It is always sad to hear that a retired person failed in business. However, it is not news and it is not a pretty sight. A few years ago, I had the opportunity to see behind the scenes of a failed multi-million-naira business set up by a retiree. The business owner retired from the senior management level of a large organization in Nigeria. He also had a sizeable amount of savings and gratuity.
However, about two (2) years after he retired, he was already looking for a loan to revive his business.
The situation
When I went to the company, I saw two factories in the same compound. One factory was to process water (sachet and bottled). While the other factory was a bakery. The company was located in an area near the seaside in Lagos state. Both factories were equipped with expensive machines.
The owner also showed me two trucks that were packed in the compound. He said that the trucks were in good condition. However, there were no products for them to deliver. In addition to the equipment and trucks, two (2) industrial generators in good condition were in the compound.
He had invested millions of naira, yet the businesses did not succeed.
In this blog post, I will discuss three (3) things that the business owner did that could have contributed to the company’s failure.
Table of content.
- There was no business start-up plan for the company.
- The water factory was located in the wrong place.
- The owner invested all his savings and gratuity in the business.
1. There was no business start-up plan for the company.
One of the best things you can do to succeed in business is to prepare a start-up plan. A start-up plan is a guide to help you set up and organize your business. In this situation, like many other failed businesses, the owner started without a business plan or any estimates on the realistic amount that he needed to start the company.
Secondly, the owner had no previous business experience, yet he set up a multi-million naira factory. Therefore, he could not handle the business.
If you find yourself in this situation, here are some things that you can do to avoid business failure.
a) You should learn some business management skills. Some of the essential skills you have to know to operate your business include record-keeping, marketing, and managing your staff.
b) Secondly, you should employ experienced people to run the business with you. If you establish a business in an area that is different from your previous expertise, you will need technically experienced people.
c) Thirdly you should continue learning. Never stop learning about your business. As the company expands, you need to know how to operate it and keep it growing.
Recommended Reading: 51 businesses you can start with 2 million Naira or less when you retire in Nigeria
2. The water factory was located in the wrong place.
As I said earlier, the company was located near the seaside. So, since the primary water source for a water processing factory is a borehole, the water was not fit for human consumption. The wrong location meant that he had to spend quite a lot of money buying extra equipment to purify the water. When I met him, he was still buying more equipment to purify the water from the borehole.
A word of advice, the location of a business means the difference between success and failure. Each type of business has requirements that will make it successful. For example, if you own a hotel or a retail store, you should ensure that the company is located near your customers. While manufacturing companies should be located closer to their suppliers or raw materials. Otherwise, it will cost extra to transport the raw material.
In this case study, the water factory’s basic raw material (water) is near yet far from the company. It is far because of the closeness of the factory to the sea. Therefore, the water is highly salty and unfit for human consumption.
Here are a few questions you should answer before choosing a location for your business.
- Is it easy for you to get raw materials?
- Can your customers buy your products or services easily?
3. The owner invested all his savings and gratuity in the business.
Like most people would act, the business owner invested all his savings and gratuity in the company. He thought that the more you invest in a business, the more profit you will make. So, he did not have extra money to pay staff or a consultant to help him solve problems.
To avoid this situation, here are two (2) things that you should do when you start your business.
Firstly, you should keep some money aside to pay your bills (salaries, raw materials, utility, etc.) for a few months. The amount of money you keep depends on when you estimate that you will start making money. The cash in reserve will help you so that you are not under pressure before you get a steady stream of customers.
Secondly, you should focus on one business opportunity until you succeed. When you succeed, you can then expand to another business opportunity. If you focus your resources on one opportunity. the business will grow faster than when it is scattered.
Conclusion
In conclusion, it is not a nice thing to see a failed business. It is also sad to see the amount of money wasted in the business and lost jobs. So, you owe yourself and your family the responsibility of doing everything possible to make your business succeed.
In addition to the tips I mentioned above, you should not start your retirement business on a big scale. It would help if you considered starting your business on a small scale. That way if you make any mistakes, you can quickly correct them. Practice with a relatively small business and focus on making it grow gradually.
