by Udeme Ekwere
Sometimes, a business is doomed to fail from the beginning because the entrepreneur failed to recognise and implement basic steps that help to build a business.
In some climes, up to 70 per cent of Small and Medium-scale Enterprises fail within the first year and close to 50 per cent of the remaining 30 per cent fail within the next three years.
An entrepreneur must ensure that he takes time to learn the ropes and carry out proper research before getting involved in any kind of business.
Experts have said that the incidence of failure can be minimised with effective business planning.
Prospective business owners are also encouraged to conduct adequate feasibility studies before venturing into any business. They should also avoid the bandwagon, as innovation is the key to success in business.
Below are some indicators that business owners have to pay particular attention to if they are to build and operate successful businesses.
1. Know the market
A major reason why companies fail is that they run into the problem of little or no market for the product that they have created. Experts say it is essential for would-be business owners to go into a businesses with high product demand.
An Enterpreneur, Mr. David Skok, says that this can either be due to simple execution, or a more strategic problem, which is a failure to achieve product/market fit.
He says, “Most of the time the first product that a start-up brings to market would not meet the market need. In the best cases, it will take a few revisions to get the product/market fit right. In the worst cases, the product will be way off base, and a complete re-think is required.
“If this happens it is a clear indication of a team that didn’t do the work to get out and validate their ideas with customers before, and during, development.”
2. Adequate cash flow
It has been said that cash is the lubricant needed to oil a business. A major reason that start-ups fail is because they run out of cash. A key job of an entrepreneur is to understand how much cash is left and whether that will carry the company to a milestone that can lead to a successful financing, or to cash flow positive
Many start-up entrepreneurs are usually not concerned with backup plans, and they also don’t keep funds for emergencies. To enable a backup plan to function properly, it is equally important to keep sufficient funds aside to fund those solutions.
Start-up businesses usually involve huge sums. The business owner may not have put his own money in the project, or perhaps could have got funding from banks or other financial institutions.
Skok explains, “In such circumstances, unprofessional handling of financial affairs could lead to losses, which in turn may prevent the business owner from getting future monetary help from these institutions.
“Having emergency funds can also help put off foreclosure from clients who reneged on their payments, or losses suffered from damaged or missing stock, until the flow of income steadies out to give stability to the company.”
3. Focus on your strategy
The best thing about start-up businesses is their willingness to pursue plans. They would give their all, for the plan to work perfectly but as soon as they face a hitch, some will waver, and start looking to approach the process differently.
Every start-up business works on and around a planned strategy, the approach of entrepreneurs might be a little different, but it is important for them to stick to the chosen approach.
Experts have said that changing an approach too soon may likely lead to confusion and rather than solve the problem, it may leave one dangling between two possible paths of solution with no end in sight.
Such fickle-mindedness speaks about the level of on the part of the entrepreneur, and means that the business owner did not do proper homework before jumping into the business.
Changing methods too soon will hamper growth, because you will have to start learning about the new method before implementing it. Give your methods some time, or put in some more effort and you might get the results you want.
4. Perseverance
Perseverance is very important to ensure the successful running of a business. It is simply a conscious persistent determination. It involves regularly evaluating each one of your goals and actions deciding whether or not you should keep going.
A business analyst, Mrs. Adejoke Onabanjo, says in Nigeria, many people who give up in business will always have one or two things to put the blame on.
Although, everyone is aware of the economy which does not make doing business an easy feat, there are issues with multiple tax, that many people try to evade at every opportunity, electricity and finding the right personnel to work with.
“To overcome this, you need to view the world as one full of endless possibilities. Once you are pursuing your heart’s true desire, smart perseverance takes care of itself. You will be naturally motivated to pursue your desires,” she says.
Udeme Ekwere is the senior Business Correspondent at Punch Nigeria
The opinions expressed in this article are solely those of the author.
