My friends and I, in a jovial mood at a gathering a couple of days ago, discussed the recent statistics of the World Health Organisation (WHO) which reported that child mortality rate in developing countries like Nigeria was on the high side. The statistics were confirmed and supported by a doctor friend. I remarked that there was a similarity between the WHO report on mortality of infants and the mortality of new businesses in developing countries. Business mortality rate is rising at a faster rate than child mortality. Small business failure is becoming extremely difficult to control in developing countries. My recent encounter with some managers of field organisations and many business owners with different cases of business failure without any form of relief from the government validates my concerns. Therefore, as a businessperson or someone that is about to start up a business of his own with scarce funds (whether borrowed or ours), it is vital to understand fundamental business intelligence before investing your hard-earned capital.
Permit me to share this true-life story with you so that you can appreciate the consequences of ignoring key business intelligence in your business activities.
Tayo is a 45-year-old businessman with two kids in a rented apartment in Lagos. He was retrenched by one of the new generation banks in Victoria Island a couple of years ago. After ten years service in the bank, he was paid off with a whopping sum of N3 Million as ex-gracia. His entire 18 years career had been in the banking industry, and as such, he knew nothing about any other industry. Tayo’s wife and friends advised him to start his own business as his age was not favourable for hunting for a new job. After recovering from the shock of losing his job, Tayo summoned the courage and decided to start up his own business finally. Although Tayo had no experience in running a private business, he had always been interested in managing a bakery. However, after consulting with few people in that line of business, he was advised that the money he had was not sufficient to start a new bakery. Tayo recalled that he had once been invited by one of his schoolmates, two years earlier before he lost his job, to team up to establish a cybercafe business which he had declined then. Since his capital was insufficient to start the bakery, he decided to invest in a cybercafe business alternatively. Within three to four months of Tayo’s discussion with his friend, he got a licence and a befitting accommodation for the cybercafe business in an excellent location very close to the University of Lagos. He also bought all the necessary equipment for the office including a telephone line and photocopy machine to enable him to operate a business centre service alongside the cybercafe business. Unfortunately, barely five months of inception of the enterprise, the transformer that distributed electricity to his business premises broke down. After waiting for weeks and it appeared that power from the electricity distribution company was not forthcoming, he mortgaged the facility in the office to take a loan for generating sets. Ever since the generating set was installed, it was one problem after the other. The sales of his cybercafe and business centre began to decline. The bank which lent him money for the generating set threatened to foreclose the mortgaged facility due to Tayo’s failure to service the loan. Tayo became worried and sick about the state of the business. The realisation of his mistake dawned on him, just like many out there. He had invested in a business he had little or no knowledge about. It appeared that he might return to the labour market if the bank exercised its right over the business facility.
The enthusiasm and passion for starting up business and becoming its chief executive officer are rising day by day. This is evident from the rate at which small and medium enterprises are springing up in the society, more so now that paid employment has become hard to find. It is however evident that starting and running a business successfully in Nigeria is twice as tasking is getting a paid job. Many entrepreneurs must now contend with a lot of hardship and the complexities of our business environment.
Despite the rigour people go through to nurse their businesses, the rate at which those businesses collapse is on the high side when compared with the same statistics in other parts of the world. Judging by the report of the survey conducted by a business network group, of which I am a member, the situation might continue as more and more people invest in a business they know little or nothing about. A few weeks ago, a few others and I were privileged to discuss the challenges facing many small business owners with some World Bank representatives that visited the country to monitor some projects being financed by the group. One of the challenges identified and discussed as a significant problem to successful management of business in the country is lack of database or information centre where people can obtain information about the industry they wish in. Forty out of every one hundred small businesses that collapsed in the first five years of their existence in the country is tracked to lack of understanding of the sector by investors.