Episode 40 Transcript

okay welcome to episode 40 of the
business in Morocco podcast this week
we're gonna be talking about business
ideas and models in Morocco but before
we get into our topic for the day we're
gonna start with a little update Ryan
how are things going what's new things
are going well Ryan, things are
progressing here at the office also the
entrepreneurs Club of Casablanca
mentioned this several times
over the past few weeks originally got
sixty-one Club applications and now I've
been going through the process of
weeding out people and inviting the most
qualified and more importantly the most
motivated entrepreneurs to become
members of the club as of this recording
there are now 22 follow-up members who
are going to receive an official
invitation to the first meeting it's
been a learning process for me learning
about the efficacy of email versus the
efficacy of whatsapp as a
communications tool here in Morocco and
many countries around the world whatsapp
is far more useful and people pay
attention to it as opposed to email
which I think a lot of people simply use
when they want to download something on
the internet or they need an account
but they don't necessarily monitor the
email it's a very diverse group
so far there are applicants who are
offering to teach classes to the group
in accounting sales video creation video
editing digital advertising data science
English blue ocean strategy just to name
a few
so I'm excited I'm excited to be a part
of this group to help shepherd this
group and have it be a place where
entrepreneurs can come and work together
and learn and grow their businesses so
that's a great development and I'm
hoping to have the first meeting at the
end of November or the first week of
December so we're working hard to get
there Wow that's coming up fast it is
it's only in a couple weeks
yeah the other big development is that
we have a new sponsor for the podcast
meilleurcreditimmo.ma is our new
sponsor and they do home loans and
mortgage brokering online and they have
relationships with most all of the
moroccan banks and you can just go to
their website and do a credit simulation
and see how much money you could borrow
in order to buy a villa or an apartment
and what your monthly payment would look like it's a great service I've run
several simulations myself and it's very
interesting to see how expensive an
apartment you could get and then what
your monthly payment would be and how
long would the loan duration be is it 15
years or 20 years or 25 years and the
best part is is that this company will
give you the best offer on the market
and you never have to go visit a bank
Wow so it's as though you went to banque
populaire societies generale BMCE BMCI all these banks - Attijariwafa
you went to all of them and you got
their best offer and you brought them
home and you went over all of them and
you compared all of them and you looked
at them except that you could do this in
five minutes Wow and you can do it on
your computer or on your phone
completely anonymously so it's an
amazing service you can save literally
hours or days' worth of time and know
that you're getting the best rate
available on the market or even
exclusive rates that aren't even
at the banks so if I want to buy a place
to live and I'm interested in this how
much does it cost me to do the
simulation so the simulation is free
it's completely free
you go to meilleurcreditimmo.ma you type
in a bit of your financial information
whether you're an employee or a business
owner or you're a government employee or
retired you give details about the
property you want to buy is it an apartment
or is it a house how much does it cost
and then you see all the different
offers and you can choose an offer
that's right for you based on how long
you want to pay off the loan and how
much you want your monthly payment to be
and again you don't even have to enter
your name or your email address to
simulate you can literally see the
offers completely anonymously Wow and
there's no fee there's no fee for the
service yeah meaning they will literally
take you from the moment you do your
simulation to the moment that the loan
closes and you are the home owner and
they don't charge you not one dirham
and the reason is they are getting a
commission from the bank
yeah and so in that sense they don't
even care which bank you choose or
which loan you choose because all the
banks are going to pay them a commission
based on the choice that you make so
they are an unbiased third party right
they have no desire to see you
pick one loan versus another and
when you talk about trust and you talk
about business it's great to find
partners like that
whose interests are aligned with yours
right yeah they want you to get a good
loan that works for you because then
they get the commission from the bank
yeah and they don't get paid anything
until you are approved and become the
homeowner so I'm excited to have them as
a new sponsor and we'll be talking about
more about them and their business model
during the future one more question when
you're doing this simulation can you go
back and change one or two variables
you have to go through the whole process
again like if I got a finished product
