, an average daily oil production of 2.07 million barrels per day (mbpd) was recorded. The production level was higher than the 1.99mbpd recorded in the same quarter of 2019.

READ ALSO: FG seeks partnership with National Council of Registered Insurance Brokers, here’s why

Non-Oil Sector

The non-oil sector grew by 1.55% in real terms during the reference quarter (Q1 2020), this was slower by -0.93% points compared to the rate recorded during the same quarter of 2019 (2.47%), and –0.72% points slower than the fourth quarter of 2019 (2.26%).

According to the Bureau’s report, growth in non-oil sector was driven mainly by Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction.

In real terms, the Non-Oil sector contributed 90.50% to the nation’s GDP in the first quarter of 2020, less than its share in the first quarter of 2019 which was 90.78% and the fourth quarter of 2019 recorded as 92.68%. Activities that witnessed weaker performance relative to Q1 2019 include Quarrying, Road transport, Accommodation and Food services as well as real estate.

Service, Industry sectors remain resilient as economy posts slowest growth in 6-quarter

Nigeria’s service sector showed strong resilient in the period under review as it contributed 54.39% to the aggregate GDP, up from 53.64% recorded in Q4 2019. Also, the industrial sector recorded a marginal increase in its contribution to GDP at 23.65%, up from 22.25% in Q4 2019. Meanwhile, the contribution from agriculture sector contracted to 21.96% from 25.16% in the previous quarter. Contraction in the agric. Sector maybe largely traceable to the planting season.

A closer look at the GDP report shows that 1.87% growth recorded in Q1 2020 represents the slowest in the last 6 quarters (2018 Q4 – 2020 Q1). In Q4 2018, GDP growth rose to 2.38% as the economy continued its slow recovery from the 2016 recession.

The slow growth momentum had been sustained through the subsequent quarters until the latest contraction which is attributable to disruption caused by the Covid-19 pandemic and oil price.

The Bottom Line

GDP is Nigeria’s biggest economic data and it measures the monetary value of everything produced in the country. It depicts the nation’s total economic activity. A decline in GDP means major economic activities are slow or sluggish, which may be a result of several factors.

It is important to note that while the Nigerian economy contracted slightly in Q1, growth in Q2 is expected to dip largely in Q2 due to lockdown across major economies of the world which disrupted both supply and demand chain.
The Oil sector, Travel and Tourism, Hospitality and Manufacturing are among sectors expected to contract largely in subsequent through 2020
According to IMF, the Nigerian economy is expected to contract by -3.4% in the year, as Covid-19 pandemic and oil price shock exacerbate the vulnerability of Nigeria fiscal and monetary landscape.