5 Things That Make Small Business Suffer: Idowu Okungbowa (FREDERICK CONSULTING)

 

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Our vision in Frederick International is to help small businesses.  This is why we put more effort in working with small businesses than big ones. We discovered that small businesses have massive challenges because the people who fund small business have a lack of business knowledge whether formal or structured knowledge. 

The first challenge the individual who runs the small business is that he believes that he has all it takes to run a business.  He forgets that running a business is a management act.  It is like every other trade he has to learn.

Create a Comprehensive Plan (Business Plan)

The first challenge a business operator has is that he believes that a business starts and run on an idea.

A lot of motivational speakers have misled people, teaching them that the success of the business is determined by how great the idea is. 

This is not true.

Ideas don’t run businesses.  Ideas are just thoughts that need to become practical realistic physical actions.  What people do is that they run their idea through people, and when they are told the idea is unique, they believe it will work and run out there to start.  Not knowing that having an idea is just the beginning.

 Yes, every business starts with an idea because what makes a business noticeable is peculiarity, the need the business meets and the answers it gives that other businesses have not been able to.

The first thing anyone who has a good idea should do is to convert your business into a physical realistic plan.  Before you start running your idea, you should be able to see it work in your mind.  Then it will no longer be just a mental exercise but an academic one.  

If you have an idea, go through the process of doing a business plan.  A business plan includes structures that professionals have put in place to help you deal with things you would ordinarily have taken for granted.   

A proper business plan will include critical segments like a feasibility study, an executive summary, a SWOT analysis and a few others that will address important questions.

On creating a business plan, critical questions that will test the viability of your idea will be raised.  Your business plan should include proper questions and answer that are academic in nature.

Everybody tries to reinvent the wheel.  When God created the earth, everything the earth needs to sustain itself God was created.  What every business owner does is to try to reinvent the wheel.  Everyone who is trying to do business is not creating anything new.  The car manufacturer who is making cars is creating a better option to riding a donkey. The internet is a better option to P and T or Nigerian Postal Commission.  

The consultant has been trained to help you create structure for your business.

Employing the Right Staff

I see this point as very important. People don’t understand that staffing is a professional assignment.     Before you employ a staff, you ought to first of all do something called job audit.  Job audit has to do with determining who fits into the available job position. You don’t employ a staff and look for a job for the staff.  You have a job, analyze the job, you identify the people that can fit into that job, then you use this model of who can fit, to search for the individual who would match during recruitment process.

For example:

If you want to recruit a receptionist for your company, you should ask the question “Who is the ideal person in my reception?”  

You could conclude that: A charming beautiful young lady, who smiles, does not get angrily easily, courteous, smart, and mindful of people’s feelings prompt would do.

Then you should ask: “How many visitors do I get in my reception? “

“Does my business need a reception at the moment?”

You don’t want to employ staff who would be sleeping because there is nothing to do.  It is natural for a person to sleep when she is idle.  You shouldn’t be angry when you find staff sleeping on duty.  She is sleeping because she is idle.  This is why before you employ someone into an office, do ask: ‘Does the job function support personnel to be in the office from 8-5pm?’    It is not compulsory that you have a receptionist because you have rented an office.

Like I mentioned, you need to institute a process to identify people who can fit into this model, especially people you are meeting for the first time.  You should ask questions that will reveal the person’s character attitude and disposition towards those things you have analyzed.  On this premise you access people.

It is very wrong to give jobs only to people you know. Give jobs to people that are qualified.  It is good to bless people you know from the profit that people that are qualified have made for you.   If you give job only to people you know, they can take your business down.  It is very vital you employ competent people and bless people that you are have a relationship with.

Keeping Proper Record

Everyone has the mindset that when we talk about record keeping we talk about financial records only.   Record keeping is all encompassing.    It is the ability to document information that is relevant now and will be relevant in the future.  

The kinds of information you need to gather are of two natures, they are qualitative and quantitative information. The importance of financial records is important, but it has been over flogged, so I put emphasis on non-financial records.

For example, you are car dealer, and you heard that Nigerians love luxury cars. Most race cars are built in such a way that they are close to the ground. You should be able to do your statistics on where your car shop will be best situated and who your target customers are.  

Identifying Cost and its Element

Almost every business owner cannot fix a proper price.  This is because they can’t identify what is called the element of cost.   An average person thinks that cost is only what he has incurred in chasing a dream.    

Costs you should associate to your business include phone bills, office space, staffing, even your suit etc. In summary, they are things that you acquire that enable you do business effectively. Also, you should cost your good will, your experience, contacts and so on.

You should also be able to know how to cost idle time.  For example, people who do mental work cannot really work 9-5pm non-stop.  You should cost for that time you need to take a break.   

All these are associated to your business and they must all play when you are giving a price.

Most businesses are underpriced.  This is why many business owners get frustrated at a point and say the business they are doing is not good because the income they get does not support them enough.  Meanwhile, they couldn’t get something out of it because of bad pricing.

People don’t buy your product because the price is good; they buy because you are able to make them see the relevance of the price you have given.  Almost all products are transferable.

Seeing Beyond Short Term

Businesses should look beyond short term.  God the originator of life made provision for long term, and that is why man is able to live long years on earth.   An average Nigerian business person starts a business with the mindset that the business is so good that he believes it will make him a millionaire in 6months time.  Especially businesses that are been generated by young people, they have no room for growth.  They do this paper work calculating how much they believe they will make within a short period of time. Their calculation is based on the high profit that the business seems to be able to bring them.  

In a structured economy, prices are regulated.  Businesses should not make profit above a certain percentage.  In Economics, there is something called the normal profit and the supernormal profit. A supernormal profit is profit you make between 25 and 35% (of a cost) on a business venture.  It is believed in business that any business that is making a margin of 25-35% in profit is making supernormal profit. In a structured economy, it can never be sustained because it is an unusual profit.  When you make unusual profit in your business, it will seriously attract competitors.  So you need to know that your business won’t last for too long and in a short while, you will be forced to go back to normal profit.  A normal profit is between 0-20%.

In Nigeria, because of the failure of price control, a lot of factors make this idea of supernormal profit work.  And this is why white people are keen on doing business in Nigeria since they can get away with it in our economy.  It is abnormal to make supernormal profit in other parts of the world.  

When you package a business, dealing with normal profit, you must have a long term picture. You must understand that this dream of yours will require sometime.   

It is very rampant among young people and young businesses not to have room for growth. They believe in short term breakthroughs. It is natural that short term cannot give such growth, so they lose interest.

Ideas are common. God made man with the mindset that man would be like him, having the ability to create.  It is natural to create ideas.  You really don’t need ‘education’ to create ideas.    Ideas are on the streets.

These five issues all have solutions.  People have been trained to solve these problems and they are consultants.  

For example, at Frederick Consulting, we have a package that helps small businesses solve accounting issues. We put up a structure for you whereby you don’t have to employ an accountant. We show you how you can keep records daily, and we come at the end of the month to prepare your records. We charge a quarter of the pay of an accountant. We also have a very convenient recruitment package where we help you realize what kind of staff you need and get you the right people.

A lot of people take the consultant for granted, thinking they can always download templates from the internet and do a business plan themselves, but templates can’t answer your test questions. You need to talk to professionals who have done this overtime.

In conclusion, ideas don’t sustain themselves, people sustain ideas.   Ideas cannot just rule the world on its own; it needs people to drive it. 

Idowu Okungbowa is the managing consultant of Frederick Consulting. A consulting company that helps small businesses grow into thriving businesses.

Contact:

idowuokungbowa@yahoo.com

08037263527