and I said okay that's the rate that's
the monthly commitment with the
parameters I entered can I then say what
if I extended the term of the loan from
20 years to 25 years
how does that affect so when you enter
your information like your nationality
your age your profession the type of
apartment or house you want to buy how
much it costs once you put in that
information you receive the offers and
you see all the offers at one time okay
so you see the best offer that's for 12
years the best offer at 15 that's an
offer at 18 the best offer at 20 years
or 25 years so you see all of those
offers at the same time okay if you want
to change the price of the home you want
to buy you can just go back and change
the price or you can go back and change
your salary meaning how much
could I borrow if I had a larger salary
so you can play with it and do an
unlimited number of simulations right to
figure out what the best situation
is for you this is so great that this
business model has come to Morocco
because right now there's just
incredible inefficiencies in the home
loan market yeah this technology is
available in the States in fact there
are many competitors doing this
technology now and this is the first
time that it's come to Morocco yeah Wow
what about you what's going on this week
yeah I spoke on Thursday night with
JCI a local organization that puts on
events to help young professionals and
business people and I spoke on the power
of habits for success which I give a
full workshop a five-hour workshop on
that but this was just sort of a sample
you know a small portion of what I
usually cover and it went really well it
was a great opportunity it was exciting
and I have another workshop I'm teaching
on November 23rd it's a half-day on
Saturday and if anybody wants more info
you can go to maroctreasure.com/courses
to find out about that and
some of the people who attended this
workshop are interested in coming to the
full workshop so it's almost like giving
somebody a free sample and then they're
interested in purchasing the whole
product so again we've talked about this
a lot you're offering value for free
you're sharing your product your service
in some form at a discount or even
completely free with the hopes that
those who really enjoy it and want more
will then purchase down the road and I've
found that to be an effective model in
my line of work all right so we've
covered the updates let's get into the
topic of the day Ryan you want to
introduce it for us
yeah I want to talk a little bit about
business models and business ideas for
Morocco just to get everyone on the same
page I want to give a definition of a
business model it's essentially a
company's plan for making a profit it
helps identify the products or the
services the business will sell the
target market that its customers will
come from and any expenses associated
with operating the business now this is
a very basic definition of a business
model but it's essentially how you
create and capture value in a
sustainable way meaning you don't
just fool someone into buying something
one time and it's not true it's a fraud
right that's not a business model well
it is in Jamaa el fnaa for European
tourists you're right I guess in the
tourist industry it is a business model
but it's becoming less and less so
through TripAdvisor and those other
forums Google Maps yeah but for any
traditional businesses committing fraud
or selling something to a customer who
ends up unsatisfied it's not a sustainable
business model so when we talk about
business models we're talking about
things that are legal things that are
sustainable that produce value over time
some of the things to think about when
you're coming up with your business idea
or your business model and the reason I
want to go into this is I've had a lot
of questions about business ideas and as
we get into the entrepreneurs club a lot
of the members, a lot of the applicants who
want to become members they don't
actually have an idea right now or they
have one but it's not fully developed so
some of the things to think about and
the first thing to think about is what
problem are you solving what issue is in
the market that your product or your
service is going to solve are you going
to relieve a pain are you going to
reduce an expense are you going to save
time are you going to improve a quality
of life are you going to entertain you
have to be solving a problem and
that needs to be the first focus the
next thing to think about is what unique
insight or experience or advantage do
you have in this industry for example
does your uncle own a store in Gauthier
and will he give you below market
rates on the rent on that store which
would give you a competitive advantage
if you had lower rents than all the
stores around you in Gauthier then you
could charge your customers lower prices
that would be a unique advantage
do you have an agreement with a brand
name producer around the world to be
their exclusive distributor meaning no
one else can distribute Chanel or Nike
or coca-cola than you that would be a
unique advantage someone that can't be
something that can't be replicated by
somebody else that's something to think
about where when you're coming up with
