Why Your Business is Failing?

I went to see a prospect in one of our financial institutions today. I had to ask the Executive Assistant to the person we went to see, “where are your people?” The organization was practically empty. The building was looking somewhat run down and the entire environment did not look like where the serious business of financial transactions were conducted. What niggled me the most, was the fact that the organization had a recognizable brand and was still viewed as viable from the outside.

When my partner and I left the meeting. The question we both kept on asking was, “why continue to do this business?” It was clearly obvious that the business was failing from what we could see that turning it around, would be like driving a trailer with a stiff steering wheel. You can imagine how difficult that would be.

There are many businesses in Nigeria, going through this same situation and it is disheartening. The economic landscape is not making it easy for businesses to succeed and the uncertainty of the elections and fear of its fall out has exacerbated the situation.

We both attempted to determine what could have caused this downward decline in the business. Below are some critical areas to look at to ensure that your business does not fail:

The Right Manpower and Technical Competence

We noticed a lack of fit between the role the individual was meant to play and what we thought she was equipped to do. It was clear that though the person may have all the technical skills in the world, her lack of soft skills would make it difficult to achieve desired results. Organizations need to ensure that when employing staff both technical skills and the right managerial or executive skills must be put into consideration, otherwise they are being set up for failure. Employees need to have an executive presence, this brings in 30-40 per cent of the revenue, because it opens doors and provides opportunities for hard business to take place.

Doing What Everybody is Doing and Misguided Objectives

We were not sure that the organization had the capacity to do what it said it was in the business to do. Firstly, we did not see a strong workforce. Secondly, it appeared, adequate research had not been done on why it was doing what it was currently doing with respect to its future strategic goals. Many Nigerian businesses jump at the opportunity of doing what others are doing, without confirming that it will work for them or would be the right fit. Adequate market or entry strategy research, pilot tests, focus groups, qualitative and quantitative research are not done. Mainly because people do not want to pay advisory fees or think they have the rudimentary knowledge to do the research and analysis themselves. Many times these research are then done, when the business begins to struggle.

Enabling Environment – Government Policies

I was at the global real estate conference on Friday, where the challenges of conducting business in the sector was discussed. The knottiest problem they all had was in government providing an enabling environment and having the right policies in place to succeed.  These government policies destroy both big and small businesses. Companies usually do not proactively safeguard themselves against these ever changing government fiscal and monetary policies in our rather unfriendly business environment.

Digitization and Technological Trends

Not being comfortable with digital and technological trends will destroy any business today. The sooner you embrace technology, innovation and realize that you must think change and improvement on a real time basis the stronger your business will be. Unfortunately, many Nigerian businesses do not quickly embrace technology, some have an aversion and some do not like change. This company we went to see, were just looking at implementing a digital strategy, which many of its competitors had done over 10 years ago.

Poor Corporate Governance and Management

The conclusion my partner and I both arrived at was that the company was suffering from poor corporate governance and management. The company being a financial institution, we were sure that inadequate adherence to corporate governance requirements had weakened the organisation and made many of its processes fail. The management may not have been strong enough to hold its ground against interference and undue pressure in managing the business.

We also wondered about the strategy, management had used to drive the company, because when compared to its peers, we did not understand why the organization had not done well.

Ajaero Tony Martins says, “my most important word in business is ‘Strategy’ and the reason is this: The speed at which your business grows is directly proportional to the overall strategy deployed on that business and the team behind the creation of that strategy.”

Competition

As we all know, competition is fierce these days. In many industries today, we see how competition has destroyed and is destroying players. It is survival of the fittest. Once you are deemed to be doing well, others clamour to copy you. While competition is sometimes termed to be good for your business because it makes you stretch and keeps you striving to do better, too much of it can stifle you and kill you if you are not strong enough. In view of the weak foundation of many businesses in Nigeria, they fail due to competition and not putting processes in place to mitigate the negative effects of competition.

Capital and Fraud

Cash flow is the life blood of any business. Insufficient capital is the bane of many businesses in Nigeria and can kill even the most profitable business. The organization we went to today, it was clear that an infusion of cash would help turn the business around. They were clearing working on a bootstrap budget, with limited cash and had eliminated all “unnecessary spending”, though this spending, can and is essential to their survival.

In addition, fraud is a major reason of business failure today. I was talking to my accountant a few days ago, he said the people committing the most fraud in organizations these days are female. These is an aside, though alarming. Bad employees can be a key cause of business failure. When stealing and stripping the organsation becomes the key transaction of employees, the resultant effect can only be bankruptcy.

In conclusion, let’s work on ensuring we do not succumb to the challenges above. I know it is easy to say and hard to do. Doing your research, defining your strategy, scanning your environment, deploying the right technology, processes and employing the right people will help your business grow and shield you from failing.

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Marie-Therese Phido, CEO, Elevato, Strategy, Innovation & Marketing Expert and Business Coach