Five Laws of Business

How to build lasting businesses.

Today everybody is an entrepreneur. Some solve real-world problems, while some don’t. Some are self-acclaimed CEOs of non-existent businesses. But it’s all good. I’m a big believer in African entrepreneurship and I know Africa’s progress depends a lot on which businesses today’s entrepreneurs build.

I want to outline five laws I believe are very important when pursuing any idea, whether you want to build a big startup or you want to start a small business. To be fair, these ideas are not originally mine. I first read about them in The Millionaire Fastlane, a fantastic book by Mj DeMarco. I believe he wrote it as a guide to getting wealthy, but I want to apply it to businesses and entrepreneurship, since it would be hypocritical to talk about it in reference to getting wealthy, as I don’t consider myself wealthy — yet.

According to the book, there are five major principles/laws you have to apply in every business to achieve business success. These laws can be remembered with the acronym CENTS. For any business to succeed, or anybody who wishes to pursue an entrepreneurial route, the laws of CENTS are very important.

C for Control

If you want to make it big as a business owner, having control is very, very important. Control means being in charge of your supply chain, if you’re into productions, or having access to your proprietary technology, if you are running a technology company. If you have to depend on someone else or another business in order to run your own business, then the principle of control is being violated.

To be clear, these rules are not written in stone. You could forge, modify, or even violate them, and still be successful.

Consider an example: If you decided to start an e-commerce business, you would probably be tempted to use an already existing platform, for example, Jumia. Of course, Jumia already has an existing customer base, so that gives you an advantage. However, you have to understand that you’re not really in control. Jumia could eventually wake up one day and de-list your product from their site and you can’t do anything about it. Also, when people buy the product, they won’t say they got if from so-and-so; they would say they got it from Jumia. So Jumia has the control here and you’re just selling on Jumia’s platform. Again, like I stated, there are many successful sellers on Jumia, so these rules are not static. However, while you’re trading on Jumia, it would be wise to start your own personal e-commerce store and try to drive traffic to your store. That way, you’re in control.

E for Entry

Before you start a business, you have to consider the barrier to entry of the business. This refers to how difficult it is for other people to copy your business. The truth is, sooner or later, as soon as you become successful with your business, other people would want to copy. It is on you to choose businesses that are difficult to start. That way, you get less competition.

Most people seek to start really simple business. These are the kinds of people who go online and google “Business ideas I can start from home.” Sure, you will definitely find business ideas you can start from your bed, but this also means that if you can start the business from your bed, so can anyone else. When everybody starts the business, you see the profitability of the idea plummet. I think this is one of the biggest problems in Africa’s business ecosystem. We have more of business people and less of entrepreneurs. Entrepreneurs care about solving problems; business people simply copy the next big thing. Hence, once you see one person start a business, every other person floods to do the same business. Sooner or later, the supply exceeds the demand, extreme price competition starts, businesses start to fail, and they blame village people.

We have more of business people and less of entrepreneurs. Entrepreneurs care about solving problems; business people simply copy the next big thing.

As you might have guessed, one principle of starting a really successful business is starting a difficult business. When you get an idea and you think it is tough, it is usually a good sign, because if it is tough to you, it will be tough to others, too, which means you’ll have less competition when you start your business. Elon Musk is one entrepreneur who ventures into really tough businesses. Aspiring to send humans to Mars, or building electric vehicles that would eventually be autonomous, are both very difficult. No matter how you love space or are environmentally conscious, you’re less likely to compete with Musk because the barrier of entry to his businesses is extremely high.

One other way to build a high barrier entry business is to use technology. Developing proprietary technology helps you stay on top of the game, and except a better technology comes along, you’re less likely to be dethroned from your business position. Take Google as an example. Google’s search technology is top notch. No matter how skilled you are, it would be very difficult to create a technology as good as Google’s (Ask Microsoft or Yahoo!). That way, they have created their own barrier to entry

I think this principle also applies to career choices. When you want to choose a career, it is usually best to choose difficult ones. The more difficult it is, the less people would be willing to want to pursue that path. Its difficulty creates a barrier to entry. As more Africans awaken to the importance of having technical skills, most people are more likely to settle for graphics design, for instance, than they are to settle for machine learning or web development. This is because machine learning is more complex to learn that graphics would be, and this is a barrier to entry. Obviously, you don’t need to look around much to notice that there are more graphics designers than there are machine learning experts. This has driven the price of graphics design very low. You could get a very good one for less than N2,000. Try getting someone proficient with machine learning at that price!

