Key reasons why first-time businesses fail

Statistics show that about 50 per cent of first-time businesses fail within their first five years of operation, experts say. In this report, Okechukwu Nnodim and Ayomikun Abiola highlight the major reasons why first-time entrepreneurs fail in business

Businesses succeed as much as they fail. To run a successful small and medium scale business in Nigeria, aside adequate capital investment, some basic criteria must be strictly adhered to by the entrepreneur. Experts note that the neglect of these criteria contributes to the failure of most businesses.

Entrepreneurs, especially those just starting out in business must appreciate the fact that shrewd businessmen treat business failure as a milestone on the road to success. They must try to bounce back notwithstanding the fall. Experts note that real entrepreneurs count on learning from their mistakes, and use the experience to move to the next idea. Owners of start-up businesses should learn from the mistakes of others to avoid the pain and suffering associated with business failure.

Below are major reasons why first-time businesses fail, according to experts and medium scale business entrepreneurs interviewed by our correspondents:

 Lack of business plan

Many young entrepreneurs often neglect the essence of writing out a business plan for their venture. Experts note that you should not believe the myth that a business plan is not worth the effort. The Managing Director, Nordmark Communications, a medium scale communications firm in Ojo, Lagos, Mr. Daniel Nze, says no matter how small a business might be, the entrepreneur must take the pains of writing out a plan. He notes that the time and energy put into writing down a plan shows that the entrepreneur truly wants to transform his idea into a business.

Improper execution of ideas

It is one thing to come up with a business plan and another to astutely execute the idea. Experts note that an idea alone is really worth nothing. According to them, the idea is useless if not executed. They note that the entrepreneur must be a risk taker and one who takes strict business decisions in order to do well in this area of idea execution.

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Nigerians advised on writing of Will

IT has been disclosed that only one per cent of urban literate Nigerians write will, out of which 90 per cent of them are over 60 years.

This revAelation was given by Mr. Rotimi Edu, a Lagos lawyer and insurance practitioner while delivering a lecture on Will and Testament: Tool for Estate Management, at a public forum recently in Lagos.

Edu noted that writing of will was germane to peaceful transfer of wealth from parents to wards or children and other beneficiaries, but had been grossly under utilised due to some noxious traditional beliefs that must be discarded.

He lamented that transference of wealth had generally been a problematic issue in the African society, due to the reticence of many towards writing of will and its administration.

Edu knocked the bottom off the popularly held notion that only the affluent needed write will, stressing that anyone above the age of 40 years must accord the posthumous instrument premium attention.

“It is always advisable not to die intestate, given the fact that obtaining a probate document for such individuals are quite cumbersome with its attendant discomforts and delays,“ Edu asserted.

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Business plan and communication of profitability….By Goke Ilesanmi

A business plan is a formal document that communicates the direction of a business in a bid to accomplish its most important goal, that is, profitability.Profit does not come by accident. So by writing and following a business plan, you can definitely increase the possibility of achieving profitability. Whether you want to start a business or grow one, attract investors or obtain a loan, attempting to do it without a well-composed business plan is like a stranger going to a place without prior direction. Or better still, it is like a ship without a rudder (which controls its direction). Let me also illustrate it as a motivational speaker. It is like having a dream without an action plan. The dream cannot become a goal that can be achieved.

To be successful in business, you need to research and write your business plan; master the key components of a successful plan; understand all your financing options; and streamline the process using easy-to-use templates.

A business plan is used for many purposes, that is, as a development tool, a management and planning guide, a mission statement, a sales document, etc., and is read by several different audiences. Therefore, you need to structure the components of your business plan for the greatest impact; anticipate all questions that business plan reviewers will ask; and critique and package your business plan for winning results.

Balanko-Dickson, a third-generation entrepreneur, Licensed Professional Business Coach and founding member of the Professional Business Coaches Alliance, who has clients throughout Canada, the United States, South Africa and the United Kingdom says a business plan has an equation structure of Goals + Research+ Strategy. Developing a detailed business plan will provide you with an opportunity to shape a powerful business development strategy.

