Lack of proper saving culture

Many business owners have a poor saving culture. Every money they make in their business is consumed, and in most cases the money are spent on things that will not bring any increase to the business. Because they spend all the money of the business on things that are not in line with the mandates of the business, the business is sure to fail. Materials and other business consumables for the smooth running of the business cannot be bought because adequate provisions were not made for it.

The lack of proper saving culture among business men is a major factor to be highly discouraged if we must make meaningful progress in business. Working capital should always be made available if the business must survive. A business man that has no reserve cannot succeed in business, because when opportunities for his business advancement arrive he will not be able to quickly seize it. And in most cases where he is able to secure a loan to make good use of a profitable business opportunity, the interest rates and the amount he is expected to remit as an install mental payment of the loan facility will drain him of adequate liquidity to run the business.

I was passing through this dilemma before in my business. I make money but the moneys were going to settle my indebtedness. I was barely able to keep my business going. Many times I thought the business will fail, but suddenly God will create a way of escape for me and I will survive that stage. That was how I was struggling with my business, until I was able to develop a strong saving culture. I decided one day to keep part of what I made solely for the running of the business. I decided to pay my self and the business first before paying anybody. With this in place I was able to save enough to embark on other profitable business ideas.

If you want your business to succeed, part of what you earn is yours to keep. Part of what you keep should be invested so that it helps to labor vigorously for you and for your business. It is only in this shall you be able to save your business from failing.

Limiting business to one location

Limiting business to one location is a fundamental cause of business failure all over the world. Majority of business fails because the owners limited the business to their location only. They refuse to look at the other side of the road to see other potential market. When you limit your business to one location, you will only get patronage from that location only, but if your business is spread across many markets you will not only be a brand in the market place but you will generate more profit that will help keep your business floating even in the midst of economic downtown.

Take for example, if you have a business in one location that pulls in $500,000 monthly revenue and you decided to duplicate your self in five more strategic locations that equally generate $500,000 monthly revenue each, it will be more profitable because your customer base will increase. You will be able to locate potential customers whose patronage can help to catapult you to higher heights in your business endeavors. It is not the quantity of the customers you have that makes your business grows, but how many quality customers you have, and how you are able to convert them to loyal customers. And you cannot get a handful of quality customers if you remain in one location.

Now let us do a simple mathematics:

Numbers of business outfits:       6

Monthly Revenue:                      $500,000

Total monthly Revenue:              6x500, 000

Total Monthly Turnover   =        $3,000,000

With this monthly turnover, your business is now more profitable compared to monthly revenue of $500,000 from only one business location. More so, you are able to capture more markets, offer more products and services to your targeted market. This means you will meet with more potential customers whose patronage can help greatly in catapulting your business to higher heights. I want to re-emphasize a fundamental truth: It is not the quantity of customers you have that makes your business profitable, but it is the quality of loyal customers that patronizes your business that makes it profitable. A man with customer base of 1000 simple customers who only buys products of $20 once a month cannot be compared to a man who has 500 quality customer bases that make regular patronage of $500 trice a month. Where the former make only $20,000 monthly, the later makes huge sales of $750,000 monthly. That is the power of quality customers.

Therefore, a wise business owner will not limit his business to only one location. He will put in effort to spread his business across many potential markets in order to capture more quality customers. I have heard people say you can put all your business in one place and let the public know what you are doing and where you are located; they will find you. From experience, I have come to realize a fundamental truth that people tend to patronize the man whom they can easily access than the man whom they have to go through certain difficulties to locate. Why put your targeted market through pains and difficulty to do business with you when you can actually take your business to where they are and spare yourself the effort involved in paying huge sum of money to advertise your business. It is more profitable to take your business near the market that needs your products and services than to try to call and persuade them to come to you. Refusal to recognize and comply with the above truth is a fundamental reason of major importance why many businesses fails. And he who can avoid it would have taken a sure step in the right direction of building a solid foundation for the success of his business.

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Making no effort to improve

Making no effort to improve is a major factor for business failure.  Many businesses fail because the entrepreneurs behind them were too confident of the superiority of their skills. This over confidence blinded their eyes to the little business improvement effort they needed to make to stand out. Business is dynamic, therefore, to succeed in the world of business you need to be dynamic; you need to learn the new skills of trade, understand and acquire the required technology that will help you to continue to maintain your relevance in the market place. When you fail to do this, get ready to be left behind.

Even if you cannot buy sophisticated technology, try to improve on your service delivery and spend some money to pick one or two technology that will help you to satisfy your customers. Do not expect to experience meaningful changes in your business if you continue to do the same thing over and over again. This is what I call business insanity. To prevent your business from failing, you need to put in your effort to completely eradicate this insanity.

Read more articles and publications on your line of business; attend seminars and workshops that are business oriented. Break loose from your comfort zone and step into the realm of positive interaction with people in your industry; most especially people that are doing better than your self. Do not copy them, but learn from them and apply what you learn with little enhancement to make your business more unique and profitable. Engage your customers in conversation to find out ways on which you can serve them better. Listen carefully as they talk, and you will be able gather enough information that you can work on to make your service and business more unique and leverage able.

