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Why many businesses fail


Pastor David Adeoye

Sometime ago, I read the story of King Solomon’s first judgment in the third chapter of the first book of Kings. The story was about how two women (harlots) slept on the same bed with each person’s baby beside her.

One slept on her baby through the night and woke up to discover that her baby was dead. She put her entire weight on her baby, overloaded its small frame, until it died. She then replaced her dead baby with her friend’s baby. (I King 3: 16-27).

This is what happens with more than 70 percent of new businesses; and they end up packing up within their first year. A lot of them are laden with more than they can carry, either through overstaffing or overspending.

This is just like overmilking the cow you underfed. The “over-milking” of your business at its infant stage can wreck your business. When you begin to overmilk a cow and underfeed it, the cow will become lean and eventually die, if nothing is done fast to save the situation.

“There is desirable treasure and oil in the dwelling of the wise; But a foolish man squanders it.” (Prov. 21: 20)

“The wise have wealth and luxury, but fools spend whatever they get.” (Prov.21: 20 NLT).

Squanderers are not always good Managers. The Prodigal son left his city to another city with lots of money. He had a wasteful spending habit that led to his wreck in no time. Squanderers can’t manage anything. A squandering businessman cannot manage his business properly. A squandering pastor can’t manage his church’s finance well. For anyone to manage anything well, he or she must first of all deal with his or her wasteful habit(s).

Your business or career has the potential to grow, if only you will learn and practice some basic financial principles from the Word of God. I have not seen a better manager than God. He created just two people in the beginning and today we have over six billion people all over the world. He managed the world to multiply it. Whatever you cannot properly manage, may never multiply. You may never be able to grow your business to the next level without these principles in place.

Ten Financial Principles For Business Growth
Have a Financial Plan
“Where there is no vision, the people perish.” Prov.29: 18 KJV

You need to understand where you are coming from, where you are right now and where you are going. Then you need to draw a financial plan that will help you move from where you are to where you are going.
You don’t start a journey when you have not established your destination and you don’t have a roadmap that is clear enough to get you there. The vision must be clear, precise and documented. (Hab.2: 2 -3). 

Due to lack of clear financial planning, many people become victims of financial instability. Someone once said, “If you don’t know where you are going, you’ll follow everybody to where they are going.” Your financial plan guides your spending and makes every of your financial decisions purposeful ones. It also helps you carry out a proper assessment of your business. We all know that progress is difficult without constant assessment.
“Suppose one of you want to build a tower, will he not first sit down and estimate the cost to see if he has enough money to complete it?” (Luke14: 28 NIV).


Avoid Impulsive And Wasteful Spending
Impulse means sudden urge. You need to stop spending without thinking, and planning. Some of the spending you do outside your financial plan is wasteful.

“And not many days after, the younger son gathered ALL together, journeyed to a far country, and there wasted his possessions with
PRODIGAL LIVING. But when he had spent all, there arose a severe famine in that land and he began to be in want.” (Luke15: 13 -14).
“A few days later this youngster packed all his belongings and took a trip to a distant land, and there he WASTED ALL HIS MONEY ON
WILD LIVING. About the time his money ran out, a great famine swept over the land, and he began to starve.” (Luke15: 13 -14 NLT).

The Prodigal son wasted all his money on wasteful and purposeless living. He ran bankrupt in no time, because his spending was based on impulse. Your financial future and that of your business is tied to how well you spend. You can’t afford to keep spending more than you can afford, if you don’t want to be bankrupt.
Avoid Over Staffing
“…Let us strip off every weight that slows us down…” (Heb.12: 1 NLT).

Everyone that is working with you must have what they are contributing into the progress of your business; they must be assets and not liabilities. None of them should be a weight that is slowing you down. What is the essence of a tree that is big, but producing nothing just using up the ground? (Luke13: 6- 9).

If you need to downsize your staff, you had better do so as early as possible. What the parable about the tree that has no fruit and just using up the ground, taught us is the principle of downsizing.
There was a time Gideon was going for a battle with 32, 000 soldiers, and God told him they are too many. So God conducted a downsizing exercise for Gideon’s soldiers.

Royalty Christian Centre; Wisdom Arena, 1, Williams Estate, Opposite Vetland Grammar School, Agege, Lagos. 07082083554. Email:
 … to be continued.

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BusinessDavid Adeoye
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