your idea or your business model next
thing to think about is revenues how are
you going to make money how are you
going to charge customers what are your
expenses going to be one of the things I
see small business owners screw up a lot
is this idea of overhead overhead is
what it costs to keep the lights on to
run the business but is not directly
involved in the product or the service
for example if you go to a grocery store
the direct cost of goods sold would be
the fruits the vegetables the cereal the
food the water the drinks that's the
cost of goods sold but the overhead
would be the rent on the store the
lights the electricity the air
conditioning the refrigerators the
employees the cost of cleanup all of
these things are called overhead and you
have to add up all these expenses and
you have to make sure you include them
when you're assessing your business
model in terms of will I have enough
revenue to offset my expenses it's not
just the cost of the products or the
services it's the cost of the overheads
well yeah and people fail to include the
capital expenditures so for a grocery
store there's the cost of running the
freezer it's plugged into the wall it's
generating its using electricity but
that freezer has a lifespan and maybe
every 15 years the freezer is useless
and you have to completely replace it
and maybe every five years you have to
get it injected with freon or something
you have to maintain it to improve its
efficiency that needs to be added into
the daily cost as well so if if it costs
$15,000 to purchase and it lasts for 15
years you're spending a thousand dirhams
a year just owning the freezer without
even plugging it into the wall that
needs to be covered in your costs
otherwise you'll say I'm making a profit
I'm generating revenue and then boom
something will be broken you know a
customer breaks a chair that they're
sitting on or a table leg falls off or a
freezer breaks down and all of a sudden
your quote unquote profit is erased so
this is something that you've told me
you've experienced in owning property in
Canada right a lot of your peers they
underestimate the
actual cost of owning property what have
you learned as being a property owner
renting out properties I've learned that
you need to include capital expenditures
as one of your monthly costs so in real
estate typically you have things that
break down over time it's a property it
depreciates that the physical assets
break down so I might have a dishwasher
that needs repair this past week I spent
$600 fixing the control panel on a
furnace now furnaces typically last 25
years or so before they need to be
replaced but most investors don't factor
that into their costs and so on a month
where nothing goes wrong nothing breaks
down I might say hey look I made $200
this month this is a great investment
but what about a month where I spend
$600 replacing the control panel now
I've just wiped out three months worth
of quote-unquote profit so you really
have to either have a long you either
have to have a long timeline that you're
actually looking at how much you've
spent and and earned or you need to add
in capital expenditure as best you can
estimate as a monthly expense and this
is important for any business that has a
physical presence but even if you work
online and you have a computer right you
have a computer you have a monitor, you have a printer eventually those things are
gonna break down over time as well right
we're gonna have to replace everything
in this room yeah it's a microphone the
computer the keyboard the mouse the
phone the monitor the desk everything is
going to eventually degrade and we
have to figure those in as cost of doing
the next thing that you really do think
about is competition competition is not
always a bad thing if there's
competition that means that there's
likely customers right it validates your
idea right if there's no competition
what it mean it could still mean they're
customers but you probably gonna have to do a
lot of educating of the customer if
you're offering a new product or a new
service you're gonna have to educate
the customer on why they need it how
will they benefit we're both doing this
right now you have your trainings you're
having to educate people on why would
they need leadership training right I
have the the Club for entrepreneurs why
would they need a club for entrepreneurs
right there aren't any clubs for
entrepreneurs in Casablanca there is no
competition so we're gonna have to
convince people why it's a good idea why
should they pay the monthly fee every
month what benefit are they going to get
that's an education process so when
there's no competition you have to
educate the market when there's a lot of
competition you may not have to educate
the market but you will have to compete
on quality and price and that can
be more difficult sometimes the next
thing to think about is what makes your
business special what makes it
defensible and I want to tell a story
that caused me to want to talk about
business models today on Saturday I was
with my wife and we were looking for a
place to eat we were walking down the
street and we saw a very nice-looking
restaurant it was very clear that a lot