Of course, there is nothing wrong with still going for skills with low barrier to entry if you’re really passionate about it. However, you would need to be extremely good to differentiate yourself from the crowd. You would be a needle in a haystack, and you know how difficult it would be to find you.

N for Need

Your business has to fulfill a need. In fact, that’s the purpose of every business. Most entrepreneurs, especially the ones that sell online, literally have to coerce, beg, and emotionally blackmail their friends to buy their products, for example, by making you guilty for not buying, even though you really don’t have any need for their product. If you have to beg people to buy your product or service, and more importantly, if you have to beg them to reuse it, then it means your product probably does not fulfill any obvious need. Any business that does not fulfill a need, sooner or later, would die.

Consider some of the things you use the most. These are products and services that hardly display any adverts, but they still sell millions and billions in volume because they fulfill a need. Some of them, you don’t even remember their names, but you still use them. For example, what is the name of the toilet tissue you are currently using, or your current toothbrush? You probably don’t remember, but you can’t do without these products.

One way to know if people have a need for your product is to try it with a small set of people initially. Instead of jumping all in, distributing flyers, renting a big shop, and begging others to help you share and repost your flyer, and complaining how your friends don’t support you by sharing your flyers, you could at first try out your product or service with a small set of people to know if they have a need for it. By need, I mean, are they literally begging to pay you for what you are offering? If you have to beg them to pay you, or you’re giving out the product for free to gain initial traction, then you probably wouldn’t know if there is an actual need for your business.

T for Time

Overtime, you may have to learn to separate yourself from your business. As it is often said, work on your business, not in it. As soon as you can afford to, hire people to perform the repetitive tasks. Where softwares can help, try to use softwares to automate your processes. Learn to build processes into your businesses so that anybody can replace one person, including yourself, without the business crumbling. For some businesses, this may be difficult. As an example, if you own a salon, it is difficult to build processes and separate yourself from the business, because most customers would want you, the actual barber, to give them the haircut. But, again, this depends on the setting. Assuming you try to build processes from the start, you could eventually separate your time from the business. If one person does the washing, another does the cutting, another does the shaving, things would be smoother. Customers may not care who does which. All they know is that when they enter into this salon, they come out with a clean cut.

Work on your business, not in it.

Another way to remove your time from your business, as I had already mentioned, is using technology. With technology, your business can run on its own with little or no supervision, and you can invest your time into doing more important things, especially scaling your business, which is the last S in CENTS.

S for Scalability

I’ve never had any chicken from KFC, but I’ve heard they make really nice fried chickens. But so do many small business people around us who also sell fried chicken, some of which may even be more delicious than KFC’s. So what makes KFC bigger? In one word: scale.

There is this plague that affects Africans. We’re obsessed with running small businesses. We are okay with opening a small shop by the corner, having a few customers, and then buying a Benz with the first profit that comes from the business. If you want your business to grow, you need to think about scaling.

There are two ways to reach scale. One is by reaching a lot of people, and the other is by selling things at premium price. Dangote has a big business because he scaled — he’s virtually in every industry and you probably even use one of his products everyday without knowing. On the other hand, Louis Vuitton’s founder is among the richest people on earth, not from selling to everybody — most people can’t afford a product from Louis Vuitton — but by selling at high prices.

You can scale by either reaching a lot of people or by offering your products and services at premium price.

For some businesses, it may be difficult to reach many people. For example, even if you were the best barber or tailor in your area, chances are low that you would be servicing another patient in United States or Ghana, or even in another state. In cases like that, you scale by charging premium prices for your premium services.

For most business, it may be impossible to scale to the level of Dangote, Paystack, or other such businesses. But opening an extra shop or two can really make a big difference in your business. It’s still scaling. You can do this by reinvesting your initial profits into the business to help it grow at the start. (This is difficult, and I know from experience.)

Another way to scale is technology. Some of the biggest businesses on earth today are technology businesses. This is because of how easy it is to scale technology. Once it is built, you can deploy the same technology to billions of people. You can leverage these available technologies to help your business grow. You can start by putting your business online. There are free tools for launching your site online and gaining more audience. As you grow your business, you could eventually hire a web developer to customize things for you(which is where I could help ☺ ) . Even putting your business on social media could also help you scale.

If we want to build impactful businesses that would change the world, we need to look beyond mom-and-pop businesses and build businesses that can scale. If you give me a business, the first thing I would ask myself is, “How can I scale this?”

Like I said from the start, these rules are not written on stone. However, I hope that as you apply them to your own business, it helps you achieve lasting changes.

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Chisom Ogugua

I love coding, technology, entrepreneurship and medicine. I love to document my thoughts on these subjects.