Why businesses fail
In the last couple of months I have had a lot of young people come up to me to ask about how to start a business. This is adding to the fact that in the many years of my practice as a Coach, Psychologist and Management Consultant, I have seen a lot of businesses start up, gain speed and pack up all in a very short time span. The economic landscape of our country is littered with the skeletal remains of the many businesses – Nigerian brands – that boasted of some great things a couple of years back. These brands, initially started with very promising deluge of wealth and plenty for their owners, saw only the twilight before the unyielding realities of the marketplace accelerated their descent into obscurity as they became the stuff of antiquity before they ever had the chance to become iconic.
The irony is that most of these young people who come to me asking for mentorship, coaching or general help in starting their own businesses have no idea how disheartening the history of indigenous businesses in Nigeria is. Of the old guard, only a tiny handful remains. And even these handfuls are nowhere near greatness.
Spurred by the tri-factor of unemployment, poverty and the very visible success of their counterparts across the globe – thanks to the technological advancements that has revolutionalized social interactions – these young people have created an army of willing entrepreneurs wanting to be more, do more, and get more, than any other generation we have had.
But then, they say we are cursed to repeat the history we are not told. In this age, if we are going to build businesses that will become iconic brands, we need to learn to do things differently. To be more, do more, and get more, you have to be willing to give more and give differently.
There are quite a lot of reasons why we have an almost negligible number of indigenous businesses in Nigeria that are of any kind of repute. One of these reasons is their inability to thoroughly think through the business from Ideation to Profitability. Another is their inability to adapt to changing times and the dynamic nature of the market economy. And yet, another is building a reflexive system – external of the start-up entrepreneur that runs the business. The chief among the reasons, which I fear is a little more pronounced today, is the culture that allows us to want to show success even when we are still in the process. The “get it and flaunt it” pseudo-culture that drives people today is a serious cancer in the heart of our entrepreneurial system. We are driven to compete, not with our processes but with our results. So the average person thinks that the biggest definition of business success is having big cars and other paraphernalia of wealth from the get go. They begin to spend in a crazy manner before they break even.
There are three key stages in every business:
The Build-Up Stage
The Break-Even Stage
The Breakthrough Stage
In building great businesses, the heaviest weights are pulled in the Build-up to Break-even stage. It is in these stages and the transition between them, that the foundations of truly successful businesses are laid. You don’t get comfortable until you go clear past those two stages and afterwards, business greatness still demands that you stay flexible to retain your position in the break-through stage.
So what was the mistake of the old guard in indigenous business? They allowed the spendthrift culture drive them into bankruptcy. And those who didn’t spend away their chance of a place with today’s brands bound their business to their very soul so that their death became the demise of their business.
To build a business that grows from start-up to iconic requires you think through the entire process from ideation to start-up and eventually to profitability. This full spectrum thought process will inform the research that will help create a detailed Business Proposal.
The power of a detailed Business Proposal is two-pronged:
First, it helps you create the business on paper taking every business metric such as Start-up Costs, Sales Forecast, Competition Analysis, Full Index Market Analysis, Economic factors, etc. into consideration.
Secondly, it becomes the most efficient tool to sell the business to investors.
A frequent question most would be entrepreneurs ask is: “How do I get capital”? To answer that question, I ask most times, “How much of your business are you willing to give up to get the capital you need? How much equity are you willing to sell”? Most businesses die in the ideation stage because their creators or custodians could not get the required capital to start. But I dare say that if they are willing to sell equity, armed with a well prepared business proposal, they can get the money needed to kick start that idea.
Starting a business is just one step in the entrepreneurship process, growing that business to profitability takes a lot of work and some deep success secrets. The good news is that it is very possible. If you think it is impossible, look around you; every major commodity in today’s market is a product of a business that is surviving today’s constant white water. If they can, you can too!
And if you still need a nudge, let me help you.
The Olusola Lanre Coaching Academy has put together a special Entrepreneurship Masterclass to help entrepreneurs (both new and existing) learn how to start and build enduring businesses. I will be sharing the depths of knowledge gathered over my many years of running businesses and helping global brands succeed in a constantly evolving market. As a high point of the Masterclass, I will be unveiling a foolproof business success tool I created with my team of workplace psychologists, to help businesses succeed in today’s market.
The class is scheduled for 27th – 28th January 2018. To register for the online or live class, visit www.lifexone.org/#events , call 08077077000 or send an email to email@example.com.
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