The major sections of a business plan are industry analysis; market analysis; products and services; business description; and marketing strategy. Others are operations and management; financial plan; implementation plan; contingency plan; and executive summary.

Feasibility study 

Too often, people invest money in a business only to find out later that there is insufficient demand for the product or that it is not the type that customers want to buy. To reduce this risk of failure and losing money, potential entrepreneurs need to go through the different aspects of running their business in discussions with friends and advisers before they commit funds or try to obtain a loan. This process is known as feasibility study and when the results are written down, the document is known as a business plan. A feasibility study is the preliminary appraisal of the opportunities and risks that abound in a target area of business. In other words, it is about trying to discover if the target business is profitable or not. For instance, prospective entrepreneurs may have an idea about the type of fruit or vegetable product that they would like to make. This may be as a result of seeing others successfully producing it and therefore wanting to copy them. It may also be as a result of talking to friends and family members about the product they think they can make.

However, having a business idea is not a sufficient reason to begin production straight away, without conducting research into different aspects involved in actually running the business. Conducting a feasibility study requires that the most important aspects of the business be taken into consideration to ensure that potential problems are addressed. Among the necessary questions that can be asked and answered during the feasibility study are: Is there a demand for the product? (find out the characteristics required of the product and the size and value of the market); Who else is producing similar products? (determine the number and type of competitors); What is needed to make the product? (find the availability and cost of staff, equipment, services, raw materials, ingredients and packaging); What is the cost of producing the product? (Calculate the capital costs of getting started and the operating costs of production); What is the likely profit?  (Calculate the difference between the expected income from sales to an estimated share of the market and the costs of production).

Each of these aspects should be examined in turn. When all the information has been gathered and analysed, it would be possible to make a decision on whether the proposed investment in the business is worthwhile or whether the producer’s money could be better spent doing something else. It is also important to remember that the business plan is a working document that should be used as a framework to guide the development of a business. To do this, it should be regularly updated. However, it often happens that once an entrepreneur pays a consultant to prepare a business plan, he or she will just read it once, then keep it somewhere without reviewing it from time to time.

Market analysis

Here, we look at the sub-concepts of product quality survey; survey of market size and value; and market share and competition

Once a producer has decided that he or she wants to start the  business, the first thing to do is to find out the likely demand for the fruit or vegetable product that he or she wants to make, by conducting a short market survey. Although there are market research agencies that are able to do this type of work in many developing countries, it is better for the prospective producers to be involved because they will then properly understand their (prospective) customers’ needs and how their business should operate. If an idea is found to be feasible, this knowledge will in turn give them the confidence to go ahead when they encounter challenges, knowing that their product is in demand. Although telephone or posted questionnaires are possible, in most developing countries, it is better to conduct a market survey by going out into areas where the producers expect to find consumers and asking people for their views. There are two types of information that are needed as regards market analysis: (a) information about the product and its quality; and (b) information about how much people will buy, how often and for what price.

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Ban, UNDP want Nigerian youths in leadership

THE United Nations (UN) Secretary-General Ban Ki-Moon has urged more youth engagement in global development.

Also the UN Development Programme (UNDP) Country Representative in Nigeria, Daouda Toure, has decried the lack of opportunities for Nigerian youths to correctly participate in the political process.

The concerns by Ban and Toure were expressed at the commemoration of the International Youth Day in Abuja, yesterday.

The event was organised by the Democratic Governance for Development (DGD) of the UNDP.

According to them, the world was fast losing grip of youth potential for economic, political and social development spreading underdevelopment through “low-wage, dead-end work and record levels of unemployment.”

Ban, whose message was delivered by the Deputy Country Director of the UNDP in Nigeria, Ade Mamonyane-Lekoetje, stressed further that, “the global economic crisis has hit youth the hardest and many are understandably discouraged by rising inequalities. A large number have no immediate prospects and are disenfranchised from the political, social and development processes in their countries without urgent measures, we risk creating a lost generation of squandered talent and dreams.”

