About 8 years ago, I inherited a mono product retail business from my mum who is a retired civil servant. At the time, she was selling pre-pack eggs in front of our family house at a neighborhood called Obalende in Lagos State, Nigeria. In a bid to help my mum grow the business, I assisted her with some marketing activities to retail outlets and supermarkets on Lagos Island for a little while and got her some wholesale customers too. She must have sensed that at my young, agile and not to mention jobless state, I could do a lot more with the business than she could. My mother tactically handed her business over for me to run, travelled to Togo and on her return, refused to resume as the owner of the business. This was how I got into business and I have since then faced the challenge of growing and making the business successful. Although the business has seen immense growth over the years, I experienced the good, bad and the ugly side of running a sustainable venture.
Recently, a staff of mine gave me a book written by Brian Tracy. It explains the basic principles of the business life summed up in this saying “What you sow is what you reap!” Starting a small business is like giving birth to, and nurturing a newborn baby. There are basic rules and principles you must follow to succeed. There are also common mistakes that plague small businesses you must avoid! In the small business world, stillbirths are common (i.e. businesses that do not see the light of day). These mistakes are dangerous enough to sniff life out of newborn and growing SME’s. If you can strategically avoid these mistakes, you have a high chance of achieving success in running your start-up:
Do not jump into any venture with little or no knowledge about the line of business you are entering. You’ll find yourself soon jumping out! There’s usually more depth to a business than what meets the outsider’s eye. It is said that experience is the best teacher, but you can learn from others’ experiences too. An internship or even a mentor in your field of business will speed up and increase your chances of success dramatically.
Poor cash flow management
This is very critical especially if you sell goods or provide services on credit. Cash flow management ensures that you do not run out of the little funds you need for daily business expenses while you have millions as receivables in your records. Remember that cash flow is the lifeblood of any business. No blood, no life. Even profitable businesses run out of cash but you need to keep things in the right balance. Remember that those book balances of your debtors will not pay the immediate bills that will keep your business running.
Proper planning prevents poor performance. Plan meticulously and continually review and adjust your plans where and when necessary. It is still true that s/he, who fails to plan, plans to fail. Careful, detailed, strategic research and planning combined with hard work will eventually lead to success. Also keep your plans simple and straightforward. However, do not get stuck on just planning. Act on your plans! Make mistakes, learn from them and then implement.
Poor/No record keeping
As a small business owner, keeping of basic business records is non negotiable. As stated by Ubong Essien, a renowned motivational speaker: “If you refuse to take stock, you will become a laughing stock”. You do not have to be/hire an accountant to keep basic records. Documenting all business income and expenditure is all it takes. You may also consider getting an affordable small business accounting software.
A leading cause of business failure is overexpansion. This happens when business owners mistake success with how fast they can expand their business. This ideology of running a business is wrong and can cause a business to run into huge losses and massive debts. A business must expand gradually, consistently and must have the adequate financial capacity for expansion.
Slow and steady, wins the race!
Businesses go bankrupt because of rapid, unsustainable expansion. Focus on providing your clients with excellent service. As much as you don’t want to repress growth, ensure that you grow your business in a sustainable manner.
Lack of innovation
Recognizing new opportunities and being flexible as an entrepreneur is key to surviving and even prospering in today’s business world. In this age of technological advancements and globalization, new tools and equipment and systems are being developed on a daily basis. To be successful, you must constantly remodel your business plan and keep tabs on relevant innovation that can help you develop.
As I mentioned earlier, a new business is like a newborn baby and it needs all the attention and care, however, diligent entrepreneurs are bound to succeed.
Story by Kofi Mensah: MD/CEO of Rosyamens Enterprises