Technology Startups are booming in Nigeria as well as other areas of Africa. These tech startups have come in various forms. There are: financial tech, hospitality tech, medical tech, Agricultural tech, and more… Furthermore, these tech startups have succeeded in getting funds from Venture Capitalists, VCs, to help grow there business.
For example, Paystack, a Nigeria Financial Technology startup, succeeded to get seed funds from a number of VCs including Y Combinator. Wait! There are more, Intermediaries! These intermediaries serve as a medium between VCs, Angel investors and startups entrepreneurs. A good example of intermediary in Nigeria is Co-Creator Hub and Building Things for NG, BTNG. These intermediaries have help many persons to achieve their dream of owning a startup firm. Hotels.ng is a beautiful example of startups who has grown beyond micro firm and can be regarded as a medium scale firm, employing 112 persons as at when this post was created.
Certainly, you want your startup to grow up and not remaining a baby. Here are seven tips that will encourage entrepreneurs to grow their startups.
Economies of scale Advantages A reason why tech startups grows is a matter of enjoyment of economies of large scale production. In economies, economics of scale is the advantages a firm enjoys for growing up. Managerial economics, marketing economics, purchasing economics, administrative economics are among the benefits for growing your startup business.
In economies, economics of scale is the advantages a firm enjoys for growing up
Take administrative economics as an example. Large firms can employ the best managerial persons to put up a better administration of the firm than a small firm. In the face of competition, which is not yet common with tech startups in Nigeria, growing up will help have the better economics of scale to compete favourably.
Personal Ambition No entrepreneur start a business with the aim of remaining small. Every businessman put in all efforts necessary to move the business from a startup to a large one. The example of Hotels.ng speaks loud on these. After five years, the owner, Mark Essien, can be proud of what he has done so far and the future potential of his company.
Personal ambition can comes in the form of motivation, determination, grit, doggedness, aggressiveness, strong will to succeed and so many more.
Market power This correlate closely with economics of scale. Large businesses can easily get huge funds to market their product using online sources than startups. In the digital world, the more money you can budget for an Ad, the larger your audience and the more money you acquire. Growing up means more fund to throw on online Ads.
In the digital world, the more money you can budget for an Ad, the larger your audience and the more money you acquire
More so, large firms can employ the best digital marketers as well as traditional ones than a small firm, if all things are equal. Having the best marketers on ground means better understanding of your customers and how to please them.
Reduction in the risk of failure Large firms hardly fail for so many reasons. Reports has proved beyond doubt that 8 out of 10 small firms fail. This represent 80 percent of small businesses. However, large firms have choke absorber that enable them to cope in hard times. Large firms choke absorber can come in the form of excess finance and proper management of resources. Government can intervention to avoid dissolving large firm as a result of how the failure of the firm would have impact to the economy.
Large firms choke absorber can come in the form of excess finance and proper management of resources
To increase the status/goodwill of the firm The firm status as well as goodwill is very vital. A firm goodwill, which can not be measured easily, keeps it going. Large firms as a result of their popularity has more reputation than a small ones. As a fact, growing up ensures increase in status and goodwill.
A firm goodwill, which can not be measured easily, keeps it going
Avoid takeover Larger firms are less likely to be taken over. Yes and very necessary. It only take a large firm to take over a small firm or a large firm to take over another large firm. True, its not easy for a large firm to take over another large firm. Unless, the acquiring firm has the fund to do so. When a startup grows up, it can easily create defensive tactics to avoid take over from another large firm.
When a startup grows up, it can easily create defensive tactics to avoid take over from another large firm
Attract resources Resources is said to be all a business need for successive operation. There are five major resources all firms compete for. Money, management, material, manpower and information. Large firms can easily buy these resources as they have the resources in term of cash inflow to do so. However, small businesses can’t easily get access to resources because of there small nature.
For example, it would not be easy for a startup to employ the best brain in town to work for them. But large firm can do that with ease. Furthermore, it very possible to leak certain information to large firm, as a lot of cash will be giving to you for such info. Therefore, growing up will ensure that your firm attract resources which are important for its operations and continued existence.
That’s the seven reasons to from me. Your startup really need to grow. Instead of remaining stagnant. Failure to grow may lead to the end of a business. That’s all from me. Please comment below, to start more reasons a tech startup needs to grow up.