Speaking on the theme for this year’s anniversary: “Youth Political Participation: Setting an Agenda for Good Governance and Sustainable Democracy in Nigeria, Toure said: “The youth constitute over 50 per cent of the voting population in Nigeria. However, inadequate and deliberate measures to actively engage them in the electoral process have largely hindered their input in the nascent electoral democracy in Nigeria.”

English: Ban Ki-moon 日本語: 潘基文

English: Ban Ki-moon 日本語: 潘基文 (Photo credit: Wikipedia)

The UNDP chief listed some of the “obvious shortcomings” in youth involvement in Nigeria’s political process to include “somehow low participation of youths in the election of political leaders at all levels, relatively limited political parties youth leaders, lack of effective representation of youths in the political governance structure of the country and the political manipulation of youths for undesirable ends.”

On the way forward, he said: “Undoubtedly, there is a dire need for greater social investment in young people to promote active citizenry to develop tolerance and commitment to peace, justice and human rights in Nigeria and to develop their full potential for creative leadership in democratic governance.”

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8 EMAIL MISTAKES TO AVOID BY IIYA POZIN

These blunders are more than just productivity killers; they will also make you look pretty foolish.

Knowing your way around your email inbox is, of course, crucial if you want to get anything done. But it’s also necessary to avoid making a fool of yourself with silly (and unfortunately all too common) communication mistakes. Here’s a list of the most common email blunders to avoid:

1. Not including the email thread in your reply.

Think about how many emails you receive every day. When you’re communicating with dozens of people a day, sometimes you forget where you were in a particular conversation or what the conversation was even about, right? So it’s nice to be able to skim through the previous emails to refresh yourself before responding. Do your recipients a favor and include the whole thread when responding. Although deleting the thread declutters the email and makes it appear less lengthy, in the end, it just creates confusion for the recipient.

2. Not using a professional account.

Syncing your professional account with your personal account is convenient. But when you have this feature set up, always double-check which account you are sending your mail from. Accidentally firing off a message from hottstuff09@yahoo.com will not only raise some eyebrows, it will mean the message will probably wind up directly in your recipient’s Spam folder.

3. Not replying to all.

This one is so easy to forget. If the idea is to keep a number of people in the loop, then do exactly that and use the Reply All button. Enough said.

4. Cc’ing the world.

Yes, you need to reply to all, but before cc’ing someone into an email conversation, ask yourself if it’s really necessary. Spare that person the gratuitous email if you can.

5. Forgetting the bcc field.

The bcc function is great for when you want to keep someone in the loop but it is not necessary for him or her to be part of the conversation. For example, after someone introduces you to a contact via email, move that person to the bcc field. Also, be mindful of people’s privacy when sending out group emails to various recipients. Not everyone wants his or her email address exposed to a large group of people he or she doesn’t know.

6. Rambling.

Emails should be short and to the point. If it’s something you can’t say in just a few sentences, or you find yourself in a nonstop, back-and-forth conversation, pick up the phone! Overly long emails may end up in the recipients’ TL;DR (too long; didn’t read) pile.

7. Writing unprofessionally.

Always keep a professional tone. That means ensuring emails have proper grammar and are free of slang. Save the “abbrevs” for Twitter.

8. Creating unnecessary back-and-forth.

When you’re sending a quick email to set up a meeting, provide all necessary information in the first email. Otherwise, it becomes a back-and-forth conversation that could have been taken care of in one response from each side. For example, if you are requesting a meeting with someone, offer your availability. If you are scheduling a call, provide your phone number.

Which email mistakes do you see people making?

POST COURTESY: CHUKWUEMEKA UNO

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13 Startup Challenges (That Make the Rewards Even Sweeter)

By Matthew Ackerson | Young Entrepreneur Council

Everyone has heard exaggerated numbers like “90 percent of new businesses fail,” but few people have recorded specific examples of why getting a real business going (without VC money) is a monumental challenge.

