Successful Afghan business 4: How to scale projects and build a multi-million-dollar company
Previous articles in the guidance series have explained how to raise finances through private investors and how to identify/ select the best business opportunities. This session guides the entrepreneur further to scale efforts from one to several projects.
Review the earlier guidance articles
Increase the number of same or similar projects
An entrepreneur typically starts with one project. Goal is to deliver promised results to clients/ end customers and achieve a notable project. If the project does not meet expectations, the entrepreneur must analyze the situation, identify root problems and make necessary improvements, before more doing more projects.
Nobody gets everything right with the first projects. Reason: The entrepreneur based his planning on assumptions. The best research will never be fully exact or correct. Only a real effort can reveal reality!
Example: Assume the entrepreneur constructs a cold storage. Build cold storages to provide food for millions of people in Afghanistan and earn great money! | LinkedIn
The first cold storage facility & project will provide many learnings: How can the design improved to achieve a better, more stable cooling? Should construction materials or equipment be changed? How can construction costs and time reduced? What else can be improved?
Goal is to develop a success blueprint for next cold storage projects, which become increasingly better and more profitable. In this case of cold storage there is a huge market demand for thousands of cold storages in Afghanistan. The entrepreneur could just stick to this business and build dozens or hundreds of cold storages.
Scale from one project to several projects of the same kind
A prerequisite for doing a project is to select a highly profitable business opportunity and to then generate profit. The entrepreneur can then take the profits and reinvest into new projects, which helps minimize the need for additional investors.
This graphic chart illustrates the process
Stay cashflow positive!
Key to scaling projects is to stay cashflow positive! The entrepreneur can do so by several means including: Asking investors of first project to invest their profit shares in the next project and/or invest more money, acquire more investor to share money, obtain permission to delay payment to suppliers, get short-term bridge loans (example: four months to cover fruit & vegetable revenue cycle of harvest price versus winter price) and other.
Scaling from one project type to a different project type
Sometimes it is better to just stay with the same project type and scale the number of same/ similar projects. There are numerous advantages for doing so: Increasing learning leads to better, cheaper, and faster project execution. Profit margins should increase. The investor confidence raises with increasing delivery continuity. It should be easier to acquire new investors and improve negotiation with investors.
However, sometimes great opportunities in other sectors or project types exist or arise. Some of these new project types may be in the same geographic area or in the circle of influence of existing leadership team investors. Or, the same clients/ end customers may be served with through the new project type.
Some of these new business opportunities may also have a higher profit margin or just spark the interest of entrepreneur investor. Here, some points of caution. Success in one project type does not automatically mean success in another project type. The conditions and challenges may be notable different. The entrepreneur, staff and investors may have less expertise. To some extent the first project in the type will be require notable learning. It may take several projects to build expertise to comfortably roll out many projects of this new project type. This will require notably more time and leadership attention for the new project type than with previous project type.
Scaling the business from projects to large scale business operations
There are many highly profitable business opportunities across all sectors in Afghanistan.
As the entrepreneur and his team expand efforts into more project types across different industries sectors it is advisable to manage all operations in a systematic Program Management Office. This allows to scale the company to become a very large corporation. Refer to the next article of the guidance series...
You may reach out to Alex Steinberg through WhatsApp at +966531824178
(Please understand that many people ask for a meeting with Alex. Preference is given to those who are most dedicated and prepared to build their businesses and provide value to the Afghan people).
About the author
Alex Steinberg has developed, built, and led companies across the world. He has advised, directed, and supported strategies, programs, and implementations of 30+ famous multi-national organizations. Alex has worked across all key business functions, processes, and value chains of organizations across key industries.
Alex Steinberg’s insights into 230+ working for many leading organizations in the world gives him rich experience to analyze, troubleshoot, develop, build, and scale companies. Alex is currently in Kabul with the intent to help build the private sector in Afghanistan to benefit millions of Afghans.
Legal Disclaimer
This article reflects the opinion of Alex Steinberg only. It does not claim to represent the viewpoints of any present/ former client, employer, or partner. The author acknowledges that there are often different viewpoints on a topic, which are equally valid. Constructive discussion rather than criticism can lead to better ideas and positive outcome & value to business and society.