Home' Trinidad and Tobago Guardian : August 9th 2015 Contents The most critical stage in the
business cycle is the startup
phase and it is analogous to
an airplane taking off. If the
pilot does not perform the
right manoeuvres, the aircraft
will crash. But even in growth stages, new
ventures still face a high chance of failure.
Even heard of an aircraft that ran out of fuel
in mid air?
Many entrepreneurs know that being in
business carries certain risks and many of
these pose a big threat to the survival of the
business. If you knew what some of the com-
mon errors that entrepreneurs make when
their business is past the startup stage, then
you stand a better chance of not only surviving
but growing the business.
1. Not keeping the books
The founder of a new enterprise needs to
keep track of the paperwork. If she does not
know how much money is coming in and what
is going out, it is likely that the business could
run out of cash; the fuel of the business.
You never liked book keeping but you would
always try to keep up. But the business is
growing and you leave it to an employee as
a part time chore.
You call for information about bills due and
cash balances and they are frequently in error.
You see, your raw materials going up, but not
too sure about your cost of production. But
you postpone hiring help to save costs and
the accounts keep piling up and potential dis-
The pilot (founder) does not have good
information from his instruments and therefore
is flying by guess.
The solution is to spend the time and keep
good books or hire competent part time help,
this is an investment that is worth the cost and
2. Customers come second
Your business starts to boom, and you think
there are some customers that are a real pain.
Then some start to annoy you and you brush
them off as just nuisances.
In any case, why bother when the business
has enough sales. Then the unhappy customers
tell others and your reputation gets ruined
and the evitable decline starts.
The solution is to design an organisation
that puts the customer first and make sure they
get the attention they deserve. Remember the
rule that a dissatisfied customer tells at least
10 others and this saying was before the internet
3. Employees are not important
With a 3.7 per cent unemployment rate, it
is easy to forget how hard it is to get workers,
so you treat them with less emphasis. But
you re the boss and when they ask for some
extra time to deal with pressing personal issues
you brush them off.
They begin to question if this is the place
to work and if the pastures are greener else-
where. They notice the many Help Wanted
signs. Some say that employees are more
important than the customer; it takes good
employees to gain customers in the first place.
The solution is to stay close to your employees
and make sure you can keep them happy. While
a small business cannot pay top dollars, there
are intrinsic rewards (praise and more job auton-
omy) that you can hand out.
4. Monkeys running the zoo
When you leave for an errand and the organ-
ization starts to have a mind of its own. Some
employees do as they please. They quarrel in
the presence of customers and don t notice
the long lines. Even in your presence they
show little respect and you tolerate it since
there is a labour shortage. The situation even-
tually gets out of control and the business
While employees are important, you the owner
are responsible for what goes on. A dose of
good leadership and delegating to someone
responsible is one way to avoid the chaos when
you are not there.
5. Cash flow will come
Your organisation is growing and you see
an unlimited amount of opportunities to go
after. But then you realise that many of the
new initiatives take more time to generate
positive cash flow. You now see many as black
holes (like the astronomical concept of a point
in space that sucks in everything with no
escape) and your cash flow starts to suffer
and the business can t pay even its phone bills.
You forget that a startup is like a cash sponge;
it takes more cash than it releases.
Cash flow could be the number reason why
organisations fail. The best solution for dealing
with cash flow issues is first to do a cash flow
projection and look for ways to maximise inflows
and delay outflows.
One strategy could be to reduce credit and
inventory levels and treat cash with extreme
6. Tomorrow is yesterday
Things are good and you think it is going
to be so for a very long time. When asked
why the new sunglasses, you respond that the
future is bright!
When you plan, you plan with the past in
mind. In effect, the rearview mirror is your
guide to planning. Customers start asking for
more and for different benefits.
The world starts to change. It s like you
were like Brian Lara on the field and now you
are asked to play football with the same skills.
You say it s just temporary and the game will
come back to the cricket. However, it will not.
Never forget that you are an entrepreneur,
and innovation is one of your advantages,
always look at your products, business model
and strategies to find better ways to compete.
You may need to kill those things that made
you successful in the first place.
7. Enjoy It
Business is good and as an entrepreneur,
you have made a lot of sacrifices. You had
mortgaged everything you owned. Your entre-
preneurial efforts put a strain on your family
life and taken a toll on your health. It s payback
time. You start to buy the nice things that
your peers have. The feeling is good and so
is business. Nothing to worry about! Then
you start to postpone paying bills and making
critical investments. The business starts to
lose its competitive edge. You say the business
has a loyal following of customers and they
will not leave you.
Entrepreneurs need to decide what is for the
business and what is for personal expenses.
There are no rules, but younger businesses need
more cash, while mature ones need less.
8. Ad hoc decision making
You have mastered decision making in the
past. Your assumptions about the world were
You notice that recently your choices have
not been so good and that the speed to make
decisions has cost the company some money.
You rationalise it by saying an entrepreneur
does make mistakes and this is no different.
But your poor decisions have put pressure on
the firm and your managers are beginning to
question your leadership style. You are using
your intuition; the rules of thumb that simple
decisions can be made on. Again, you press
on.The way out is to leave more costly and com-
plex decisions for more critical and analytical
thinking. These require more cognitive resources
and help from others who might have a different
perspective and be more competent than you.
The end might not be near
These common errors that entrepreneurs
make are not inevitable or set in stone, they
can be avoided.
Entrepreneurs have to spend the time and
step back and ask if any of these are starting
to show their ugly heads, there is a need for
action. Your destiny and that of your business
is for you to make.
Sajjad Hamid is an SME consultant. He
can be contacted via email: entrepreneurt-
email@example.com; Web site: entrepreneurtnt.com
AUGUST 9 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
ENTREPRENOMICS | SBG13
with Sajjad Hamid
Eight ways to 'buss' a business
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