How to avoid or mitigate such mistakes.
From The Financial Psycho
Running a business enterprise in Nigeria is such a tough and demanding venture which requires strategic, intentional and pragmatic approach. However, there are certain mistakes people make which may either make or mar such move. Why some people see it as a risky move, many see it as bunch of opportunity.
For me, I see opportunities in Nigeria. Nigeria is blessed with opportunities for its citizenry. As at 2018, Nigeria population is put at 195m. This is whopping 195m opportunities. Wow! What can you see? I see opportunities in the dense population. It depends on the perspective you look at it. It all depends on mindset.
Have severally mentioned to some people that the cheapest commodity in the world is poverty while the costliest is success. If you really want to be poor, it cost nothing. Just sleep and wake up idle. If you want to be successful, you need a lot of nights of thinking, strategising and focusing. Living a fulfilled life is a choice and living an unaccomplished life is a choice.
Coming back to our subject, you will agree with me that business opportunities abound everywhere but making the right choices really matters.
Common mistakes in business:
In most cases, most aspiring entrepreneurs don’t do the right budgeting for their businesses. Lots of researches are required to enable you know the actual cost of the business you are going into. If starting a business requires N2m and you budget N1.5m, there is possibility that you get stuck in the process of starting such business and that may affect the venture. It is very important you get the budget right before you commence the implementation of the business architect. Not doing the right budgeting may truncate such business idea no matter how brilliantly conceived.
RIGHT TARGET MARKET
This has to do with the a group of consumers at which your products or services are targeted. One of my childhood friends once told me about his intention to start up a retail gold shop in one of the most remotest areas in Lagos because the shop rent is cheap and that will make her recoup some of her investments on time. I asked her, how many people will really wear gold in such area? People who wear gold are class of people who are self sufficient and you can hardly find such people in that area.
Setting up a gold business in such area is a waste of investment and grossly misconceived. On the other flip, I know of a very successful woman who is a food vendor in almost same area. She didn’t train as a caterer but she is good in cooking and she has built 2 houses in same area from the food business. That is right on point. Food business is one of the businesses best fit for such location with perfect target consumers unlike setting up a Retail Gold Sales Shop. So, right target market is key in every business.
This measures the amount of profit earned due to the efficiency of any operation in a business. This give you a clear idea of how well your business is running. However, some people really do not know how to do this. Because your shop or warehouse is stocked up does not really mean you are making profit. You need to do a proper analysis by separating your cost from your turnover to enable arrive at your margin. Your overhead and other associated costs have to be deducted. If that is not done, the business will not last and you may not know when mistakes are being committed such that corrections can be made.
PICK THE RIGHT GESTATION PERIOD:
Every business has its gestation period. From the start of the business, you should be able to determine a lot of factors that may help you break even. Foot fall is a factor, having the right consumers, cost of the overhead for a start and cost of location. Based on your expected turnover on a target number of people and also attaching a figure (price) is right. This helps you have an idea of what your cost will look like and how your turnover may look like.
If your projected turnover can’t take care of the cost, do not venture. This is very important because quite a lot of people go into business and later find out the business is not moving well because of wrong projection from the start.
KEEP A SEPARATE ACCOUNTING BOOKS
Most of us want to run a good business but we don’t know how to separate our business accounts from our personal accounts.
Due to family pressure or societal pressure, we go into our business accounts to take funds to finance our personal needs or family needs. Some even pick items from our shops to give to the kids of those who come visiting at our business locations.
In as much as it is good do such, taking money from your personal savings to do such is okay but not from the business account.
This is one of the reasons businesses don’t last and we must avoid such pitfalls if we really want to be successful in business.
This is not very different from the aforementioned. To avoid your capital being eroded, you must learn to pay yourself from your profit.
So many entrepreneurs just dig their hands into their business accounts to take funds to finance their personal needs but business is not run that way. Learn to pay yourself such that you can have personal drive to push the business so you can get paid at month end.
SEPARATE YOUR BUSINESS FROM FAMILY AND FRIENDS
This is a very common mistake in Africa. We all have family ties but it is always good to keep our business ventures away from family members and friends very often.
My first business was a car wash and I employed a brother to manage not knowing I already dug the grave for same business. Truthfully, the business did not last 4month and everything crumble due to lack of accountability.
Africans are used to abusing opportunities. Do not fall into such trap. Employ people who are competent and with no tie such that you can have control over the business.
MARKET YOUR PRODUCTS
It is very important as a business person to know that every business needs to be marketed. People need to know what exactly you are selling no matter how little. Even people who sell food do design banners and hang it close to the business location. I have seen that severally.
It all depends on how you intend to market your product but in this age of social media, the least of all marketing you can do is create a Facebook Page that is promotable depending on your projected mileage. Twitter and Instagram are also useful tools you can leverage. It goes far and wide than you can ever imagine.
Printing of handbills to hand out to people may also help in marketing the business you are into but people need to be aware of what you sell.
ACQUIRE THE RIGHT COMPETENCE
Every business requires certain skills no matter how little.
It is an indisputable fact that you can’t know it all but it is very dangerous to start a business you have no idea of. You can attend seminars, vocational schools and read about the business to be familiar with the terrain.
Before you start a business, skills and experiences are better acquired before commencing so you are not cheated or bamboozled.
Before you can start any business, you must be mentally prepared.
Starting a business requires a lot of mental alertness. No business starts on a cozy platter. In fact, life itself is not a roller coaster. At the start, it will be rough but you must have the requisite mental preparedness to stay on the business. ‘Nothing good comes easy in life’.
So many people have done certain businesses and keep jumping from one to another. Patience is key. Endurance is a big factor. On the long run, the hustle will pay off and the business will grow.
By Dare Dada. Dare is a Banker in Lagos.