Do not be contented with what you are offering now in your business, make the effort to improve no matter how little it is. When you do this your business will attract more customers that will help to boost your financial performance. This will make more money available for you to embrace more profitable opportunities for growth. Your effort for improvement will pay off if you continue to commit all you have to it. Do not say, “There is not much I can do”. There is so much you can do! You have not discovered it because you have not tried. Get up and dust your self, look up to sunshine and commit your mind to make a little business improvement, you will be amazed what you can do.

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Faulty Financial System

Faulty Financial System is one of the deadliest causes of business failure. Finance is a major factor to the survival of any business venture. Where there is no adequate finance to fund your business as at when due, business opportunities are missed and the business soon fails. In the light of the above, it is expedient that every entrepreneur knows how and where to source for cheap funds to finance or run his business. However, as essential as this, it is not always easy in most cases because of our faulty financial systems. This system comprises of the structures and policies of financial institutions. In most cases our financial institutions make it very difficult for those who truly desire financial assistance to assess it as at when due. This is as result of their strict and selfish policies which only favors those with good financial standing.

In Nigeria for instance, business loans are given out with strict conditions that will frustrates the survival of any business. They give out loans with no considerable time frame of repayment. For instance, where a bank lends N100, 000:00 to an entrepreneur at a going interest rate of 3% per month, to start a business and expect him or her to make payment monthly to offset his debt within six months, in my own opinion is putting too much weight on the business. When you remove about N20, 000:00 monthly to pay your debt, what will you use to run the business and embrace other lucrative opportunities that may help to sail you to business success? How can you even manage to pay back this loan completely if you do not have enough to run the business? This will lead to business failure if the entrepreneur has no other means of sourcing for funds to run his business.

The bank can make life easier for business owners if they can prolong their loan repayment period. This will prove mutually beneficial to both the bank and the business owner because the entrepreneur will now be able to spread the loan over a flexible time frame and the bank will equally make more money because the more time the money stays with entrepreneur, the more it labored vigorously for the bank. But because the banks are selfishly positioned for quick money, they are paying deaf ears to the pains of the sector they were set up to look after. Instead of helping the small and medium scale enterprises, they are diverting the money to run their privately owned business, and also to lend only to the rich. Thinking that this will solve their problems, it has plunged them into more problems. You cannot solve problems with problems. The rich borrowed huge sum of money to invest in business ventures which never deliver on the intended terms. Now, when these banks go to collect their money from these so called rich people, they are greeted with sophisticated lawyers who use the law to protect the rich and their corporation from litigation.

Some times these loans are given without collateral. Nigerian banks can afford to give loans to the rich without collateral, but will refuse to lend small amount of money to a business owner with viable business concept, but has no collateral. Even when the small business entrepreneur offers pragmatic reasons to support his ability to repay back, he will be turned down because has no connections and can not afford to bribe his or her way through.

A friend of mine who run a school business needed about N1, 000,000: 00 to add to what he had to purchase a piece of land to build a permanent structure for his school. He approached his bank to advance him the loan, but they refuse because he has no collateral. He even told them to buy the land in their name, and transfer ownership to him when payment is complete, but they still refuse. This makes me to wonder what the problem is with these banks. The school fees for a session, was able to pay for this loan. Though, the bank knew this because all his transactions were done through the bank, but they still refuse to help him.

The limiting role of our faulty financial system cannot be overemphasized. Whenever our financial system fails to live up to their mandate, the business that depends on them for sustainability will eventually fail.


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Bad EmployeeI

One of the greatest causes of business failure is bad employee(s). The people that you employ to run your business will either make or mar your success. If you are experiencing a frustrating moments in your business, the reason why your business is failing may just be because you hired the wrong person for the job. Your staffs are your greatest assets if they are good, and in the same vein, they can become a major liability if they are bad. Therefore, it is wise that you choose wisely those with whom you work with.

Majority of businesses fail because their employees drive out their potential customers through poor service delivery, obnoxious attitude and laziness to duty. Instead of running the business successfully, they collaborate with external forces to ruin the business. They may be technically qualified, but they are not diplomatically and socially suitable. How will your business succeed if your staffs do not carry out their duties enthusiastically? How will your business succeeds if your office becomes a place where people come and get insulted by your employees? Their complete lack of enthusiasm and social manners will reflect in the way they treat people and carry out their duties. Fine, your company may be the best technically, but because you lack people with high social skills to complement your technical skills, you will inevitably encounter business failure.

When you hire a thief, a witch or wizard, or somebody whom your secrete competitor introduced to you, your business will definitely fail. While you are doing everything positive to see that your business grows, these fellows are busy doing everything negative to see that your business fails. While they are in your business, their aims and objectives are not to you run it profitably, but to ruin it deliberately. All their activities in the business are that which destroys. They are the ones who will create disunity in the company. They are the ones destroying company’s properties. They are the ones who will not make extra effort for the growth of your company. In fact, they move about discouraging those who have good intentions for your company. They are the ones destroying your business contacts and contracts appointments. They know if your business fails and you still have those contacts and contracts appointments, you can still make a comeback. They do not want you to succeed, so they do everything to make sure your chances of success are ruined. If such people are allowed to be in your business for long, they will successfully make the business to fail.

The bad employee will spread your business strategies and techniques to your competitor so that they can outsmart you in the market place. When this happens you will begin to wonder how your competitors got to know your strategy. Friend, it is not far fetched; the little foxes that spoils and kills the bloom of business is within the company. Search and weed them out of your business and your company will grow. Those kinds of employees are not to be allowed to remain in any business enterprise that values success.