Image Source: Under 30 CEO
Many entrepreneurs tend to learn from their past failure or mistakes. It is important to avoid wallowing in depression as a result of one’s failure. Failure is costly, however, the quicker you learn the lesson and move on with life, the easier it will be for your business. The mere fact that an organization is successful today, does not guarantee continuity. A ruling business today can become a failed enterprise tomorrow. Here are some ways to avoid business failure:
1. Understand Every Contractual Agreement: It is important to understand the clauses in any agreement before consenting. Business partners could leverage on clauses that shows weakness on the part of the organization, and capitalize on it. Every power you give up to investors or business partners is a threat to your decision making as the founder. When giving power to shareholders, ensure that they are also forfeiting a steep amount of funding in return.
2. Protect Your Reputation: In the business environment, the perception people have of you is key. Your competition, enemies and friends are watching your every step. You must be wary of the public perception, protect your public image, check your lifestyle and avoid negative publicity that can cut the lifespan of your business. A bad reputation can adversely affect sale margins and profits.
3. Invest in People: Capacity building is necessary for achieving growth and delegating responsibilities to subordinates. Conducting regular staff training will shape the personal and professional growth of your employees. You must be concerned about the welfare of your staff, understanding that their commitment to their duties will have a significant impact to the growth and sustainability of your company. If your business is thriving, ensure that it reflects in the salaries and compensation scheme of your employees. Regularly reward effort, and promote employees that have added value to your company over a period of time, it will motivate them to work even harder. Employees who have job satisfaction tend to be more productive than those who are unhappy.
4. Be Conscious of Your Business Environment: Small businesses struggle in Africa’s tough business landscape. Here, some financial institutions give out loans based on your capacity to provide collateral rather than on your ability to build a good business case. Interest rates are capped at over 20%, making it difficult to avoid going into debt, destroying the same company you got a loan to scale. It is important to put these factors into consideration in your short, medium and long term plans. Start small, grow exponentially and effectively manage your expenditure.
5. Be on the Good Side of Law: A single government regulation can sink any company. Customers alone cannot sustain your business; the government’s influence is also pivotal. With the help of a good legal advisor, you can ensure that you are not found wanting on the side of the law. Regularly engaging government agencies is also helpful in avoiding legal and compliance issues.
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