Here are 13 real-world examples I came up with after reflecting on my entrepreneurial career to date:

  1. All nighters. I’ve gotten better at this recently thanks to an app my team and I recently developed, but once in a while I stay up and work for 24 hours or more straight. Sometimes it’s by choice, other times it’s out of necessity or worry.
  2. Killer stress. If I don’t have to stay up to work, many nights in the past I’ve had trouble falling asleep. It’s usually because I’m planning in my head what has to get done the next day; other times because I was fretting about the company’s cash flow. Most entrepreneurs have similar experience but won’t admit this because they worry they’ll look vulnerable or doubtful in the business’s future.
  3. Bankruptcy. I’ve gotten close to bankruptcy in the past due to poor investment choices. Maybe it’s a big deal to admit this, I’m not sure. The truth is, it was an extremely rewarding and humbling experience. It was scary but it taught me how to hustle.
  4. Unlimited patience. Clients will get mad at you, team members will make mistakes, and you’ll mess up too. For instance, in the past, a designer on PetoVera‘s team was very late with a project. I could have gotten angry or removed him, but instead I asked questions and realized that (a) he was doing an amazing job of designing the site, which took time, and (b) I should have blamed myself for not planning the project as well as I could have.
  5. Living “poor.” After college all of my friends went and got jobs. Pretty much everyone I knew was and still is making more money than me. Meanwhile, since I don’t get a “regular salary,” I’m still counting the cost of that five-dollar foot long sandwich (plus tax).
  6. Constant fear of failure. If you fail, all that hard work may seem like it amounted to nothing and you will fail publicly. The “haters” will have won and all those big ideas that you espoused will have been for naught. That fear is always present.
  7. Pulling a “Facebook” doesn’t happen. Most of the time. Study those big success stories regardless.
  8. People will hate on you. Once in while I get some dumb anonymous blog comment or someone tells me some pointless gossip about what someone else said about my company or me. It’s an unfortunate fact.
  9. Most of your victories go unknown. For example, employees won’t thank you for systematizing your business and improving profits or efficiency. The only reward comes in the long run, from happy customers.
  10. It’s always your fault. When something goes wrong assume it’s you because it usually is (even if it isn’t).
  11. Your family won’t support you. I have a sign with a quote on it hanging in my room from one of my parents. It says something like “You seem lazy, you don’t seem very ambitious, you’re throwing your life away.” I use it for motivation.
  12. You have to earn most of what you get. If I don’t wake up one day to make sales calls or go out networking, that is going to have a direct effect on PetoVera’s bottom line. On the upside, to quote Kevin McGovern, “The harder you work ,the luckier you get.”
  13. Romantic relationships are tough to maintain. This is especially true when your business isn’t yet “established.”

But even after reviewing all those examples, I still love what I do. Here are 3 great reasons why entrepreneurship still rocks:

  1. You can work from anywhere (or at least you have the option to travel much more than the average person)
  2. You get all the upside.
  3. You build something big from scratch.

POST COURTESY : CHUKWUEMEKA UNO

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‘Diminishing conventional brand communication, bane of businesses’

The Chief Executive Officer of Poise Nigeria Limited, a Lagos-based firm that specialises in the business of Total Personality Development and Business Image Consultancy, Mrs Mari Isibor, has identified decline in the effectiveness of conventional forms of brand communication via advertising and public relation as one of the major problems hindering more customer-dominated business climate.

Isibor, who made this submission in Lagos at a brand communicatiopn summit, in collaboratrion with London Metropolitan University with a view to having an expository session on creating a consonance between the brand and the manner it is communicated; said a research had proven that the traditional forms of advertising awee failing to impress the targeted audience due to poor brand communication  management.

“A brand is not a slogan, it is the way a company behaves, and how the customers perceive the organisation.  And to maintain a strong brand, it must be  built from inside out.  Employees have the power to either reinforce or break a brand’s promise every time they interact with a customer, shareholder or even another employee,” she added.

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