The ‘Akara’ Enterprise

So, one of the courses in this first semester of the Lagos business school MBA (masters in business administration) program is CFA (cooperate financial accounting) and combined with the amazing facilitator for the first session was more of an amazing adventure rather than a class if you ask me. Why do I say that?

               Now, when we started the course or rather our Facilitator: Mr. Okoye started the course on a soft note by saying we are from different fields but some of us here are consultants meaning people that have experience in accounting either as a profession or as a manager and that he would not go straight into accounting but rather into business structures. This would be the beginning of a funny yet serious analysis of a small scale bean-cake (Akara) business. He took us on a journey by asking us question to get us thinking in line with someone who is about to start a business asking us what the first things to be done in the early stages of setting up a business would be. Keep in mind, the title of this post. So, What were our answers?

With a go ahead for us to start suggesting what we thought should be the first thing to do to start a business, some said research while some said it was funding (topic for another day because I did not know that there were may variants of funding until the class) and then someone mentioned “idea” as in the idea of the business and he agreed with the person saying a business starts from an idea whether it’s the business of investing or the business of starting a product or service line, without an idea there would be no business which in this case would be selling ‘Akara’.

Then we learned that the next step  was research containing things studies on the current demand in that specific area to the availability of resources to run the business to availability of man power if needed to regulations that would affect the business to analysis of already existing future competitors if the product or services was not new and other factors that would help someone planning to start a business in a particular sector and in a particular location and with a specific market (the kind of people that would patronize the business). This brings us to the next step which is, funding.

Funding is the next step after the studies, and this is basically raising money that would be used to start the business whether it is purchasing the tools, equipment (that will be used to make the product or render the service) or structure (rented space for making or doing what the business sells). So, what would the funds raised be used for? And that would be investing in assets which is simply buying/getting what is needed to operate or produce and from here, business/operations have started.

               So it became more interesting when our facilitator mentioned this small business is going to do accounting involved although it would not be anywhere close to standards but there will be accounting and then savings as the business breaks even which is the point when the business has made more than what was invested and starts having good profit and then, they may expand into a bigger rented space and employ people to do the work while the business owner focuses on managing the customers and the income. The business may add logistics to deliver the ‘Akara’ in the morning to special customers. Then the owner may re-invest into the business by buying machines to increase capacity of production. The class continued but let me stop here but at this point he had made us see how a small ‘Akara’ business still mirrors the structure of a properly set up company with departments like accounting, logistics, sales, customer relations, human resource, management, investment, research and so on. It was truly an amazing and eye-opening session.