of money had been spent on the exterior
on the interior the seating the lighting
the decoration the menu it all looked
very nice and so we went in and we
looked at the menu and we saw the prices
and we thought okay we're at a mid-level
restaurant and then the food came and I
realized wow this food is a lot better
than the prices on the menu there's a
mismatch right now the food matched the
interior and the exterior of the
restaurant but it didn't match the
pricing and it didn't match the
neighborhood either the
neighborhood was a middle-class
neighborhood lower lower middle class
neighborhood and there were not a lot of
restaurants around that had this kind of
quality I immediately started talking to
my wife well this on the menu well
they're not making any money on that
dish and they're not making any money
and that dish and after the meal was
over I talked to the manager and I was
explaining to him things about marketing
and talking to him about what he needed to
do on Google Maps and Facebook and the
owner overheard us and he called me back
to talk about his business and he
basically told me they're in
a terrible position he is a professional
he has an entirely other business it has
nothing to do with restaurants he just
one day woke up and decided he wanted to
start a restaurant but he's not a
restauranteur he doesn't understand
overhead he has done essentially no
marketing he handed out some flyers but
he had no plan he thought that he could
just open a nice restaurant people would
come they would like it and tell their
friends well it didn't happen and right
now his break-even point meaning the
average daily revenue he needs is about
six thousand dirhams a day just to pay
the basic expenses right but he's only
generating about two thousand dirhams a
day and so what I told him is you could
either hire me to help you with
marketing which he didn't want to do
because he didn't want to spend more
money but I'm not really interested in
some other kind of relationship because
even if I grow your revenues by 300% you
will just still be breaking even right
and I would question does that include his
time in his business it absolutely does
not include his time so he's not
getting a salary so even if he just
breaks even he's got this hobby of just
going and working at a restaurant that
causes him stress or takes his time and
it doesn't generate any money yeah so
this is the concept that I want to talk
about when it comes to business models the restaurant industry is typically a
terrible business even if you do it
really well
you are always going to have people
coming into your industry like this
owner who is not a restaurateur or he's
made a lot of money in a different
industry and he decides to open a
restaurant but what is he doing
he's putting downward pressure
deflationary pressure on the prices of food.
he's actually told me that he's
pricing menu items below cost just to
attract new customers right so what you
have is you have a city full of
restaurants some of which are run by
Restaurateurs others are run by lay
people non-experts but they're all
competing for the same customers yeah so
what does this do it puts a race to the
bottom in terms of price you have to
provide very high quality to compete in
the market at a very low price meaning
the margins are very low yeah it's a
very hard business to do and it's a very
hard business to sustain and that's why
you have to think about in your business
model who is the competition what are
the margins and is it easy to come into
the market and are there a lot of people
that want to and when it comes to
restaurants everybody who eats thinks
they can run a restaurant oh I could do
it better than this well I can cook a
little bit you know but that leads
to too many restaurants and as Seth
Godin says the problem with a race
to the bottom is you might win that's
right you'll end up at the bottom now
I'm not trying to say that every
restaurant in the city is failing there
are certainly some good restaurants but
a lot of those were established a long
time ago they have a very unique
location or they have a competitive
advantage I know a restaurant that is
very successful but the owner owns the
building so he's not paying rent
does he have opportunity cost yes but he
doesn't have to pay rent so his
overhead is dramatically lower than his
competition in the neighborhood who are
renting out their spaces right so when
it comes to business models these are
things that you have to think about is
it easy to enter the market is there a
lot of competition do you have pricing
power in your product or service for
example I imagine there are not a lot of
Franklin Covey certified trainers in
this city in this country is that right
that's right I'm the only one qualified
to teach the course I teach
in English so that gives me a
competitive advantage someone else could
say hey I can teach the seven habits
because I read the book and I've got
some ideas for how I could pass on the
knowledge but they don't have access to
any of the resources any of the decades
of ideas that have been put into the
best way to train other people in this
course which gives me that competitive
advantage it separates me from anyone
else who wants to become a facilitator
