Building a Successful Business: Prospects and Challenges

Presentation by Mr. Raimi Lukman at a Business Seminar organised by MSSN Oworo Branch Lagos Nigeria on Saturday, June 15, 2013 at University of Lagos, Guest House, Committee Room 5

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Meaning Of a Business and Benefits

Business has several definitions. For me, a business is any attractive investment, an idea or a proposition that provides individual or group of individuals with opportunity and possibility of a return on investment. Business presents itself in various ways at different times, especially when the needs of the customers or communities are met through products and/or services that provide utility and value to the end users. There are unlimited opportunities and benefits in setting up a business, namely:

  • Bigger income and profit periodically,
  • Business supports and protects the owner now and in later years/old age,
  • Business is better than wasteful consumption because it increases in asset value,
  • Business when properly nurtured pays the bills and other economic needs of the owner,
  • Fulfillment of creating value and employing others, and
  • Business giver liberty, freedom and control of time/lifestyle unlike paid employment.

Building a Business Model

According to the United States Small Business Administration (SBA) starting, managing and turning your business ideas into reality requires elaborate length of thinking, research and meticulous planning.  As a lecturer of entrepreneurship and small business creation, I align myself with the view of SBA above because several of our students who took courses in entrepreneurship education never start a business. Hence, building a business model from our wealth of experiences entails three things, namely:

  1. SEEING what everyone else has not seen,

  1. THINKING what no one else has thought, and

  1. DOING what no one else has dared!”

 

Innovative thinking is the key to becoming a successful business owner in a competitive and challenging business environment like Nigeria, where opportunities abound but people cannot see, think and do them. Whether you actually invent a new product or process, or you use creativity to develop better ways to market existing products or services, you will need to learn how to think like an inventor. Thinking process provides you with clues to fund sourcing, networking, aggressive promotion and overcoming all preliminary challenges of waiting stage.

You might want to think about some of the following types of business to get your business model moving:

  • Refreshment stand at strategic locations
  • Child care/Nanny care centre
  • Groceries/fruits stand
  • Yard care/gardener/horticulturalist
  • Developing a web page for others
  • Youth community center/NGO
  • Daycare centre/Creche
  • Barbing saloon
  • Kerosene business
  • Internet café
  • Selling of GSM recharge cards/Telephony
  • Events manager
  • Delivery services
  • House cleaning service
  • Selling used clothes
  • Jewelry making
  • Computer service business
  • Add value to an existing product (packaging and Marketing)
  • Travel/tourism services
  • Car hire/Taxi
  • Repair services (shoes, electrical equipment, cars, clothing, etc.)

 

Stages of a Business: Between Success and Failure

Simplistically, there ARE four stages that separate a successful business from failing one, namely:

  • Idea generation stage,
  • Idea development stage (writing a business plan),
  • Feasibility stage (to test viability and workability of business plan),
  • Implementation through funding (personal, family, loan, equity, ploughed profit);
  • Waiting stage (nurturing period with monumental challenges), and
  • Success stage (a period to celebrate).

Business Failure: The Causes

Business fails on account of the following causes. You must avoid them to grow in strength or ignore them perished by the way side. The symptoms often manifest early, as they appear, solutions must be sought.

    1. Poor development of business plan,
    2. Lack of sustainable capital base,
    3. Lack of corporate outlook and image, functional contacts – phone, email and postal addresses, letterheads and complimentary cards for correspondence,
    4. Limited international marketing experience,
    5. Poor quality control and product standardisation,
    6. Difficulties in gaining access to appropriate technologies and information,
    7. High start-up costs, multiple taxation, corporate licensing and registration requirements, impose unnecessary burdens,
    8. Stiff competition in the market/Apathy to advertisement promotions/marketing
    9. Apathy to Research and Development (R&D),
    10. Lack of business management skills/poor management of finances (budgeting) & records,
    11. Ineffective time management/stress management,
    12. Ineffective coordination of sales and debt recovery techniques,
    13. Apathy to business counseling, Skills training and Mentor support
    14. Extravagance

