1. Failure to
write a business plan before starting the business
The need to write a well-defined and comprehensive business plan before
starting any business cannot be over emphasized. You are not supposed to start
a business in the first place when you do not have the right capacity to start
it or when the raw materials needed for that business are not within reach.
When you subject your business ideas to the test of a business plan, you will
know whether or not they are worth pursuing. See my previous article on how to
write a unique business plan on my website.
2. Poor leadership
Your business will not grow if you don’t empower your subordinates and staff by
means of training, motivation, proper communication, delegation of duties, etc.
Entrepreneurs should strive to improve their managerial skills more so when the
number of their staff increases. Get a good business mentors, read good books
on leadership, attend seminars on leadership. According to John Maxwell,
everything rises and falls on leadership. The reason for your business failed
or is stagnated can be summed as: poor leadership. Every other factor emanates
from this. Good leadership is the ability to always make the right decisions
that will make your business venture to succeed.
3. Impatience
One common thing among entrepreneurs in Africa is that they are in haste to
start taking money from a business that they just started. I know that it is
not easy not to start using some profits from a business to carter for our
family needs due to the environment we find ourselves. However, bear in mind
that it is better to reinvest profits into the business until the business has
gained some form of stability. Even when the business has gotten some form of
stability, profit taking should be very minimal. Many successful entrepreneurs
I know do not start taking profits from their business until after five years.
4. Lack of determination & Persistence
To successfully start and keep a business running and profitable is not an easy
task. It takes determination, courage and persistence, else you will be
discouraged. There are many sacrifices you must make as an entrepreneur
especially at the early days of the business. You must be determined not to
give up until you see the business successful.
However, many entrepreneurs give up too easily because of their initial failure
or difficulty.
5. Lack of focus & foresight
This is one of the greatest hindrance to business success. If you are not
focused as an entrepreneur, you will not succeed in business. You must shun
distractions. In your mind’s eye you should always see the great future of your
business. Many African entrepreneurs start one business today and the next year
they see people going into another business that they perceive to be more
profitable and then they abandon their earlier business to pursue the new
business in town. You cannot succeed this way. You need to stay with a business
for at least five years if you are to make anything meaningful from it.
6. Lack of funds
When you don’t have funds needed to keep your business running, the business
your business operations will encounter a dead lock. As an entrepreneur you
should be on the lookout for new sources of funds for your business. Don’t wait
until you completely run out of funds before you start sourcing for funds. See
how to raise start-up capital for your business.
7. Lack of Product improvement/development
If you don’t seek and strive to continuously improve your products and
services, you will be out of business soon. You should be ahead of your
competitors in product improvement and development. Continually seek for news
ways to improve your product quality and delivery.
8. Lack of succession plan
When a business stops to exist, people lose their jobs and the dependents of
those that lose their jobs are indirectly affected. This is not good for the
economy of the country and should be guarded against. In Africa, a lot of
businesses die or begin to die once the proprietor of the business dies. This
is not supposed to be so. There should be a deliberate plan to training
competent staff that can take over the efficient management of the business in
the event of the demise of the managers of the business.
9. Inadequate marketing
Marketing is the soul of business. Marketing is one of the most important part
of your business. Marketing should be consciously done. Marketing should be the
responsibility of all staff including the senior management and not only for
the marketing department. Market your products using all available avenues within
your reach and budget. Seek for more creative ways to reach your customers and
clients. Seek to get your customers to like your products more than those of
your competitors. Many entrepreneurs don’t give much priority to marketing and
that’s why their businesses fail. Keep a database of all your customers and
send them periodic reviews of your existing products and new products. Get a
website for your business. This helps you to showcase your business to the
world without any geographical limitation. You can contact us to help you
develop a professional website for your business.
10. Bad customer service
Customer patronage keep you in business and so you should do everything humanly
and legally possible to keep your customers happy with your company and your
products. Customer service and satisfaction includes seeking for customer
feedback on your products and services and attending to your customer
complaints. Carry out periodic customer satisfaction surveys and ensure that
you close all findings and gaps identified. Do not ignore the needs of your
customers. Appreciate your customers when they patronize you. Buyers are always
happy and are more likely to come back when owners of grocery stores say
‘’thanks for your patronage’’.
11. Failure to build a good team
Any organization is as strong as its team. Your team is one of your greatest
assets. Your goal as an entrepreneur should be to build a great team that would
take your business to greater heights. Every member of your team matters and
has an impact on the success or failure of your business. John Maxwell
said that every team is as strong as the weakest member of the team. He said ‘’
Everyone on the team needs to produce at a high level of quality;
otherwise, the weakest link will pull everyone
down.’’ Therefore, you should consciously develop and motivate your team
via training, commendation, incentives, delegation etc.
12. Poor business Location
Many entrepreneurs fail to take this into consideration before establishing
their businesses and this is one of the reasons their businesses do not
succeed. If you are starting a manufacturing business, your factory should be
located close to the source of your raw material. If your business has to do
with sales or trading, you should locate your business very close to where
people who need your products can easily reach you. A business that is close to
the consumers has more chance of success. Avoid locating your business at a
place where there is poor security or where there are hostilities. Give deliberate
consideration and thought to the security of your business when planning to
start your business.
13. Poor Financial Management
Finance is arguably the life blood of your business. Many businesses have
failed because the proprietors of such businesses did not draw a clear line
between the business assets
and finance and their personal assets and finance. It is a very bad practice to
use the company finance for your personal interests even if you are the owner
of the business. There should be proper accountability and record keeping for
all company assets, finance and transactions. Employ an accountant if you can.
At the least make use of the basic financial record books like the ledger,
journal and the petty cash book. You can even make use of accounting
software and applications to make your record keeping more easy and accurate.
14. Premature Expansion
Many entrepreneurs are in haste to expand without maximizing the potentials of
their current business and markets. As an entrepreneur your aim should be to
build, develop and maximize existing systems and products first before
venturing into new frontiers.
15. Little or no business profitability
Your goal and efforts should be geared towards making your business to be
profitable directly or indirectly. Your business cannot survive for long
if you are not making profits.
If you are not making profits, you would not be able to keep your staff and you
would not be able to grow or expand.
16. Reluctance to partner
A lot of businesses in Africa do not grow beyond the sole proprietorship level
because the proprietors are too reluctant to partner with other more
experienced or more capable people. They don’t want to give up a part of the
ownership of their business in exchange for the growth of their business. I
always tell entrepreneurs that 50% or even 40% ownership of a big business is
far better than 100% ownership of a small business. Imagine having 20% stack of
a business worth millions of dollars. Is it not better than having 100% stack
of a business worth thousands of dollars? When you give up a part of the
ownership of your business in partnership, you stand a chance of getting more
finance into the business, you access more knowledge and skills, the business
is more likely to expand and grow as a result of shared efforts and resources.
Just make sure that all necessary legal frameworks are established, also ensure
that profit-sharing formula is agreed and all responsibilities are defined
before embarking into any business partnership. Ensure that any partner you
allow into your business is bringing something useful into your business like
more finance, knowledge, skill, experience and expertise.
No comments:
Post a Comment