Lessons and Inspiration from Nonso Okpala’s Entrepreneurial Journey

Introduction

Entrepreneurship in the modern business environment, particularly within the African landscape, comes with unique challenges and opportunities. Mr. Nonso Okpala, CEO of VFD Group, offers valuable lessons on how entrepreneurs can scale their businesses from small startups to sustainable corporate entities. His experiences highlight the critical roles of adaptability, governance, sacrifice, leadership, and social capital in navigating the complexities of running a business.

The story of VFD Group’s evolution from a barbing salon and lending business to a corporate entity listed on the Nigerian Stock Exchange serves as an inspirational case study for aspiring entrepreneurs. This paper delves into the key principles that helped VFD Group overcome the challenges of a volatile economy and outlines practical strategies for turning startups into long-term, sustainable ventures.

Entrepreneurial Drive: From Startup to Corporate Entity

The journey of VFD Group began with a group of friends who sought to create a lasting business impact. Mr. Okpala, along with his team, initially envisioned starting a real estate company but quickly pivoted when they realized that raising capital for such a venture was not feasible at the time. They shifted their focus to a barbing salon and eventually found success in lending, which became the cornerstone of their early growth.

          Lessons from Early Struggles

• Adaptability and Resilience: The initial plan to enter the real estate market fell through due to a lack of funds. However, instead of giving up, the team pivoted to a more feasible business model—lending. The ability to adapt quickly to market realities and the readiness to shift strategy as needed were key factors in their eventual success. The barbing salon, while modest, was a stepping stone. It allowed the founders to gain experience in business operations while learning valuable lessons about managing a small enterprise. They later identified an opportunity in lending, which better aligned with their skills as accountants and financial experts.
• Leveraging Core Competencies: Most of the founders were accountants, many of whom had been trained at KPMG and PwC. They capitalized on this financial expertise to create an efficient lending system. By using their accounting skills to manage credit and risk, the team built a strong foundation for VFD Group’s future success.

Governance as a Strategy for Success

Mr. Okpala strongly believes that governance should not be viewed merely as a regulatory requirement but as a critical strategy for business success. VFD Group incorporated governance into every aspect of their operations from the onset, recognizing that good governance could mitigate conflicts and ensure long-term stability. For VFD Group, governance was not just a box to check for regulatory purposes; it was a strategic tool that ensured long-term success and stability.

 Key Governance Principles

• Structured Decision-Making: Establishing clear decision-making processes early on allowed the founders to manage challenges effectively. Every decision was made with a long-term vision in mind, ensuring that the company remained on course despite short-term difficulties.
• Transparency and Accountability: By maintaining transparency in financial and operational processes, the company ensured that all stakeholders, including investors and employees, were aligned with the company’s goals. This built trust and minimized potential conflicts.
• Governance as a Strategic Tool: VFD Group views governance not as an obligation but as a strategic asset. By refining internal processes, documenting responsibilities, and setting clear expectations, the team was able to “weaponize governance” to optimize performance and cohesion within the company. Entrepreneurs are encouraged to establish a solid structure for their businesses to maintain stability and accountability.

Deferred Compensation: Sacrifices for Long-Term Success

A defining element of VFD Group’s growth was the founders’ willingness to forgo immediate financial rewards. They spent over eight years without salaries or dividends, choosing instead to reinvest all profits back into the business. This strategy allowed the company to build a robust equity base, supporting rapid expansion.

Mr. Okpala explained that such sacrifices strengthen commitment. The more the founders invested, the more they were emotionally and financially tied to the company’s success, creating a virtuous cycle of reinvestment and growth.

Commitment Over Compensation

• Reinvestment Over Personal Gain: The founders made a conscious decision to delay gratification, channeling their earnings back into the business rather than drawing personal salaries. This move ensured that the company remained cash-rich and able to weather financial challenges.
• Increasing Stakeholder Value: This long-term approach made the founders more committed to the business’s success. The more they invested in the company, the more dedicated they became, creating a virtuous cycle of growth and reinvestment.

Leveraging Social Capital: Building and Maintaining Networks

Mr. Nonso Okpala’s social capital has played a crucial role in VFD Group’s rise. His ability to build and maintain relationships with key figures—ranging from CEOs to former presidents—opened doors and created opportunities that would otherwise have been inaccessible. For entrepreneurs, building a network of sponsors, mentors, and advocates can be just as important as having a great business idea. Entrepreneurs are encouraged to develop a problem-solving mindset, especially in the face of economic setbacks, viewing obstacles as opportunities for growth rather than as barriers. Mr. Okpala’s experiences demonstrate that clarity, objectivity, and the courage to make tough calls are critical traits for successful leadership.

