ADEMOLA ALAWIYE explains the necessary things that are needed to prolong the life span of companies, especially new ones Poor administration and lack of a good business plan can cause an early death of a new business. According to the Small Business Administration, 33 per cent of all new businesses fail in the first two years. Businesses succeed as much as they fail. To run a successful small and medium scale business in Nigeria, apart from adequate capital investment, some basic criteria must be strictly adhered to by the entrepreneur.
Experts note that the neglect of these criteria contributes to the failure of most businesses. Entrepreneurs, especially those just starting out in business must appreciate the fact that shrewd businessmen treat business failure as a milestone on the road to success. They must try to bounce back notwithstanding the fall. Experts note that real entrepreneurs count on learning from their mistakes, and use the experience to move to the next idea. Owners of start up businesses should learn from the mistakes of others to avoid the pain and suffering associated with business failure.
Below are major things an entrepreneur should consider when setting up a business, according to experts.
A good business plan Many young entrepreneurs often neglect the essence of writing out a business plan for their venture. Experts note that you should not believe the myth that a business plan is not worth the effort.The Managing Director, Netrack Limited, a small scale business, Mr. Sola Adeleye, says no matter how small a business might be, the entrepreneur must take the pains of writing out a plan. He notes that the time and energy put into writing a plan shows that the entrepreneur truly wants to transform his idea into a business.
Proper execution of ideas It is one thing to come up with a business plan and another to astutely execute the idea. Experts note that an idea alone is really worth nothing. According to them, the idea is useless if not executed. They note that the entrepreneur must be a risk taker and one who takes strict business decisions in order to do well.
Unlimited revenue sources It is worthy of note to understand that even some non-profit organisations generate revenue or donations to offset operating cost, not to talk of a business outfit established for the purpose of generating income. Experts note that if your product is free, or you lose money on every sale, it will be hard to make it up in volume. According to them, your product must be one that will attract customers with adequate purchasing power. They note that if your customers have no money, your business won’t last long.
Passion This is one reason why many young entrepreneurs give in too early. Experts say the most common cause of start-up failure is when the entrepreneur just gets tired due to lack of passion for the venture and shuts down the company. Despite setbacks, many successful entrepreneurs like Aliko Dangote – Africa’s richest man, and Steve Jobs – founder of Apple Incorporated, remained committed to their vision until they found success.
Business opportunities Another reason why first-time businesses fail is as a result of limited business opportunities for their products or services. The Manager, Peers Events, Mrs. Omobolanle Peers-Adekunle, notes that some good ideas may not succeed in the end. She notes that customers at times are indifferent to some products, whether such product is great or not. Experts say that is why it is vital to conduct market research before manufacturing a product.
Strong competition Too much competition for customers may signal danger for a growing business. Budding businesses which have so many competitors may find it hard to penetrate the market. Experts say this is why it is important for the entrepreneur to embark on thorough research before starting up a business.
Working with experienced people An inexperienced team will drag a business aground. Experts note that investors fund people, not ideas. So a first-time entrepreneur must get workers with requisite experience if he desires funding from investors. According to experts, investors look out for people with real experience in the business domain of the start up. Investors want to invest in people with real experience when it comes to running a start up business.
Hence, it is important for young entrepreneurs to partner individuals with sound experience of the venture.
Important tools Some young entrepreneurs underestimate resource requirements for their businesses. Experts say a major resource for any business is cash funding. They, however, note that other resources such as industry contacts and access to marketing channels may be more important for certain products. The tools needed for the marketing of these products are also vital, otherwise the venture may collapse. According to Peers-Adekunle, having too much cash and not managing it shrewdly can be just as devastating as too little cash. She says that entrepreneurs must get the right tools to succeed.
Marketing skills First-time entrepreneurs must embark on aggressive marketing for their products and services. Experts say the word-of-mouth marketing strategy is not enough to make your product and brand visible to a larger market. Take advantage of the media, advertise on classifieds and adopt other channels to make your product known and appreciated by customers. Without effective and innovative marketing across the range of the media, you won’t have customers and this might lead to business collapse.
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