The Guardian
Email YouTube Facebook Instagram Twitter WhatsApp

Mitigating against Business failure

Related

Henrietta Onwuegbuzie. PHOTO: YouTube

Start small, think big
As stated in the previous articles, the first step to business success, is to have an idea that solves problems or meets a need. The second step is to find a way to start small while thinking big. Even when you have the funds, it will always be safest to start any new line of business small, while thinking big or having a big vision.

This is also because when you start something new, you are likely to make mistakes, and as you go along, you discover, new and better sources of inputs, better materials, better techniques, better equipment etc. So, if you start at the onset by buying large amounts of input, it becomes more difficult for you to incorporate new and/or better materials, as you have already sunk huge costs in large sub-optimal inventory and may not even be able to afford to buy the new and/improved material. On the other hand, a competitor who is lean and flexible, can very easily incorporate the use of superior quality material.

There are therefore many advantages of starting small. Besides minimizing the cost of mistakes, starting small also gives you an opportunity to learn the market. By this I mean the opportunity to get feedback from customers, to better understand their wants and improve your offering.

The improvement of business offerings therefore comes from two perspectives; customer feedback as well as improvements on internal processes, such as technique, processes and inputs. This knowledge is important to help you scale successfully, because, you would have understood exactly what the market wants and how best to serve the market, before scaling. Without this knowledge, you may be spending on the wrong things.

Another advantage is that it is easier to attract funding once a business starts. No matter how small one starts, once the business starts to grow, it is easier to attract funding because people can see the offering and the market acceptance. It is therefore a big mistake to start by looking for funding as people are less willing to release funds for an idea, but are more willing to give or loan funds, when they know or can see that the idea is gaining traction in the market.

Apprenticeship
Another safe means to start on sound footing, is through apprenticeship. Learning under the tutelage of a Master or working in a similar or related business for a period before starting yours is a safe way to learn about a business before embarking on one. For instance if you cook well and would like to start a restaurant, it is safer for you to go and work in a restaurant for some time before you start one. Being a good cook, does not mean you can run a restaurant.

The skill required to run a restaurant goes well beyond just cooking as there are many administrative processes entailed in serving customers. These include how you get the supplies, the processes to ensure efficiency and effectiveness in preparing what customers want, the way they want it and on time, the decoration and cleanliness of the restaurant etc. Coordinating all this to ensure a pleasant customer experience is not easy.

However, by working in a good restaurant for at least a year or two, one gets familiarized with what it takes to put it all together. It may also help to work in more than one restaurant and to work in the kind of restaurants you would like to eventually set up. The experience will equip you with the knowledge, skills and confidence to start a restaurant on the right footing.

Following the advice of starting small, this may mean starting from home and therefore making it a take-away restaurant to start with. You could also start by providing miniature samples for tasting and then receiving orders online or by telephone and then delivering to offices or homes. Since each order will be paying for deliveries, one can work with a logistic company that has motorbikes through which these deliveries are handled.

As revenue grows, you will eventually have enough funds to rent a place for an eat-in restaurant, which can grow in size and number over time. This is one of the surest ways to start a restaurant chain successfully.

In spite of what one has learnt from experience, one has to keep looking out for new ways to please customers as customer wants and tastes are constantly changing. The best way to keep finding ways to please the customer is by talking with them and understanding their needs better. It is a big mistake to assume you know what the customers need without speaking with them or confirming your thoughts. Many companies waste funds where it is least needed because they assume they know what the customer wants and spend money on what turns out to be unimportant to the customer. They discover this only after the expenses have been made.

For businesses to grow and thrive, entrepreneurs should have a mindset of continuous improvement. These improvements or innovations have to be very relevant to the targeted customers or market. Customer wants are best tracked through one-on-one conversations.

I personally avoid questionnaires for different reasons. Sometimes because people tend to find questionnaires a waste of time and so, they either trash it or answer it speedily without really understanding the questions. Other times, those who really care to read and fill the questionnaire, may not understand the questions and so respond to what they interpret the question to mean.

These possible confusions are more easily clarified during a one-on-one interview, or by observing customer behavior.

While it is important to observe the customer behaviour, to know how best to serve them, it is even more important to look after your staff, who are responsible for making your customers happy. Unfortunately, most people think that the adage, “customer is King”, means staff are not important. We, however, have to understand that unhappy and demotivated staff do not make happy customers, and so if we want happy customers, we need to ensure employees are happy.

Getting it right with employees, who are the soul of the business, requires knowing how to recruit the right people, train them, and ensure you have the right culture in your organization. This will be the topic of the next article.

Dr. Henrietta Onwuegbuzie is a globally certified Management Consultant and a Senior Lecturer in Entrepreneurship at Lagos Business School: Twitter: @honwuegbuzie; email: honwuegbuzie@lbs.edu.ng


Receive News Alerts on Whatsapp: +2348136370421

No comments yet