 Key Insights on Building Networks

• Persistence in the Face of Rejection: Mr. Okpala’s philosophy is simple—don’t take rejection personally. Whether it’s investors turning you down or clients declining your offer, the key is to keep pushing. He advises outperforming expectations and revisiting those who initially said “no” to build trust and credibility. He emphasizes that success often comes after multiple rejections, and once you achieve success, even those who initially said “no” will want to align with you.
• Cultivating Relationships with Sponsors: A critical aspect of Mr. Okpala’s success has been his ability to build relationships with influential people. These sponsors advocate for his business and open doors in ways that traditional marketing cannot. Entrepreneurs should focus on building genuine connections and maintaining them over time, as these relationships often prove invaluable.
• Salesmanship and Confidence: Mr. Okpala highlights the importance of being a consummate salesperson. Whether pitching your business to potential investors or convincing people to support your product, being able to sell is one of the most important skills a business leader can possess. He suggests that no matter the level of success you achieve, the ability to personally engage and sell your vision is critical.

Leadership and Sacrifice: Lessons for Aspiring Entrepreneurs

Leadership in entrepreneurship requires making tough decisions, especially in challenging times. Mr. Okpala points out that sometimes being a leader means laying off staff, cutting costs, or taking a financial hit to ensure the long-term survival of the company. The willingness to make these sacrifices separates successful entrepreneurs from the rest.

 Problem-Solving Mindset

• Objective Decision-Making: When faced with difficult decisions, Mr. Okpala emphasizes the importance of stepping back and separating emotions such as fear and frustration from the problem at hand. By approaching challenges with a clear, analytical mindset, leaders can make more informed and effective decisions.
• Dispassionate Leadership: Once a solution has been identified, the next step is executing it, no matter how difficult or uncomfortable it may be. This could involve laying off employees, cutting costs, or making other tough decisions that are necessary for the business’s survival and growth.

Conclusion

The success of VFD Group serves as a powerful example for startups aiming to scale into corporate entities. Mr. Nonso Okpala’s emphasis on adaptability, governance, sacrifice, leadership, and network-building provides a comprehensive framework for sustainable growth. Entrepreneurs must be willing to make long-term sacrifices, build robust governance structures, and leverage their networks to navigate the complexities of the business world.

By adopting these principles, startups can not only survive the early years of uncertainty but also build a foundation for long-term success. In Mr. Okpala’s words, creating a business is about much more than generating profits—it’s about establishing a platform that will endure, supporting not just your ambitions but those of future generations.

Reflective Questions for Entrepreneurs

1. Vision and Motivation:
   1. What is the long-term vision for my business beyond making profits? Am I committed to building a platform that could benefit future generations?
   1. Is my business driven by passion and purpose, or is it merely for survival? How can I align it with a deeper mission?
2. Adaptability and Strategy:
   1. How adaptable am I when my initial plans don’t work out? Do I have the flexibility to pivot when necessary?
   1. Have I identified the core competencies of my team and myself? How can I leverage these skills to create a stronger business model?
3. Governance and Structure:
   1. Have I put governance structures in place to ensure transparency and accountability within my business?
   1. Do I see governance as a strategic tool for growth rather than a regulatory obligation? What steps can I take to implement it effectively?
4. Social Capital and Networking:
   1. How am I building and maintaining relationships that could support my business growth? Am I investing time in cultivating genuine connections with mentors and industry leaders?
   1. Am I comfortable with selling my vision and business to potential investors or clients? If not, what steps can I take to improve my salesmanship and confidence?
5. Financial Management and Sacrifice:
   1. Am I willing to make sacrifices, such as deferring my salary or reinvesting profits, to grow the business in the long term?
   1. How do I manage my business’s cash flow and equity to ensure it remains sustainable and can absorb financial shocks?
6. Team Building and Collaboration:
   1. Do I have a cohesive and committed team that shares my vision? How can I foster a culture of collaboration and commitment among my team members?
   1. How do I distribute responsibilities and set clear expectations to keep the team focused and aligned with the company’s goals?
7. Long-Term Planning and Sustainability:
   1. What are the sustainability principles and values I uphold as a leader, and how do they translate into my business operations?
   1. How am I planning for the long-term future of my business? What steps can I take to scale my operations while ensuring sustainable growth?
8. Problem-Solving and Leadership:
   1. Do I approach business challenges with a problem-solving mindset, separating emotions from decision-making to achieve clarity and objectivity?
   1. How prepared am I to make difficult decisions, such as cost-cutting or layoffs, for the survival and growth of my business?

