Lazarus Dokora, is quite an enigma. Hate him or love him, the man will not be deterred. Of all his proposed reforms, there is one which has the potential to open a great business opportunity. In this article I try to unpack the attractiveness of that opportunity and to provide a few pointers, should you want to investigate further. I want to showcase an opportunity with the following key characteristics: (1) Relatively low set up costs; (2) Possibility of a niche market without competition from industry incumbents; and (4) Great upscale potential.
The good Minister is insisting that students should have obtained driver’s license by the time they sit for O’ levels. I personally doubt the feasibility of this given that about 50% of students turn 16 during Form 4 when they need to be fully focused on their exams. However, they will have the time during that long holiday before results are out…and can have a full license by the time they finish A’ level. I think it’s a noble but almost unenforceable policy. The best they can do is instruct schools to raise awareness, encourage, and help etc. students to obtain driver’s licenses. Whether enforceable or not, it increases the demand for driving instructors. Stay with me…
The minister may or may not succeed in getting his wishes translated to Government policy. The tips and pointers presented below are valid in the presence or absence of such a policy…It really does not matter. They will also assist existing driving schools to rise above their competition.
Driving schools have mushroomed all over the place, charging anything between $3 and $10 for a 30 minute lesson. Whenever, you are entering an industry with fierce competition, your first check should be investigating the possibility of a niche market. If your marketing strategy is done correctly, you will render existing competition irrelevant. If you fail to develop a niche marketing strategy, you will find the going very tough.
Example One – The best way to “eliminate” competition would be to target individual schools and colleges as “catchment areas”. Formulate your niche marketing strategy around signing agreements with the institutions whereby you will train their pupils at rates below the market. If sufficient numbers sign up for your service, you should be able to benefit from economies of scale. You will also maximize profits (not from great margins, but…) from volumes. Prospective students will sign on because of the discounted prices you are offering through their institution. Careful business planning should be able to determine the breakeven number of students you need to sign on per month.
Example Two – Most microfinance institutions and banks prefer lending money to civil servants and employees of blue chip companies. This is because of their low default rates. You can use these employed parents or guardians as your “catchment area” again. You can engage an employer/government department where you will provide the services for their children or dependents on “credit”. The microfinance institution or bank will give you the money for your services whilst the guardians will be indebted to repay the loans to the microfinance or bank. There is no disadvantage for you because you get your money when you provide your service (it’s as good as any cash client). The microfinance or bank will be willing to engage because they will be able to charge an interest on top of that money. The guardian will jump at that opportunity because they do not need to pay for your services all at once but they can repay the loan spread over 12 months. It’s a win-win situation.
This is how Econet has been able to sell their phones to employed people on credit through partnerships with Steward Bank with credit facilities for up to 24 months. Remember TN Harlequin? They used to sells their furniture on credit in partnership with TN Bank (now Steward Bank). There is no reason why you should not be able to employ the same strategy. The point is, if you can establish a smart niche marketing strategy, you can render competition irrelevant. There is also a good article about Vineyard Funeral Assurance’s clever marketing strategy here. That is a good example of the kind of innovativeness I am talking about. If you can work out an offering that creates a win-win situation for everyone in your target market, it will be difficult not to turn a profit. A local insurance company designed an insurance product that pays a tithe…a clever way to capture business from the Zimbabwe’s Pentecostal Christians. You can also engage clients through churches…and promise to tithe from the business…kkkkkk.
Let me note that your staying power or opportunity for growth in this business will be as good as your marketing and business development campaigns. You will need to be constantly on your feet looking for new business. You will need to be innovative…coming with clever structures like the two examples I have given so that you outfox rivals. Once rivals learn of a successful strategy you have, they will imitate you…thus the need for you to always be a step ahead.
Your marketing can not be caught napping. I will take you back to the case of TN Harlequin selling their furniture through TN Bank. When the bank was sold to Econet, they had to break that relationship. TN Harlequin failed to innovate or design a new way to sell their products. Eventually, they were forced to close shop, retrenching thousands in the process. You cannot depend on one relationship alone! (No matter how small you start). Your thinking cap will need to be continuously on.
Set up costs
The amount of funding required to set up such a business will be determined by the scale at which you want to launch. The biggest cost will be the cars themselves. Proper business planning should determine the minimum number of vehicles you require to launch a profitable operation. It is possible to launch this venture with minimal capital via a process called bootstrapping. A business planning consultant worth their title should be able to formulate and advise you on a workable bootstrap strategy that will lessen the initial capital burden.
An attractive business opportunity is one for which you can develop a scalable business model. Entrepreneurs should never waste their energies on business opportunities without any meaningful prospects for growth. Proper business planning should see you launch your operation with the minimum profitable number of vehicles and other resources. My advice to you will be to operate this way for a few months, learning the ropes and adjusting your business model. One you have perfected your business model you then scale up your marketing and acquire additional vehicles or open satellite offices and branches as the need arises. A great article on “scalability of startups” can be found here.
Driving schools are regulated by the Traffic Safety Council of Zimbabwe in the same way that banks answer to the RBZ. TSCZ has its list of requirements that you need to satisfy before you launch your operation or commission a vehicle for use in your business. Here we are looking at (1) Business license from TSCZ; (2) modifications to vehicles; (3) ZINARA License; (4) Insurance; (5) Qualified Instructor(s) etc. Once you clear this regulatory hurdle, you should be ready to rock and roll. In the next part of this article, I will outline a comprehensive checklist of all requirements.
I cannot emphasize enough the importance of proper business planning before you launch your operation. A very good article on Business Planning can be found here.
The purpose of this article has been to merely showcase the opportunity as I see it. Whether or not the good Minister succeeds in getting his reforms into force, the strategy presented herein should help anyone survive and operate profitably in that industry. The all important key to success in this industry is a robust, focused and aggressive marketing strategy. Everything else will follow. #DareToDream.
Remember, we can do BIG things…
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