another aspect of business models you
mentioned was target customers now if
you want to focus on Morocco
specifically you've narrowed it down to
thirty five million people and for our
listeners who speak English that's even
more of a niche within Morocco however
it has that advantage of being an
unsaturated market so there's plenty of
ideas that exist globally that we don't
yet have in Morocco and that might be
because it wouldn't work here there are
some businesses that can be very
successful in Spain or in America that
wouldn't work in Morocco nobody would be
interested however there's other ideas
that just haven't yet arrived so I
shared about an idea of opening up a
drive-through coffee shop here in
Morocco because it's something that I
saw on my trip to Saudi and I've seen it
on the west coast of America and it's a
great business model it's a tiny real
estate space it serves people who are
professionals that don't have much time
and that are driving in a car and some
of the comments that I got were bashing
the idea saying negative things and
saying oh there's only about 20% of
Moroccans who drive cars and I was
saying that that doesn't matter
I don't need every one of the 35 million
Moroccans to be my customer it's a
geographically bound idea it exists just
in one location and it's a drive-through
coffee shop so by definition I'm
discriminating against all those people
who are riding the bus or riding a
bicycle or walking on foot I'm targeting
a niche one other broad idea to
think about in the business is if I
wanted to generate a million dirhams
worth of revenue and I'm selling a
bag of popcorn that costs five dirhams
Ok I need to sell 200,000 bags of
popcorn per year to generate a million
dirhams whereas if I sell some sort of
product that costs 500 dirhams now I
only need to sell 2,000 of that product
or that service so when considering
which business to start one thing to ask
yourself is do I want to sell something
that's very small but I make money
through volume or do I want to sell
something that's very expensive it
narrows those who could purchase my
product but I need to make far less
sales all I need is five customers a day
and paying 500 dirhams
in order for me to reach a million
dirhams a year so if i can come up with
some sort of product or service that
people are willing to spend 500 dirhams
for i could have an excellent business
it also narrows my distribution
challenges and my overhead costs the
challenges associated with serving a
million people a year are extremely high
whereas 2,000 people a year is much more
manageable one of the things that's
growing around the world is this idea of
being a blogger or a vlogger or content
creator an influencer and I'm
always puzzled as to how people think
they're going to generate revenue doing
that I was looking in order to make a
hundred dirhams a day through your
website you need fifteen thousand unique
visitors Wow just to make a hundred
dirhams a day from Adsense now there are
other ways of generating revenue meaning
you get paid more if they click on the
you get paid more if they ended up buying
but in general that's an incredibly
large audience to be making a very
little bit amount of money one of
the ways that we've identified to
use content to create money is you have
your the top of your funnel which is
the podcast or the Maroc Treasure YouTube channel and that's the top of the funnel
and then people come down the funnel and
maybe they come to a training or they
buy an e-book or they become a member of
the entrepreneurs Club and they come
farther down the funnel and then even at
the bottom of the funnel is a multi-day
training when it comes to leadership for
you or becoming a member of my startup
incubator which will be here in the
office so we have traffic coming
to the podcast coming to the website but
our plans to monetize this traffic don't
have a lot to do with the actual website
or posts on Facebook or Instagram or
other forums it's about building an
audience and then speaking directly to
that audience and providing them value
in other ways that they're willing to
pay for that they're happy to pay for
and when you're talking about writing or
blogging or doing photography or video
you really have to think hard if you're
gonna spend all of your days and nights
working on this how are you going to
monetize this effort and there are a few
Moroccans who are trying to be
influencers but it isn't really clear to
me how they're ever going to make
any money doing that so this is
something that you really need to think
hard about yeah I've spoken to a couple
different influencers in Morocco those
with hundreds of thousands of Instagram
followers or you know possibly some
other channel and it is difficult there
isn't as developed an industry
for influencer marketing in Morocco but
it is growing there are some
opportunities coming down the pipeline
but really those people need to think
what is an asset I can create so I've
got this audience that follows me
but right now it's free but there's a
portion of that audience that would be
willing to offer money for something
more so that's what the idea of the
funnel is is at the top there it's very
wide its general its broad but it's free