Appendix: Glossary of Terms and Simplified Guides for Small Business Owners

This appendix breaks down key business terms into simple definitions and practical examples to make them easy for small business owners, including those with limited literacy skills, to understand and apply.

1.  Entrepreneurial Drive

• Definition: The motivation, passion, and commitment needed to start and grow a business.
• Example: It’s like having the energy and desire to open a small shop and make it successful, even when things are tough.

2. Adaptability

• Definition: The ability to change your plans or business model when the situation changes or when things aren’t going well.
• Example: If your business of selling clothes isn’t making money, you might decide to start selling food items instead. Being adaptable helps you survive and grow.

3. Resilience

• Definition: The strength to keep going and not give up when you face difficulties.
• Example: When your sales are low, resilience means you continue working hard, finding new ways to attract customers, and not closing your business.

4. Core Competencies

• Definition: The skills and knowledge you and your team have  to help your business succeed.
• Guide: Think about what you and your team are really good at—like baking, sewing, or managing money. Use those skills to grow your business.

5. Governance

• Definition: The rules, processes, and ways a business is run to make sure everyone knows their roles and responsibilities.
• Example: It’s like having a family where everyone knows their chores—one person cooks, another cleans, and another manages money. In a business, governance helps the team work together smoothly.

6. Deferred Compensation

• Definition: Choosing to delay taking money or benefits now so that the business can grow and succeed in the future.
• Example: Instead of paying yourself a salary right away, you use the money to buy more products for your shop. Later, when the business grows, you will earn more.

7. Social Capital

• Definition: The relationships and connections you build with others who can help your business grow.
• Example: Knowing people who own shops, suppliers, regulators or community leaders who can support your business or introduce you to new customers. The more people you know and maintain good relationships with, the more help you can receive.

8. Dispassionate Leadership

• Definition: Making decisions based on what is best for the business, without letting your emotions control you.
• Guide: If you have to lay off a worker because the business is struggling, you do it to save the business, even if it makes you feel bad. Keeping emotions separate from business decisions helps you make smarter choices.

9. Salesmanship

• Definition: The ability to convince people to buy your product or invest in your business.
• Guide: Think about when you explain why your product (like fresh bread or custom clothing) is the best choice. You are selling by showing confidence and highlighting what makes your product special.

10. Transparency

• Definition: Being open and honest about your business’s finances and activities so that everyone involved knows what is going on.
• Example: If you have a partner, you both keep track of the money earned and spent so that no one feels cheated or confused.

11. Accountability

• Definition: Making sure that everyone in the business is responsible for their actions and does their job correctly.
• Example: If your shop assistant is supposed to manage stock and they don’t, they should be held accountable and reminded of their duty to prevent shortages.

12. Long-Term Vision

• Definition: Thinking about where you want your business to be in the future – 10,20,50 years and planning how to get there.
• Guide: Instead of only thinking about today’s profits, you think about how to expand your shop, add new products, or open more branches in the next five years.

13. Capital

• Definition: The money or resources used to start and run your business.
• Guide: This can be the cash you saved, the stock you bought for your shop, or even the tools you use. Having enough capital helps your business grow and survive challenges.

14. Equity Base

• Definition: The value of the business owned by the founders or investors.
• Example: If you own a shop and don’t owe anyone money, the shop and its contents are your equity. If you grow your business, your equity base increases.

15. Business Model

• Definition: A plan that shows how your business will make money. It explains what products or services you will offer, who your customers are, and how you will sell to them.
• Examples:
  • Retail Business Model: Selling products directly to customers in a shop or online.
  • Service-Based Model: Providing services like hairdressing, cleaning, or repairs for a fee.
  • Subscription Model: Charging customers regularly (e.g., monthly) for ongoing access to your service, like a gym membership.
• Guide: Choose a model that fits what you do best and how you want to reach your customers.

16. Reinvestment

• Definition: Putting profits back into the business instead of taking them out, to help the business grow and expand.
• Example: Using the money you earn from sales to buy more products or improve your shop, so you can attract more customers and make more profit later.

17. Minimalist Mindset

• Definition: Keeping expenses and spending low to save money and focus on what truly matters for the growth of the business.
• Example: Instead of renting a big, expensive shop right away, you start small and expand as you gain more customers.

18. Scaling Up

• Definition: Expanding your business to increase its reach, output, or services.
• Guide: When you see a steady increase in demand, think about ways to grow—like opening a new location, hiring more staff, or expanding your product range.