Weeks ago I put out my experience on social media. This experience is centered on things I’ve learned in my effort to float and run different businesses. The response I got was huge, never had I in years of sharing on social media receive that measure of feedback on startups and pitfalls of business. I guess its something that many people do experience.
I’ve lost money-lots of cash and businesses in the past, not one business. Today I view them as my learning processes, and I’d like to talk about a few things I picked up along the way.
Businesses all over the world suffer certain challenges especially startups, be it the big business establishments or the small-scale business. I perceive that some challenges are more pronounced in certain parts of the globe and the contributing factors are mostly socio-cultural. A few months ago my friend started a small business online as a way of earning additional income. Weeks after, I called her up to link her up with a client and she tells me she had to put her business on hold due to a reason that will form an integral part of this discourse.
For new business start-ups, the dilemma of recouping revenues after sales on credit and recruiting the right staffs are the twin factors that drag budding businesses aground and not lack of plans and vision as I’ve come to discover in my foray into the world of trading.
For a new business, there’s usually serious concern on how to attract customers and retain them as well. The desperation to make sales can drive an entrepreneur to deliver products and services on credit, all things being equal this is a good strategy in expanding your customer base but most times it’s going to prove counter-productive because you are not in control of customers behavior. A client who has enjoyed goods and services can choose not to pay up and most times there’s little you can do about it. And some clients would even go elsewhere to buy when the owe you.
Now, selling on credit is a huge trap to every entrepreneur and business organizations that aim at profit-making (well except you are running a charity organization) and it has buried countless businesses. This is the reason why businesses fold-up as soon as they open just like in the case of my friend whom a lot of her friends bought her services on credit and promised to pay at the end of the month, months after most of her clients haven’t made any form of commitment in repaying their debts to keep my dear friend in business.
See! I know the discouragement and stigma(yes) that comes with a failed business venture. Sometimes the individual is scarred for life. Understand that business failure is a global phenomenon, it has no respect for race, creed, religion or geography. It doesn’t care If you have an MBA from Harvard or you don’t have any education. Yet if you play by its rules which is sometimes unwritten, you’ll get rewarded, and these rules are age-long and require common sense. Be smart enough to adapt to your current location and circumstance.
The result of giving out goods and services is that you could be making turn-overs without the commensurate money returns. When this happens you cant keep up with requirements of keeping the business afloat such as stocking up your goods and other necessary expenses. Business gets interesting only when services and goods are paid for promptly. It is fun when you do what you love and get monetary rewards for it.
A greater percentage of businesses close in the first year of establishment, and another chunky percentage don’t make it beyond the fifth-year mark. Make your findings; any business that has lasted beyond five years are those that have found their way around not having to deliver goods and services on credit or have devised reliable means of getting their money back.
Every business must avoid this trap by any means especially as the current business climate is very harsh. In some climes, there are no working legislation aimed at protecting businesses, worst in areas where insurance coverage at best is minimal and in more instances non-existent
On a personal note, I’ve lost as much money as I have earned (maybe more) and here’s why.
One big factor that drags most businesses down most especially the startups is the choice of staffs and partners. Who you choose to get involved with is definitely going to determine the longevity of your business. I learnt the very hard way and it ain’t funny at all. Firstly, sit down and develop a robust business plan and put into account things that may likely not work and other eventualities. You need to develop your business around your personal principles I.e you need to formulate your mission and your core values, that way your modus operandi comes naturally. Your core values should guide when recruiting or entering into any form of partnership. Above all you need Financial Education; basic maths on cashflow. It is important to know the basics otherwise business is going to be an exercise in futility. Your financial intelligence can have a profound impact on your quality of life
Seriously, in business, involving friends and family can sometimes be a serious backdrop, its risky, a mistake perhaps and could become a severe liability. It’s dangerous to do this, especially at the formative stage. In recruiting, there’s no hard rule but there are certain requirements that should not be overlooked. Find out what can work for you. Am talking from several personal experiences. How long have you known the individual? It’s not even about the length of time you’ve known a person or blood ties. Can you vouch for the strength of their character? Can you ascertain their level of work ethics? Would they put in their best shot? What about integrity and honesty? You can get them involved when your business has found its feet, then you might have built a strong structure that can check negative tendencies.
Article:- Chukwuemeka Ogbonnaha