10 •
The Lion King
• July - September 2017
Business
By Udeme Ekwere
Start-Up Businesses:
Important Factors to Note
which is a failure to achieve product/
market fit.
Most of the time the first product that
a start-up brings to market would not
meet the market need. In the best
cases, it will take a few revisions to
get the product/market fit right. In the
worst cases, the product will be way
off base, and a complete re-think is
required.
If this happens it is a clear indication
of a team that didn’t do the work to
get out and validate their ideas with
customers before, and during, devel-
opment.
Ensure adequate cash flow
It has been said that cash is the lubri-
cant needed to oil a business. A major
reason that start-ups fail is because
they run out of cash. A key job of an
entrepreneur is to understand how
much cash is left and whether that will
carry the company to a milestone that
can lead to a successful financing, or
to cash flow positive.
Many start-up entrepreneurs are usu-
ally not concerned with backup plans,
and they also don’t keep funds for
emergencies. To enable a backup
plan to function properly, it is equal-
ly important to keep sufficient funds
aside to fund those solutions.
Start-up businesses usually involve
huge sums. The business owner may
not have put his own money in the
project, or perhaps could have got
funding from banks or other finan-
cial institutions. In such circumstances,
unprofessional handling of financial
affairs could lead to losses, which in
turn may prevent the business owner
from getting future monetary help
from these institutions.
Having emergency funds can also
help put off foreclosure from clients
who reneged on their payments, or
losses suffered from damaged or miss-
ing stock, until the flow of income
steadies out to give stability to the
company.
…But Avoid Overspending
Starting a business doesn’t have to
require a large investment, but some
new business owners feel that they
need to spend a lot to purchase
the best of the best everything from
marketing help, to equipment, to
software. There are usually other, less
expensive but equally viable options
available, if you’re willing to do the
research. Creating and sticking to a
business budget to curb overspending
is always an excellent idea.
W
ith the tough economic and
business climate in most parts
of the African continent, it has
become highly essential for individu-
als to be forward-looking. To this end,
entrepreneurship has been advised,
not only as a benefit to the individual
involved, but also as a catalyst of
growth to the nation’s economy.
Some businesses are doomed to fail
from the beginning because the
entrepreneur failed to recognise and
implement basic steps that help to
build a business. In some climes, up
to 70 per cent of Small and Medium-
scale Enterprises fail within the first
year and close to 50 per cent of the
remaining 30 per cent fail within the
next three years. Therefore, it is impor-
tant to take note of certain key factors
in order to avoid being on the wrong
side of the divide.
An entrepreneur must ensure that he
takes time to learn the ropes and
carry out proper research before get-
ting involved in any kind of business.
Experts have said that the incidence
of failure can be minimised with effec-
tive business planning. Prospective
business owners are also encouraged
to conduct adequate feasibility stud-
ies before venturing into any business.
They should also avoid the bandwag-
on, as innovation is the key to success
in business.
Below are some indicators that busi-
ness owners have to pay attention to if
they are to build and operate success-
ful businesses.
Research into and know the
market
A major reason why companies fail is
that they run into the problem of little
or no market for the product that they
have created. Experts say it is essential
for would-be business owners to go into
a businesses with high product demand.
This may be either due to simple exe-
cution, or a more strategic problem,
