Two weeksago we started a discussion that was centered on the reasons many business (es) fold up soon after establishment, we’ll continue from where we stopped and possibly explore some and devise effective solutions to the challenges picked up.
Many folks just do stuffs with levity because it’s a family thing, it’s my friend he’d do nothing to me. Here there’s no formal approach to assigning and carrying out a task and there’s no proper job description. They are aware you won’t call the cops when they misbehave. Over familiarity can retard growth in business and career. When recruiting people, prior relationships should not be the top determiner. Cast friendly feelings aside because it has wrecked businesses, crashed dreams and ruined the same relationship because friendly feeling played out more over the need for proper assessment.
In forging any form of working relationship, character and competence should be the chief determinants, not personal feelings. I know your friends and family are ‘good people’ but with them, it gets really complicated and you should know that the business climate can be very unpredictable and coupled with the fickleness of human nature. But If you can handle the intricacy of that relationship, go ahead. Of course, someone would argue that friends and family contribute to the growth of a business; yes I agree with you but only in a perfect world and that’s a topic for another day.
One day I went shopping at a market in town that I visited when I noticed some wares going for a very good price and I knew a location where they could be resold for a decent profit margin. I made an inquiry from my companion who resides in that town and we reached an agreement regarding purchase and way-billing the goods to my folks whom I spoke to on the phone as I was just about leaving to another state. Yes the goods were purchased and sent to a family member and a friend of our family, sales began but after the first remittance which was a little over 20% of the capital I invested, I never received any dime again. The young woman at the center of it all still tells me we’d see yet we are already counting years, I did absolutely nothing for the sake of preserving the relationship, in fact, I had forgotten about it except for this article.
Follow me, my friend was handed over a business because the owner was leaving for good. But the owner had stripped the business of all his funds. I knew that the company was doing very well financially up till that moment and my guy was practically stranded for lack of funds. I saw an opportunity and practically scraped every cash I had and even borrowed some equipment to add up to ensure the successful kick-off. Shortly before then I’d moved to another city. That was one hell of investment that I lost everything and even incurred debts. A few months after it began, this friend ran it aground and had even started selling off some of the equipment before a member of his family drew my attention. I cannot begin to recount friends and acquaintances that had purchased stuffs from me and won’t pay. And I don’t even know why some of them still relate to me like nothing ever happened after I got tired of asking for my pay, worst of all is some situations where I had to spend more money trying to redeem a bad credit. Believe me, buying and selling isn’t easy especially in most African set-up
All human relationships should be built on sincerity and trust; if you cannot trust them, then you cannot afford to trade with them its that simple. The importance of trust in a business relationship or any relationship for that matter cannot be over-emphasized. Whether it’s a multi-billion dollar deal or a deal of a few hundred bucks, demands and work out some measure of trust. On your part, ensure you are reliable. Trust is not a one-way traffic thing, you should give it before you demand it.
Let us get down to some suggestions:
- You need a proper business plan. Develop one and its necessary to do so before you set out to start a business.
- Financial intelligence is very important, invest in getting information on investing as much as you can get. This is not a waste of time or effort.
- Don’t borrow to make investments, you will be incurring debt you shouldn’t have. Always invest from the excess of your savings.
- Don’t invest what you are not willing to lose or better still it won’t cause you a heart attack or losing your sleep
- Learn to start small. Eg if you have 5million, invest 200 thousand first and gradually increase it when the business begins to yield, you can gradually increase it.
- Don’t invest in a business that you are not part of or not willing to be part of or have any form of commitment. I have lost money doing this, I remember once I approached a father figure to share my plans to invest in a business and he asked if I’d be 100% involved and the answer was a no. Not long after the business started, the points he raised started playing out. Sadly, that was my first major financial investment.
- Always seek for advise from people who know and be willing to listen and possibly carry out instructions to every extent that is favorable to your system. Don’t just invest, get the counsel of a financial investment analyst before making investments.
- Keep a book and details of your business transactions always-the importance of good bookkeeping cannot be overemphasized
- Don’t invest in an invisible business that you don’t know the modus operandi.
- Don’t be in a rush to invest in a business that looks very juicy, pause and think about it first.
- Business is business, don’t bring family and friends sentiments into it, treat it as an entity that can sue and be sued
- Enter a proper contract with terms and conditions, you can get a lawyer or an accountant to help you draft financial policies agreement where it will be sealed with a stamp in the case with Nigeria once that is done it is binding, any defaulter will be dealt with in accordance with the law.
Article:- Chukwuemeka Ogbonnaha