CIRCUMVENTING BUSINESS PROBLEMS
Most business failures are caused by the entrepreneurs through personal mistakes or shortcomings. Prospective entrepreneur should be aware of and do all that is necessary to avoid the following deadly mistakes of entrepreneurship.
1) Management Mistakes: In some businesses, poor management is the primary cause of business failure. Sometimes the manager of the business does not have the capacity to operate it successfully. The owner simply makes bad decisions in critical situations. Given the competitive nature of some businesses and the predictability of profits, business results are quite sensitive to small errors.
2. Inexperience: Entrepreneurs need to have experience in the field they want to enter. Too often some entrepreneurs launch their enterprise without having sufficient experience to succeed. Inexperience can be translated to mean a lack of technical ability or management skills. Each of these shortcomings can lead to disaster. Ideally, a prospective business owner should have adequate technical skills(a working knowledge of the physical operations of the business and sufficient conceptual skills). So if for instance, you have no knowledge of how to operate computers e.t.c you have no business going into that particular business.
3. Poor financial control: Every business venture requires financial control. This involves among other things have sufficient capital on hand at start-up, and implementing proper cash management techniques; undercapitalization is a common mistake that some business owners make at the beginning of their business. They tend to be optimistic and as a result often misjudge the financial requirements of going into business. They start off under capitalized and can never seem to catch up financially as their ventures devour increasing amount of cash to fuel their growth. Another aspect of poor financial control is improper cash management. This is usually evidenced from persistent cash flow problems arising from credit screening, careless debt collection practices and undisciplined spending habits.
4. A Poor location: A business should be sited in a particular place where there are certain factors which favour its establishment such as nearness to target customers. This requires proper study, investigation and planning before a business location is selected. Too often, beginning owners ignore this. Some choose a particular location just because they noticed a vacant building. But the location question is much critical to the success of a venture to leave to chance.
5). Uncontrolled expansion: Growth is natural, healthy, and desirable part of any business venture, but it must be planned and controlled. Ideally, expansion should be financed by the profits a firm generates or by capital contributions from the owners. But most businesses end up borrowing at least a portion of capital investment. Sometimes owners encourage rapid expansion, only to have the business exceed their ability to manage it. As a business grows, problems increase in magnitude, and the owner must learn to deal with them.
6) Lack of planning: Many engage in formal planning soon after starting their businesses but one-third could not recall ever having a formal business plan. Most business owners usually disregard the process of strategic planning because they feel it is something that only benefits large scale businesses. Plans are guidelines for action, and as businesses increase in size and complexity, they must be continuously upgraded to reflect changes in the business environment. Generally, a business that fails to plan may also fail to survive. Without a properly articulated strategy a business has no sustainable basis for creating and maintaining a competitive edge in the market place.
7) Improper attitudes: An unfortunate aspect of many business failures is that too often individual owners attitudes get in the way of sound business practices. Some entrepreneurs blatantly disregard customers and some engage in unethical behaviours. They exploit customers to make a fast buck. Commitment to quality is replaced by a commitment to use substandard materials, to pass on marginally safe or defective products and to serve customers reluctantly. These improper behaviours attract customer’s reaction much quicker and the business owner will feel the brunt. If they feel cheated and dissatisfied they will spend their money elsewhere.
Dear reader, apply this principles listed here and see a change in your business.