The Nigerian Accountant 2012 - The Institute of Chartered ...

Business
for smart entrepreneurs to capitalise on.
Solar energy, wind energy and bio energy
are some of the alternative power supply
system that are currently making waves
in the country but the present alternative
power supply service providers cannot
meet up with the demand thereby leaving
room for other creative investors. With a
good plan, adequate capital and a strong
business team; you can break into this
market.
Entertainment
Over the years now in Nigeria,
entertainment business is growing fast
compared to the developed countries.
Stated below are various sub-sectors
in entertainment that you can invest
or participate to get a good Investment
returns:
1. Comedy: I am not saying you
should turn to a comedian but you can
be a business manager, financial adviser,
etc, to them because they make good
money.
2. Chair, Table and Tent rentage
3. Ice Block business
4. Cold Room
5. Decorations
6. Event Planning
7. Etc.
Please note, that there are numerous
business opportunities and potentials
available in the Nigerian economy, I
believe the ones listed above (though
there are many others) are potential
money spinners always do your own
feasibility study before investing in any of
these business opportunities.
CONDITIONS THAT MAKE A
BUSINESS OPPORTUNITY
FEASIBLE
1. Real Demand
The first condition that makes a
business opportunity viable is market
demand. Your business idea or opportunity
must have real market demand. Your
business opportunity must either satisfy
a need or solve a problem.
2. Good Return on Investment
The next condition that makes a
business opportunity feasible is the
Return On Investment (ROI). Any
business opportunity you intend to pursue
must show a strong possibility of yielding
a good return on investment. Moreover,
all what a business is meant to do is to
either satisfy a need or solve a problem
for a profit.
3. Competitive
The third condition that makes a
business opportunity feasible is its
competitiveness. Except your business
idea is the first of its kind, there is bound
to be competition. If your business idea or
opportunity is not competitive, just forget
it because it will never stand a chance.
4. Liquidity
This point is very clear as availability
of cash is not the same as availability
of profit. The presence of good liquidity
which is as a result of efficiency of the
company is a good condition for viability
of a business. A company that is efficient
but not profitable is better than a company
that is profitable but not efficient.
5. Meet the Objectives of the
Entrepreneur
This point is also very clear and easy
to understand. Before ever starting a
business, there are certain aims and
objectives you intend to achieve using
that business as leverage. For a business
opportunity to be viable, it must meet your
objective.
6. The Competence of the
Entrepreneur and his Team
Lastly, one of the most important
factors that make a business opportunity
worth pursuing is the competence of
the entrepreneur and his business
management team. A business
opportunity will only be feasible if it is
backed by a strong business team. I say
this because I have seen a good and solid
business opportunity that fails to break
even because of the incompetence of the
team.
TRIANGLE CAPACITY
This talks about three major capacities
that an Investor should have before
venturing into a business.
1. Financial Capacity: This is the
ability to source for fund and finance
the business start up fund and working
capital requirement for the first few years
of operation. The financial need of a
business can be determined through
proper feasibility study.
2. Managerial Capacity: This is the
ability to plan, control and make effective
and efficient business decisions. It
further involves having human skill and
high conceptual skill. You can’t go into
a business all because you have the
financial capacity; you should also have
the managerial skill it entails for the
business to be successful. Even if you
have the financial muscle to employ good
managers to your business, you must
also have the ability to manage them.
3. Technical Capacity: This is
the ability to understand and have
the knowledge of the nitty-gritty of
the business. You should have a core
understanding of the production process
of the business. Even, it is advisable to
have a technical understanding of the
business outside your field if you are in
a partnership with others that have the
technical capacity.
BUSINESS ENVIRONMENTAL
SCANNING
This is also known as Environmental
Analysis. It’s a very crucial step to take in
order to maximise business opportunity by
understanding the business environment
where the business will operate. A
systematic scan of the environment
is thus a useful place to start so as to
identify and gauge current influences
on the organisation and the drivers of
change for the future. A common tool for
undertaking this is known by its acronym
PESTLE.
The acronym represents various
facets of the environment:
Political: Stability and supranational
influences; electoral shift; fiscal,
competition, trade and industry policy;
legislative intention.
Economic: Growth trends and cycles;
budget and trade imbalances; inflation
and exchange rates; disposable income
and savings.
Social: Demographics; hierarchical,
gender and ethnic structure; mobility;
education; lifestyle; cultural changes.
Technological: Applied science;
infrastructure and process developments;
government support; obsolescence.
Legal: Consumer, employment and
commercial (Business) law; regulatory
frameworks; governance.
Environmental: Energy; natural
resource; waste, emissions; carbon,
water and bio-diversity markets;
protocols, regulations and green taxes.
The category descriptors are just
some of the generic issues that need
thought. Every business organisation
will have specific aspects to consider.
These will then drive strategies to exploit
opportunities, or to deflect and protect the
business from threats from exogenous
change.
Business environmental scanning
will eventually leads to Scenario Plan/
Building also known as “What if”
analysis and Sensitivity analysis. This is
trying to understand the effect of changes
in variables in the business environment
and what the business needs to do if the
THE NIGERIAN ACCOUNTANT 49
April/June, 2012