Hey there! I do hope you are enjoying every bit of your entrepreneurial dreams and journeys. Of course there could be challenges along the way, but what is in you is greater than the challenges you might have. In you is a sleeping giant. Go for it, and you will make it!
It’s another great weekend to share some entrepreneurial resources. Recently I promised to dedicate a blog to the importance of ‘knowledge’ to an entrepreneur, and today I intend to do just that. Today is a day to fulfill one of my promises. It’s oftentimes easy to promise but challenging to keep promises.
In the words of John Dewey; ‘Knowledge is no longer an immobile solid; it has liquefied. It is actively moving in all the currents of society’. Again, John Maurice Clarke said; ‘Knowledge is the only instrument of production that is not subject to diminishing returns.’ What is your opinion about knowledge?
Now, why do you think knowledge is vital for an entrepreneur? What are some of the key reasons for an entrepreneur acquiring and making use of knowledge? Does it make sense at all for an entrepreneur to continue learning? What benefits can a business owner gain through knowledge capital? Let’s see.
- Knowledge enables you to master your enterprise operations. By the way, this word operation is very important, and I know that there are entrepreneurs out there who might not even understand what I’m talking about here. I mentioned a while ago that operation is the core of your enterprise. It is basically the core thing you do that brings income into your enterprise. For example, a retail business can have buying and selling as its operation. A bus company will have keeping buses on the road and in time, as its operation, just like an airline. A manufacturing outfit will have keeping production activity ongoing as its operation. Do you get an idea now? So, just tell me how you are going to be on top of your operations if you have a knowledge void? Tell me how you are going to succeed as a bus company if you have no idea of what it takes to keep a fleet of twenty buses on the road – I mean the drivers, maintenance, time schedules, handing breakdowns, ensuring revenues are fully collected etc? How will you know what works and what does not work? Imagine someone rearing chicken commercially, but without any clue about common chicken diseases and how to avoid or treat them! Candidly, isn’t this a recipe for business disaster?
- Knowledge guides you in managing your business resources. Being an entrepreneur, you have in your hands resources such as money, manpower (human capital), machinery, materials, and even knowledge itself as a resource. Without adequate knowledge, you will grossly mismanage your resources until you simply pack and leave the business, or decide to sell it. If you have machinery, do you know the details about preventive maintenance? Do you know the fundamentals of managing money? What about managing human beings? Does it occur to you that people like to be treated with respect, just like you like respect even if you are their boss? What about the raw materials you handle, do you know the best way to keep them to avoid deterioration? How do you ensure and improve effective and efficient management of the various enterprise resources in your hands, Mr. Entrepreneur?
- Knowledge improves your enterprise positioning and mastery of the market. I stated last time that in the market there is competition and choice. These two C’s are critical for your enterprise success. It is in the market that you will deploy your resources. It is in the market that you will convince people out there that you have some value to offer, for which they should pay, whether it’s a product or a service. You need to position your enterprise well to be able to attract the customer’s choice, and compete favourably. Don’t you agree with me? This is why you need abundant knowledge. Don’t you think so? Don’t blame anybody, including your competitor, for your business failures in the market. OK? You only have got yourself to blame if the market out there rejects your goods and services like a plague!
- Knowledge guarantees your business profitability and hence sustainability. I will state over and over again, that profit is a key motive and driver for most enterprises. You might not agree with me but I think it is. If you don’t we can argue another day but for now let me proceed with my point. So, profit is factor of revenue and costs. Revenue is a factor of volume and price. Some costs (called direct costs) are also a factor of volume and price/cost per unit. Some costs (called overheads) are fixed in nature and are not directly related to volumes. I also guess that you are aware of the fact that you can only remain in business for long if you operate profitably. If you don’t know this fundamental fact, then you candidly need prayers. Do you know the numbers that can ensure you operate profitably? What are your annual costs? What output and revenue levels give you profits? At what level do you break-even, hence at what level of output do you start making profits? What portion of your profit, if any, should you reserve to ensure business growth and expansion? Or are you the type of entrepreneur who eats every gain you make in a period? I leave the rest to you Mr. Entrepreneur.
- Knowledge ensures you properly manage your enterprise growth and expansion. Have you not seen some enterprises that take steps to rapidly expand and then make U-turns in a quick and disorganized way? Sometimes it’s dramatic and catastrophic. Now, there are many considerations and dynamics of enterprise growth and expansion, and if you proceed into this zone without proper consideration, planning and execution, you will burn your fingers and make a hasty return like the scenario I’m talking about here. Do you know the human capital needs for your expansion plans? How about the working capital and other long-term investment needs for your growth and expansion? Are the markets you are going into profitable? Is there economic sense in your expansion, or you simply want to impress people or satisfy your friends who complain casually about your absence in some locations? Be smart Mr. Entrepreneur!
- Knowledge keeps you on top of stakeholder’s relationships. Before I proceed, let me mention here that you personally are also a stakeholder to your business. Yes I mean it. I have come across entrepreneurs who cannot distinguish between personal financial activities and business financial activities. Everything is simply upside-down and down-upside. Do you get what I mean? Now, your stakeholders including shareholders if any, creditors and financiers, the tax guys, the government and its regulatory agencies, society, your staffs etc, are vital stakeholders that need proper management. You need the knowledge to do this, if you must be successful in your enterprise. A staff strike could cripple your business in a short time. A clampdown on your bank accounts by the tax collector could jeopardise your operations. Action by an environmentalist could cause the government to shut you down. Action by a consumer who lands on a contaminated packet of your food product you want everybody to taste could give you a headache. Don’t say nobody warned you Mr. Entrepreneur! OK?
- Knowledge helps you weather the storms of business. Again, you might be dreaming that your enterprise will never have any storms whatsoever. I can hear you speak all kinds of words against business storms. I’m just telling you to be a little bit cautious because no one knows tomorrow. Life and all its acquaintances have their ups and downs. Business is not excluded. However, with knowledge, you are not going to quit and run when sales become so low that you can remember every item sold and the buyer by name – because the numbers are so mean. It could get so bad you know. When the bankers tell you your enterprise does not deserve funding, yet creditors are on your neck, you need knowledge to know how to manage the situation Mr. Entrepreneur.
- Knowledge enables you to build your business to last. Candidly, I think you add much value to society and humanity if you build a business that continues in existence even after you are no more, but if you want to go with everything you have, that’s up to you. Isn’t it? Even building an enterprise that spans decades is not easy. People who just jump into business without knowledge also jump out anyhow and let the enterprise crash land. Interact with as many entrepreneurs as you can. Learn what works and what ensures an enterprise continues in perpetuity.
Thanks a great deal for your time. I guess I should be running now. Remember, knowledge is power. Get hold of knowledge and make good use of it in your enterprise. If you chose to be the opposite, you can chase vanity and lose money as much as you like. One thing you can be sure of, I don’t like being a friend to entrepreneurial losers.
The Wise Entrepreneur