Do you want to fail in business? Of course NO. No one wants to fail after spending sleepless nights planning and strategizing for their dream venture. Unfortunately, even with all the good planning, learnings and discipline we all end up doing things that indirectly catalyze our failure. Read this article carefully and reflect on whether you are committing some of these mistakes that could push you out of the market before 2017.
1.Too quick to invest, too slow to research
In business, you need to be fast to research and moderate with your investments. Otherwise, as most recorded jua kali investors do, you will end up dumping your money into a sinking ship. It’s no wonder we have so many pyramid schemes cropping up all over town nowadays.
People rush to invest, hoping to make some quick millions effortlessly, a few months down the line the scheme closes shop and all jua kali investors are left crying.
This happens all too often. And it happens for the simple reason that most people get “too excited” at the sound of a good idea until they forget to do some soul-searching. If you are doing this today, then be sure, your business might not survive for more than two years from today.
Related: How to do a feasibility study
2.Rushing to sign contracts (e.g. lease contracts, partnerships and MOUs)
Contracts are part and parcel of any business. However, if you are the type that finds it tiring to read through a 140 character SMS, then you need to be extremely carefully lest you sign a contract that will send your business to its death-bed in a jiffy.
Don’t be too quick to sign off that bank loan contract, you might just subject your business to financial slavery. Don’t rush to sign that 5-year lease agreement with your landlord, you might just discover that the premises are not suitable for your business.
Take your time before signing anything and please develop a culture of reading through (and understanding) all documents prior to giving your opinion on them. Involve a lawyer in all contracts you sign, if you can afford it.
3.Poor understanding and implementation of local rules and regulations
This year alone we have seen so many businesses close shop due to this reason. For instance, while we touted the Wines and Spirits business for being a good income generator sometime back, many small investors were badly hurt by a poor understanding of local rules and regulations.
You start a Wines and Spirits outlet in Kiambu without a Liquor license, Mututho comes for you. You start a real estate business in Kajiado without understanding that the county has unique land laws, the office of the Governor comes for you. You start a restaurant in Nairobi without a single-business permit, Kidero comes calling.
Oh yes, you may think that the issue of local rules and regulations is a minor one today. But be careful it might just hit you hard when you least expect.
4.Cash flow problems
You start the business, market it well and within a few months you get a big order from a customer. Eager to get huge returns you drain out all your savings so that you can process the order, hoping to get a cheque to off-set your debts in a few weeks after making the delivery.
Unfortunately, the customer happens to be quite slow at processing payments. You wait for months and months and still there’s no sign that the payment will be ready soon. You have to survive on loans and if not careful the weight of the debt will push you out of the market.
Cash flow problems are a common feature among startups. Particularly if you are planning to be supplying the government or big companies – you need to be very good at managing cash-flow to prevent a glut that could easily suffocate your business. One way to overcome this challenge is by asking for deposit from customers and NOT BITING more than you can chew.
5.Lacking uniqueness and value proposition
You may have a great idea, great service, enough cashflow, good marketing skills, but your business is still failing because your approach is mediocre or you lack a strong value proposition. Ask yourself, what set your business apart from the competitors? Do you have a customized approach that no one else in your industry is using?
If there’s nothing unique in what you do, then the writing is on the wall. You better up your game or you will get the short end of the stick and ultimately close shop before you realize any profit.
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