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| Image by Gerd Altmann from Pixabay |
Today's post is a quick look at a failed business in Jos, Plateau State Nigeria. As part of efforts in helping startups avoid making similar mistakes i have decided to talk to real businesses, real people with real experiences that we can relate to and I have the permission of the business owner to share.
I had the opportunity of interviewing a business owner in Jos, whose business recently shut down late 2018 after surviving for just 4 years. I tried to do a failure post-mortem to determine the cause of the business mortality and found a couple of things which i'll be sharing.
The business owner had retired and was paid gratuity amounting to more than 10 million naira more than 4 years ago. Retirement was as a result of the then sale of the Power Holding Company of Nigeria (PHCN) which led to early retirement of some staff within the organization.
Here is a snippet of the business owner's story. After receiving her entitlement, she secured a shop first without really knowing what business to do and never done business before, after some thinking and talking to a couple of people she decided to go into the sale of groundnut oil as a sub-distributor, registering with a major producer of groundnut oil in Jos, cost about 5 million naira, to register as a sub distributor, registered the business with the Cooperate Affairs Commission (CAC), got products, stocked the shop and that was it. A couple of months down the line, got a few "customers" who took products without making payment and later on there was a break-in and products carted away, she switched to selling chicken feed, got more "customers" who continued taking product and never made payment until the business shut down late 2018. Everything that could possibly go wrong in this business went wrong. Ab initio everything was wrong.
Now here is my takeaway from why this business failed, it doesn't follow any particular order. I'll touch on two of them and the rest i'll take in subsequent post.
1. No Market Evaluation
With the ever changing business landscape especially in Nigeria, staying informed is one thing you can't afford not to be doing, not affording to know and act on the right information before launching into any business venture can be damning. Market evaluation is the most critical element of successful business planning. It provides the basic data that will determine if and where you can successfully sell your product or service and how much to charge. If you are thinking of starting a new business or expanding into new markets, proper market evaluation is critical to success. While it may sound deceptively simple to figure out if a market exists for your product or service, it's probably one of the most challenging requirements of business. The process involves scrutinizing your competition and your customer base and interviewing potential suppliers. The information collected can help you, if necessary, adopt your product or service to better meet customer needs. In some rare cases, it might lead to a totally new, but financially rewarding venture.
2. Talking to the wrong people
Asking information from the wrong people and acting on them is a sure way to start off your business on a wrong footing. Achieving success can be far from reality. There are many aspects to a business which cannot be overlooked.
3. Very High Risk for a Newbie
4. High Startup Capital
5. No Metrics to Track Growth
6. No Prior Business Know-how
7. Running on Sentiments
8. No Business Plan
9. CUSTOMER DEBT
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