Why business fails
The desire of almost every Nigerian is to start up a business that they can control and call their own, no matter how small. Nigerians have always had a knack for entrepreneurship and regard themselves as great entrepreneurs, whether or not that is true is another issue. But we have seen some businesses start with some great enthusiasm and drive and before you know it, Kaboom... many great products have disappeared from shelves and warehouses because the companies that produce them went under.
Business failure is a global phenomenon and cannot be associated with Nigerians alone. It cannot also be analyzed from one focal point because, just like businesses fail for one reason or another, so do governments, social systems, economic systems and so on. The uprising in the Arab Nations that spread like wild fires and led to the sacking of various governments, the introduction of Boko-Haram and senseless bombings in Nigeria, the plunge in global capital market indices, debt situation of the biggest economy in the world and the ripple effects, the Nationalization of three commercial banks in Nigeria, the riots and looting in London, e.t.c are all testimonies of failed systems.
Business Failure can be examined from the perspective of Size, geography, economy, industry e.t.c. But fundamentally speaking, the reasons are not far-fetched and can be easily recognized. The problem is that most business owners see the problems, either don't understand them, or some are even pointed out by consultants, staff, or customers and the owners fail to act until the spiral continues and it is too late. Some of the reasons like lack of planning, no succession plan, poor record keeping and accounting system, cash flow problems, lack of knowledge about the business, greed, partnering with people of unlike minds, attrition, growing too fast out of control, etc
On this forum, I would like you to join me in looking at some of the common reasons why businesses fail, especially in Nigeria. Though the fundamentals of business remain the same, I would be using real cases that took place in Nigeria, where most of my audience are drawn from. We would focus our attention on the internal issues rather than the external, internal being those that can be corrected within the organization with minimal disruptions. Please feel free to make your contribution, let us provide solutions....
1. Lack of planning:
Planning is chalking out future courses of action to be taken. It is a very important function of entrepreneurship or (management). A lot of entrepreneurs have great ideas which they develop in their minds and some lead to the production of a great product, service or brand. Some were discovered while working somewhere, accidentally like that guy that left the cake in the oven for too long and discovered the recipe for cookies, that fellow that created that social networking site that millions of people are addicted to in his dormitory or that college radio station that has now become a global news network. Whether it is a start up or a business that is in existence presently, a good recipe to make it fail is to have no plan or failing to review the plan to meet present day realities. A business venture needs to keep evolving to survive in a very dynamic and volatile world that we live in today. The strategies of yesterday may not work for today for obvious reasons, as there may have been change in policies of regulators, market shifts, technology, trends, e.t.c depending on the industry the business finds itself in. All these will affect the overheads positively or negatively, price of the product or service, which will invariably affect the revenue, how competitive the organization will be in the market place and ultimately continuity.
Let us take for instance Emeka, who used to trade electronics in Alaba and after spending 5 years as an apprentice in the business graduated from being an apprentice to being a bonafide...
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