Learn from successful business owners to avert start-up failure

The Nigerians have a popular proverb that says, “Looking at a king’s mouth one would never think he sucked at his mother’s breast”. Such is the distorted perception most novices and aspiring entrepreneurs have on successful business founders in our society.

Looking at their successful empire, one would never think they spend sleepless nights thinking of where to get money to pay bills, had their loan application rejected by lenders, had big suppliers refused to stock their products and so on.

The majority of business founders have a tale to tell about the difficulties they experienced at some point in their entrepreneurial journey.

There were times when failure seemed inevitable, and the prospects for breakthrough they envisioned when starting up or even survival appear to be extremely limited and a sense of hopelessness reigned.

Such terrible moments often do not last unless the entrepreneurs give up. When we look at the success stories of the people who overcame such tough times to propel their businesses, we learn few things that give us inspiration and hope to hang on.

First, they examined their business fundamentals to find out why things were not working as anticipated.

One could have a very great business concept but operate it on a faulty model that allows things like loose credit control, stock theft, poor management and uncontrolled spending to weigh it down. It could be undercapitalisation or poor spending habits by the owner.

Second, they did things differently to get different results rather than quitting or hanging on grumbling and doing the same things but hopping for better results.

Before throwing in the towel, one needs to rationally think whether the business is really doomed or the failure is originating from poor management.

Rational thinking calls for humility and the discipline of putting emotions, blame, pessimism or blind optimism aside to make decision based on facts.

Sometimes this objectivity may require consulting a third party to help you analyse the situation. Many entrepreneurs quit in despair at a time when, with the right tactics and strategies, they could have succeeded.

Third, they know when to quit and do something else. There are instances where a complete change of business is needed. This means quitting that line and doing something else that has potential to succeed.

If the outcome of rational analysis of the state of the business shows that there is really no likelihood of the business succeeding the best logical decision to make is to cut losses as quickly as possible.

As a quick guide, if you find your business is struggling in a market where other players in the same industry are doing well, the problem is most likely the execution part. You need to ask yourself what is it that you are not doing that others are doing and strategise to do it well.

If a majority in the industry are struggling or closing down, you could easily be riding on an ailing donkey on its final leg. In that case the earlier you dismount the better.

However, quite often the problem could be precipitated by something as simple and reversible as the failure of effective marketing or customer care to attract and retain potential customers.

After doing an objective analysis, your decision must be informed by establishing whether the identified problems can be addressed and whether the business has, or can get the required resources to solve them.

Before you borrow money or inject more cash into a struggling business first be absolutely certain that this is necessary to solve the problem, not merely to prolong the life of a failing venture.

It may cost you money to hire an expert to help establish the cause, but then the cost of staying on and eventually losing out is higher.

Mr Kiunga is a business trainer and the author of ‘The Entrepreneurial Journey: From Employment to Business’. Email: [email protected].