7 Mistakes Startup Entrepreneurs in Nigeria Make You Must Avoid

7 Mistakes Startup Entrepreneurs in Nigeria Make You Must Avoid
Doing business is really cool but in the face of this ever-changing business environment one need to be extra careful to maintain composure and stealth confidence to avoid unnecessary pressure that often push startup entrepreneurs into some pitfalls that undermines their contribution to the nation’s economic growth and development. Here are 7 common mistakes startup entrepreneurs make that is often responsible for the underperformance of small businesses today:

1. Wrong Business Structure

If you make a mistake about the kind of corporate structure on which to build your business it could be detrimental to your business functions and workflow thereby make you lose out on some opportunities that can help you achieve your business goals. Entrepreneurs often neglect this at start but as business grows it can be a major limitation so, why not avoid it and get it right from start if you truly mean business.
Let me quickly explain the different classes of business structures in Nigeria;
where to buy inderal A. Sole Trader (Enterprise) – This is the simplest form of enterprise. It does not require registration but the business owner may wish to register the business name with Corporate Affairs Commission (CAC) to ensure other businesses do not trade by the same name. This is cheap for a startup entrepreneur, as you can save few bucks at startup by just floating a name for your business venture with or without registration, as you won’t need to file accounts or returns with the CAC if you don’t register a name, and no third party intervention in your business activities, but I must warn you there are lots of risks involved; as the entrepreneur you are solely responsible for all aspects of the business, you have the greatest personal risk with unlimited liability to all debts and legal actions.
inderal 40 buy B. Private Limited Liability Companies (Ltd) – This is a legal entity separated from its owners or shareholders. Its simplicity makes it the most commonly registered business structure in Nigeria. Unlike the Sole Trader business structure, the shareholders’ risk is reduced to only the money the owner(s) have invested in the company. The shareholder’s personal possession remains separate unless they are secured against the business for borrowing or use.
Limited liability companies are considered legitimate by the public because information is recorded at the Corporate Affairs Commission and this gives the business a level of transparency which is beneficial in terms of public confidence.
source site C. Public Limited Liability Companies (Incorporation) – Just like the Private Limited Companies, this is the public version. With a public business structure, you can sell shares to the public and may be quoted on the stock exchange. The cost of running a public limited company is considerably higher hence, the reason it is for larger corporations.
D. Companies Owned By Guarantee (Not for Profit) – This is the type of organizations formed for not-for-profit kind of businesses. They do not have share capital, and members do not own the company. No profits receive as all income is used for the day to day operation of the company to achieve its business goals and members do not hold claim on any of the company’s assets.

2. Lack of Record Keeping and Information Management

Poor record keeping and lack of information management are very pronounced among small businesses today. Few business owners do not prioritize record keeping and very few that did do it unprofessionally while other think it’s not necessary. Record keeping is the lifeline of any business, whether a hundred thousand Naira worth business or a Multi-million Naira worth business without record keeping such business is going to die a natural death in matter of time.
Don’t start that business if you have a little or no knowledge about how to keep sound records of your business activities, from the smallest item to the most expensive asset of your business must have its ink in the book of life (Record books).
As far as record keeping is concern business owners have two options; Do-It-Yourself or hire an accountant or a book-keeper, you can even adopt both. Contact us at SPA Business Playbook for a simple easy-to-use account and book keeping software that can help you keep tabs on all your business activities to avoid under-performance due to lack of record keeping by giving your business a consistent, clean and sound record it deserves.

3. Fund Mismanagement

So many entrepreneurs has turned their businesses to an ATM, they draw cash from the flow anytime and justify spending as profit. In fact, in some business account books, Owner’s Draw (cash drawn against the owner of the business) carries the highest figure. To be candid with you on this, cash handling and fund management requires self-restraint and discipline, without them you cannot go far in business.
Financial management has been identified as the biggest problem of small businesses and many businesses have suffered setbacks, in some cases it is outright closure due to the problem of fund mismanagement.1 It is mandatory and important to separate your business account from your personal account, never spend the cash earned from your business on nothing else other than the business itself except your due portion in form of wage or salary.

4. Lack of Requisite Business Skills & Knowledge

Let me not deceive you, although, formal education is one way to acquire management skills but experiences has shown that this does not guarantee business success. To avoid a massive business failure, extra effort is required to learn firsthand the various entities peculiar to your business line. Make no mistake, what matter in business is not the idea but how to make the idea happen and that comes with relevant experiences through learning, reading, private business coaching and training as an apprentice or intern if necessary and required.
You should also not hesitate to consider strategic partnership with someone who possesses necessary skills and knowledge that can complement you to achieve your business intentions and goals

5. Wrong Products and Service Pricing

Often times most startup entrepreneurs fail to understand the value of their goods and services. They price low on their products in a bid to attract more customers and later discover that the resources expended on rendering the service or production does not justify the price tags and the income.
Under-pricing your products and services is a killer to the venture, so is overpricing.1 It is better to get it right at first than to miss this important part of your business process and struggling later to raise the par to where it should be. Don’t be naive about this at all, there are lots of resources online to help you determine the current market value of your goods and services and we at SPA Business Playbook will also be happy to help you out on this.

6. Misguided Customer Service and Relationship

There are lots of Business owners that have misguided understanding on the concept of customer service and relationship to a level that they want to impress their customers and end up in a serious flop that they never regain from. In business, it is better to under-promise and over-deliver. Don’t be too shy to engage your clients and customers in a frank conversation.1 Avoid timidity and fear of losing them, customers often appreciate a straight to point response, make them understand what brought about the added cost if necessary and you will be surprised that some customers won’t mind paying for the added value if justified.
This misconception is the major cause of the point #5 mentioned above and many other naive actions such as not knowing when to say NO and turn down offers that is not business friendly. Don’t get me wrong, it is good to gain more customers and retain existing ones but it is dumb and more dangerous to ignore the fact that customers respond to values and not empathy.

7. Unrefined Business Model

Another common mistake entrepreneurs make is stickiness to one particular way of doing business in this ever-changing business environment. This is one major reason many business owners lose out on some major opportunities this digital world of business presents. Ability to change and adapt quickly to the changes in the market space is a lucrative skill an entrepreneur must hone in this generation.
Many entrepreneurs are too primitive and unrefined to adjust their business model to match the on-going social media platform revolution. So many businesses are hitting it hard and enjoying breakthroughs online by getting more leads and sales. Don’t be too defensive, look into your business processes, and make necessary adjustment by responding to the behavioral trends of consumers. Get feedback and use the responses to refine and develop a viable business workflow.

Final Thoughts and Game Plan

The underperformance of small businesses today has undermined their contribution to the nation’s economic growth and development because of these common pitfalls discussed above.
  • Get requisite knowledge about your business line. It is not about the Idea, it is about making it happen.
  • Choosing the right business structure will save your business from missing out on opportunities.
  • Avoid underpricing or overpricing of your goods and services, it is a killer.
  • Ensure you separate your business account from personal account, so you won’t mistake earnings for profit.
  • Go get the required record keeping knowledge or hire an accountant to save you the entire headache involve.
  • Conduct business survey, get what is trendy in the market and use the feedback to refine your business process accordingly.
Business can be very challenging; it will be an additional burden to be defensive in your approach.
Credit: SPA
Also Read  10 Steps to Start a Successful Business in Nigeria [INFOGRAPHIC]

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