ENTREPRENEURHIP WITH MUIDEEN ADEBAYO IBRAHIM ENTREPRENEURSHIP: WHY BUSINESSES FAIL

“Success is stumbling from failure to failure with no loss of enthusiasm”
          – Winston Churchill

It is a statement of fact that businesses do fail and there are so many factors that are responsible for failure. I will bring that to the fore in this article so that you as an entrepreneur or business person will be wary of the various pit falls in the course of running your business.

In Nigeria, the average life span of most businesses is ten (10) years because of so many factors, whereas, the reverse is the case in some advanced countries such as China, Japan, India, United Kingdom,  Switzerland, United States  and Germany just to mention but a few because most companies in the aforementioned countries outlive their founders.

Bajaj Auto was founded in 1926 in Mumbai in India (94 years ago), in 1937, Kiichiro Toyoda established an auto division called Toyota, Schweppes tonic drink was founded in 1790 in London, United Kingdom, Nestle baby food was founded in Switzerland in 1866. Whilst Peugeot was founded in year 1810 by Armand Peugeot in France, Opel Automobile was founded in 1862 by Adam Opel in Germany. Mercedes-Benz was founded in 1883 by Messers Karl Benz and Gottlieb Daimler. In year 1901, Henry M. Leland founded Cadillac in the United States and Ford Brand as well as the most luxurious brand Lincoln, were founded in 1903 by Henry Ford after several attempts.

From the forgoing, it is crystal clear that companies in developed countries live longer and survive after their founding fathers might have passed on whereas, the reverse is the case in Nigeria, we have so many moribund companies/industries; where is Dunlop, Tate and Lye, Bacita Sugar, Okin Biscuits and Cocoa Industries amongst others? They are all dead and forgotten due to so many reasons or some of the factors as enunciated infra:

Firstly, lack of passion; if you do not have passion for your business, you will lose steam before long and the business will pack up or fail totally. Passion keeps the business going and it is the passion the entrepreneur puts into the business that will move it forward at an accelerated rate. So the imperative of passion of the business owner in running the business effectively cannot be over emphasized.

Secondly, when you start your business for the wrong reasons; kindly note that if the motive of starting your business is wrong, that business can never see the light of the day. Patricia Schaefer in one of her write ups posited that “Is your primary reason for starting your own business the desire to make a lot of money? Do you think that if you have your own business that you will have more time with your family? Or may be that you wouldn't have to answer to anyone else? While those are benefits some successful entrepreneurs achieve after years of hard work, they are not reasons to start a business”.

She posited further that “the right reasons for starting a business that lead to building a successful company include the under listed:

• You have a passion and love for what you'll be doing and strongly believe based on educated study and investigation that your product or service would fulfill a real need in the marketplace.
• You have drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever.
• Failures don't defeat you. You learn from your mistakes, and use these lessons as business tips to help you succeed the next time around. Studies of successful business owners have shown they attributed much of their success to "building on earlier failures;" on using failures as a "learning process."
• You thrive on independence and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints.
• You like if not love your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals”.

So as a good business owner, there is need for you to understand why you are in the business so that you will not be in the business with the wrong reason.

Thirdly, when there is no market or the market the business owner is operating is too small. This will not allow the products to be fully absorbed and as a result the business will go under.

The Fourth, lack of corporate governance, most businesses lack the characteristics of good corporate governance and as such, they do not usually survive the first ten years of their existence. Some of the characteristics of good corporate governance are; participatory, consensus oriented, accountability, transparency, responsiveness, effectiveness, efficiency, equitable, inclusive and the rule of law.

Failure for any business person to follow that aforementioned will lead to the collapse of such business. I hereby implore you all to embrace good corporate governance when you are running your business.

Fifth, poor management; a lot of business owners lack good management expertise and as such, they lack the will power to drive the business to a required level and standard and this factor can lead to the collapse of the company. The best thing a business person can do is to seek for knowledge and attend refresher courses in order to hone his or her skill on management.

Sixth, improper planning; there is need for a good business owner to plan adequately; put down in black and white your vision, mission, core values, unique selling proposition and set SMATER (Specific, Measurable, Achievable, Time Bound, Ethical and Review) goals. The aforementioned will ensure that the business owner is focused at all times because lack of focus has led to the collapse of so many companies in the past.

Seventh, lack of adequate capital and mismanagement of cash; this is the bane of so many business owners and care must be taken to ensure that the business is very liquid at all times. As a result, ensure that you bank all your cash and run your account very well so that when the chips are down, you can approach your bank to loan you funds. So if there is no cash or liquidity in your company ensure you raise adequate funds and move on.

Eighth, over expansion; this often leads to collapse of businesses if not carefully or properly done. Hence before you expand, ensure you understand the nitty gritty of expansion drive and strategy so that it will not lead to the collapse of your business.

Ninth, leadership failure; it is an established fact that lack of leadership is the bane of most business owners hence embrace good leadership because there is no short cut to success. There are good leadership qualities a business person must have and some of which are:  honesty, integrity, confidence, inspiration, commitment, passion, good communication ability, resilience, humility, transparency, vision, drive and purpose amongst others.

Tenth, lack of good location; you need a location or market that is accessible and strategic, if not it will affect your business which may eventually die.

Eleventh, no succession plan; a lot of companies do not have succession plan and whenever the founder or owner dies, the business will suffer and die naturally or prematurely.

Twelfth, emotional intelligence; the importance of emotional intelligence (EI) cannot be over emphasized and a good business owner must apply EI at all times in order to take the business to the next or higher level. Please, manage your emotions effectively, be better or very good at social awareness, have super empathy, embrace seamless communications and be very good at conflict resolutions amongst other things.

With emotional intelligence, a very good business person will be able to control his or her emotions, which prevents negative emotions from influencing their decision-making skills and this will not lead you to make hasty decisions which may be counterproductive.

Thirteenth, inability to embrace the social media platforms. When a business owner embraces social media platforms, it is usually the best for the business because it will reposition the business in a strategic manner and also enhance patronage as well as visibility.

Fourteenth, harsh economic environment; it is sad and disheartening that the business environment in Nigeria is very harsh and this has led to the comatose of so many companies/industries in the past. So for you and your business to survive in this harsh economic environment in this country, you must develop thick skin, be resolute to succeed. This is due to the fact that the ministries and agencies that are saddled with some of the responsibilities that ought to give good enabling environment for businesses to thrive or succeed are not sincere and serious.

It should be noted that for your business to succeed and/or survive the harsh economic environment in this country, you must manage your cash adequately, decide the role of social media in your life and in your business, ask for feedback from your customers, learn from your competitors, build a good business that will outlive you, put effective plan in place, embrace emotional intelligence, visualize success, have a good management team, delegate effectively, have a superb succession plan, learn from your mistakes, learn from your competitors and brand your business effectively with brand statement as well as with good brand identity. Above all, you must develop strong Positive Mental Attitude (PMA). 

Wishing you the very best.

Please, keep the dream alive! Success shall be yours!

Never Give Up!!

See You at the TOP!!!

It is well!

Muideen Adebayo Ibrahim is an entrepreneur: the Founder, LIBRA CONSULTING; a Management Consultancy Firm and BAMIB RESOURCES (a Premium Pencil Company) based in Lagos and can be reached via muideenibrahim2004@yahoo.com or 08037221517 (sms) only please!