The U.S President, Benjamin Franklin, popularly said, “if you fail to plan, you are planning to fail”. The British Prime Minister, Winston Churchill, came up with this golden quote: “Those who fail to learn from the past are doomed to repeat it”. Whichever way you see it, failure is bound to happen, if there is not enough laying down of “achievables”, and if there is no learning from past mistakes.
The business climate in Nigeria is tough for established companies, talk less of start-ups and “small merchants”. The fluctuating business environment takes several forms such as: hike in petroleum products, rental fees, importation embargo on selected merchandise, cost of fixed assets (as in office equipment) et cetera. These are stumbling blocks for burgeoning entrepreneurs across Nigeria. Being young and inexperienced, overzealous and impatient, kind of adds up too. A great quote by Kevin Ashley, CEO of Nairobi Java House, goes this way:
“The journey is forever. Do not ever let yourself feel like you have arrived, because if you do, someone else will come and run right past you. You always have to keep going because you haven’t reached the mountain top yet.”
As we investigate further, there are still some uncontrollable factors that hinder young entrepreneurs in Nigeria:
- Lack of focus on objectives: Objectives are the means through which ends are met. There is usually no strategic approach to doing business, as has been found among younger entrepreneurs. A lot of people want to hit the jackpot, there is little care for what is to be achieved on the long-run. The vision is often unclear and indescribable. At the Lagos Start-Up Week event, late last year, a famous executive from a prominent online-commerce company mentioned that “during sales pitches to potential investors, you find out that young start-up owners are all over the place, with no clear, set goals and definition of their business”.
- Infrastructure is a problem: In the bigger, more vibrant cities, it is a herculean task to get a decent work space. Offices, warehouses and lock-up shops are more expensive than ever. If you add what a new business owner is going to expend, it evidently eats greatly into the overhead costs. Getting office space is competitive. Some advisers opine that start-ups may have to partner with other start-ups in getting co-working spaces. Real Estate guys may start building structures to cater for these needs exclusively.
- Lack of long-term loans: “The inability of commercial banks to give long-term credit facilities is due to the non-availability of long-term-deposits by Nigerians, a financial expert, Mr Nnamdi Okonkwo has said. (Read more at: http://www.vanguardngr.com/2016/09/banks-dont-give-long-term-loans-fidelity-bank-md/). Commercial banks have passed the era of asset mismatch, where long-term assets are replaced with short-term assets. Because, most depositors do not keep money in the bank for a long time, banks are only able to provide loans to burgeoning business men within a short repayable period.
- Lack of orientation towards cost: cost focus is important, especially when you have not hit break-even point. Minimization of cost is ideal, as you may not want to incur costs on meaningless expenditures like buying a car, using a high-class delivery service, when you are not supposed to, buying a lot of fixed assets for the office, when they are not required, or even worse getting an overpriced office space, when your business requires mostly online transactions. It is imperative that a start-up gains some financial literacy, because, that is the thin line between profitability and liquidation. A study by Financial Post says, that 85% of businesses survive after the first year, but only about 51% make it past five years. The reason for this is because of the lack of understanding on how money and assets work.