 

Business Failure and Nigerian Experience

Businesses are hindered in Nigeria by several operational and institutional constraints (OICs), which include: limited access to loans due to lack collaterals, insufficient managerial acumen, infrastructural deficiencies especially electricity, and dubious legal systems. Other identified constraints include: mind-set to remain informal, inability to afford new technology, unfriendly tax system, local markets, lack of incentives from governments, corruption, difficult business registration, ineffective partnership among stakeholders in the region, lack of succession plan, inadequate legal framework, and dying culture of entrepreneurship.

 

The chain reactions of all the constraints have created very weak businesses, that cannot create jobs, add value to national GDPs nor able to improve the quality of lives of the citizens.

 

Businesses are in horrific state in Nigeria going by the results of several surveys such as National survey on SMEs by NBS and the national survey of Manufacturers Association of Nigeria. The national survey conducted by the Manufacturers Association of Nigeria (MAN) shows that eight hundred and thirty-four (834) manufacturers shut down their facilities in 2009, an ugly development linked to their poor capability cope with the challenges high overhead cost and unfriendly business environment” in Nigeria. Other challenges and socio-economic factors that precipitated failures of SMEs with specific reference to 834 SMEs in Nigeria include unstable electricity/power supply, unbearable overhead costs and multiple taxes across three levels of governance.  The summary of failed SMEs across the six geographical zones in Nigeria is as shown below:

  • 176 SMEs shut down factories in the Northern zone;
  • 178 SMEs collapsed in the south-east zone;
  • 46 SMEs halted operations in the south-south zone;
  • 225 SMEs closed down in the south-west area, and
  • 214 SMEs closed down in Lagos zone (Punch, 2010; The Nations; 2011; Oyelola et al., 2013:208).

 

Relevant Case Study

Adewale Alausa is considered to be the father of hotel business in Ago Iwoye. His case study presents the “rags-to-riches” story of a businessman. From humble beginnings, he built businesses that cut across several cities in Nigeria. Adewale steadily expanded his business after serving others, and by the time he reached the age of 35 years, his companies included a number of luxury hotels and travel agencies. Adewale finished secondary school in 1985 with five credits and got a job as a waiter/steward at Hotel Cecil in Enugu for a salary of N250 per month, which was increased to N280 per month because of his customer-friendly smile, ingenuity, empathy and attention to details. Women particularly love his smile and his polite speech “Ma! Can I be of help in any way”. The owner of Hotel Cecil, George McKay was impressed with his knotted tie, attitude, empathy and polished shoes on the basis of which he sent him for a six-month training course abroad to improve his skills in Hotel Management. George McKay (GM) is involved in all the operations in his hotels. Just two years after the training, Adewale started coordinating one of GM’s hotels in Togo. This hotel he continued to operate till January 1995 when he pulled out to set up his own hotel because of concern for independence and need to create jobs for others. When he resigned from Hotel Cecil; he bought a property in Sagamu, renovated and named it Immaculate Hotel, Sagamu. Within 6 months the hotel became a beehive for politicians and socialites who are his primary customers. Paul Abbey helped Adewale with the advertisement promotion which read: “Immaculate hotel in Sagamu is a place where you can get everything you want, we offer comfort without tear or fear.” People of Sagamu today considered Adewale as an accomplished entrepreneur and bigwig in the hotel industry in Ogun state. Adewale’s success could be attributed to his attention to quality, beauty and colours. He used to get involved in the nitty-gritty of operations of his hotels, even to the extent of inspecting the toilets, garden and swimming pools. Like his former boss, he owns chains of hotels like Havanah, Wale Rocks, One-in-Town Grotto and Tiwantiwa.

CONCLUSION
Do not be a liability but an asset to the society.  People want to associate with individuals with success stories and celebrities. Try and be one by virtue of the business seminar you have attended. Thanks for your warm attention.

 

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