Entrepreneurs set up shops across Nigeria in their hundreds on a daily basis. Typically, they go into the world of business with high hopes of little beginnings blossoming into giant aftermaths, maybe even becoming relevant far beyond the limits of their locality. Again, all too often, the tale doesn’t quite play out as they expect- things unfold slowly, and then there is relative stagnation. In fact, one frequently cited statistic suggests that 80 percent of SMEs in Nigeria do not survive past their first five years- a shockingly high business mortality rate for such a short period of time. But it may not be far from the truth.
Finance, or the absence of it, is the usual scapegoat pointed to in tales of business failure. More often than not, however, it’s not as simple as that. The problem might just be closer to the owner of the failed business than the bank or government house (although sometimes, it is).
Here are things you can do to keep your business alive and well beyond the early years:
People might think that only the big businesses need a plan; the little shop by the roadside doesn’t require a several-page plan detailing goals and strategies, challenges or possible gains. But that mindset can sink any enterprise, including the smallest ones. After all, you can’t really go into a business without knowing how you intend to proceed with it for the foreseeable future. Simply wanting to ‘make money’ or ‘make ends meet’ is not enough.
With a business plan, you have a roadmap to a destination, a clear vision of where you are headed with the business. You should have realistic targets about revenue over a period of time within the near future, and estimate how much you could be spending over that period as well. This helps you put things in perspective, and makes it less likely that you would be caught off guard by the business’s performance. The business plan will be your reference book, something you can evaluate the performance of your business against.
- Don’t Overspend; Reinvest
There might be the temptation to use up your first profit from the enterprise. But don’t give in to it. Instead, plough it back into the business, and get the things you know you would require to improve it. Don’t just stay at the same level; aim for growth, strive to get better. In today’s business world, there are only two ways to go- up, or down. And a sure way to get your business on the downward path is to not build on your success.
In spending, however, be sure that you acquire only what is needed. Treat your resources as dear. Also keep records of cash inflows and outflows, so you are able to monitor the state of your finances.
- Watch Market Trends
Observe which way the wind is blowing. Is demand for the products you sell rising, about stable, or falling? And what are the reasons for these trends? These are questions you should ask. If you get the sense that there is some major change taking place, try to adjust accordingly. For example, if you discover that energy costs are increasing, you might have to review your pricing decisions to match the changes. But don’t just come up with figures. Do a detailed calculation of how much the cost changes could affect the price you set for your product or service if they are factored in. Determine how to allocate costs to units of your products in a way that saves you from making losses, while retaining your customers.
- Customers First!
Your business can’t go on for long if it doesn’t have customers. Find out how to keep the customers happy, and offer them the best possible experience you can. Make your enterprise customer oriented, by constantly seeking their feedback and tailoring your products to suit their tastes and preferences. If you are able to keep them, then you may just be able to keep your business alive.
- Have the Best Team Possible
You might be passionate about your enterprise, but unless your team also believes in the work’s worth, you may find yourself trying to drag them along with you on the journey to your destination. A company is only as productive as the people in it. It is important to ascertain that those you want to work with are also motivated to get the job done. Don’t settle for mercenaries.