and then to go down a level to get
closer to that person you need to pay
and so these people need to create some
sort of asset that they can then offer
to their audience in order to monetize
you're a speaker Ryan, you're a
trainer what are some of the challenges
that you've faced regarding your
business model one of the challenges I'm
currently facing is the payment options
in Morocco so I'm teaching workshops
which are paid I often give free
workshops and as you know I publish lots
of content online that's completely free
but then for somebody who wants more
direct contact where the workshops that
I'm charging for are just ten
participants so it's very intensive
contact lots of chance for discussion or
for direct input but those costs more
money now the challenge I'm facing is
when somebody's interested in the course
it's hard for me to get the money from
them so I'm looking for options where I
can have it directly within my website
for somebody without an international
credit card how did they transfer money
from their account to my account in
advance so their seat is reserved and
I'm confident that they're coming I'm
not taking any risk by reserving their
seat because what happened to me on the
previous course is that I'm saying no to
people that want to come because I'm
saying I'm full I've sold all the seats
but because I only took a deposit
someone who didn't show up lowers the
amount of profit that I generate at the
end of the day so I'm not interested in
doing that now if something ever
happened where I got sick or wasn't able
to perform I would refund everybody's
money and send it back to them but I
want to know in advance that each seat
has been fully paid for and I don't want
to deal with any finances on the day of
I want to concentrate on delivering the
content offering as much direct
attention to them as possible without
worrying about collecting funds
so that's what I'm looking for in
Morocco is some sort of digital platform
that somebody can come read the details
watch a video and say yeah you know what
I want to sign up for this course and in
that moment they do it and it's done it
also saves me on all the hustle of
contacting people and saying oh here's
my bank details did you pay yet okay
thanks for sending that photo I don't
want to have to waste my time with all
those little transactions I'd rather
just get a notification on my phone
hey you just received 500 dirhams into
your account so-and-so signed up and
then I know okay great that's my 10 spots
it's closed everybody else is on a
waiting list now for future workshop
yeah this payment issue is a problem for
people in general entrepreneurs and
that's why I cannot more highly
recommend if you sell anything
clothing crafts electronics furniture if
you make anything physical or you repair
things or sell things create an online
store jumia.ma or veemo.ma we have
talked about these in the past we have a
whole episode with the marketing
director from veemo, get your products
online because they are the ones that
handle all the payment all you have to
have is a personal bank account and in a
lot of cases you don't even have to have
that because they will put the money
they owe you on a bank card and then you
can go and spend it you don't even have
to have a bank account use these
online platforms create an e-commerce
store it's free in many cases it's free on
jumia on veemo there are entire
industries in the United States where
all people do is they look on amazon.com
for products and then they go out into
their neighborhood into their local area
and they look for those same products
but at lower prices then they buy
them in bulk whether it's a closeout
sale or a special discount and they buy
them in bulk and then they sell them on
Amazon it's a whole industry yeah
and it could be done here it could be
done here if you go onto Jumia
or go on veemo and look for products and see them and what they're priced at if you
can get it for cheaper create a store
and put those on online yeah that's
right what we've shared today have been
some broad general principles so if
you're an entrepreneur and you're
considering starting a business make
sure you think about these high-level big picture ideas before
getting too committed to a narrow idea
because sometimes people are excited
about opening up a cupcake store or
they're really into fashion and they
think they're gonna be successful
selling shoes or dresses but you've
really got to think through the business
principles behind it or else you're
gonna waste a whole lot of time and
money on an idea that just wasn't gonna
work from the get-go the numbers weren't
there you've been listening to the
business in Morocco podcast my name is
Ryan Kirk here with my co-host Ryan
Maimone if you enjoyed this episode be
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you think we should cover on the podcast
fill out the form on Moroccopodcast.com
or email us at Ryan@Moroccopodcast.com and we'll give you a shout
out on the show our theme music is
lovely day by Bill Withers
used under Creative Commons and we hope
you'll have a lovely day doing business
in Morocco we'll see you next time

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