In a moment straight out of The Pretender, I found myself doing “speed consulting” for rural Nicaraguans. The event was hosted by a local non-profit that helps small businesses grow. Several consultants (including me) sat at different tables, and Nicaraguan entrepreneurs were assigned to us for thirty minute sessions on any business problem they might face. I saw four entrepreneurs. The first one went something like this:
“I make wooden furniture, and I’d like to export.”
I wait for a second to see if he is done. “Okay…” I wonder if the skepticism is showing on my face. “What countries do you have in mind.”
“I was thinking Central America or maybe the United States.”
“Do you want to export finished pieces or individual parts?”
“Um.., sure, both sound fine.”
This guy was lost. I gave him some perfunctory advice about certifications for exporting and building a network of buyers. However I have no confidence that he will ever export anything, because he lacked knowledge of the market, brand positioning, and relationships with buyers: his idea lacked a “why” and a “how.”
Unfortunately he was similar to other entrepreneurs who arrived to my table for “speed consulting.” I want to use his example to make several points:
- People can erroneously extrapolate what they currently do into new markets
- Nonprofits are not magical panaceas for poverty, a detail sometimes forgotten
- People sometimes look for the wrong advice because they look forward too many steps
1. Hasty extrapolation of current activity into new markets:
I make chairs. My earnings are limited by the volume of chairs I can sell to my principle buyer, who has a furniture stall in the local market. Therefore, I should expand to other markets, and sell my chairs to people in United States.
Wrong! Just because you sell in one part of the world, does not mean you are an efficient producer in another. Of course it is possible there are other market opportunities, but you shouldn’t assume your advantage is transferable. Someone producing low quality furniture on a small scale may be strong in the local market but will not compete with IKEA.
2. Nonprofits are not magical panaceas for poverty:
It’s also possible that something entirely different was going on. It’s possible that the man doesn’t even make furniture. Perhaps he has a cousin who once received a scholarship from a nonprofit. So logic starts to form: nonprofits help people; I am a person; this nonprofit can help me.
This nonprofit advertizes support for people to build thriving businesses. “”Transform your business,” says the flier. So the man shows up and plays along: he invents a challenge – he wants to export furniture. He waits to see if he may get something out of it. Of course he will not, because this man doesn’t fit the profile for which the nonprofit was created.
Suppose you don’t have a house. A hardware store can help with this problem if you are building a house and you want to trade money for tools. If you don’t fit this specific profile, a hardware store will not help you with your problem. People don’t always look at nonprofits like hardware stores, though they are similar, offering only a small subset of solutions to a subset of targeted people.
Hardware stores don’t advertise support for people without houses. They advertise tools for money. Sometimes nonprofits, in all their idealistic zeal, promise a panacea benefits to anyone who participates in their programs. Nonprofits should be careful to advertise specific services. Otherwise they get unfocused traffic of people who don’t fit their targeted profile.
3. People seek the wrong advice:
A last possibility is that the furniture maker does have the ambition to export furniture, but is currently far away from realizing that goal. When I was a senior in college, I wanted to be an entrepreneur. I had several underdeveloped business ideas, and I wince to think back on asking contacts for advice. My ideas satisfied my concept of being an entrepreneur, but were not based on actual knowledge of people’s needs and production opportunities: the ideas lacked a “why” and a “how.”
Of course there is nothing wrong with dreaming to be an entrepreneur or dreaming to export furniture. The problem was how we were were seeking advice. I wanted businessmen to wave a magic wand and ordain me into entrepreneurial success. This man wanted me to wave my wand and reveal how one can export furniture. However he needed more familiarity with local and foreign markets and a strategy to add value. He should have asked less ambitious questions: how to learn more about furniture production; how to make contacts with different types of buyers and understand their needs; how to learn from the most successful producers in the market.
I would not have been able to provide all the answers, but a discussion with this frame would have been more productive. There’s nothing wrong with dreaming. However when seeking advice, consider whether you are in a strong position to discuss the end-state of the dream, or whether you should be looking for tips on getting training and knowledge.
Speed consulting wasn’t that useful. I didn’t advise people with immediately feasible projects, and I didn’t locate entrepreneurs who can benefit from other services offered by the hosting nonprofit.
Development is hard! But it’s a worthy goal, and the effort continues…