A BUSINESSMAN, after serving his master for certain number of years was settled and he started a supermarket at Aba, Abia State. He hails from a town close Aba.
As soon as he started the supermarket, he used the remaining cash to marry a girl from his home town.
Since the girl was so young, she had nothing doing, the businessman decided to use his wife as a sale’s person in his store.
Unfortunately, she wrecked his business. Any time the man traveled, the wife would package provisions and move to her village and quickly dropped them for her mother and siblings, immediately returned to the husband’s supermarket before he returns.
The wife to the business man continued that practice and the business started to collapse and the man continued to search from where his failure came from.
It was revealed to him that the wife was stealing his provisions each time he traveled. The man laid ambush and found that it was true.
But before he discovered what was wrong with his business, it was late as his business had already failed.
The businessman couldn’t endure that and sent the wife packing. Then he packed his remaining articles to the village, and started life all over again.
In her book, Management of Small Scale Business in Nigeria, Obeleagu-Nzelibe said “It is important to realise that to start a new business of any type is to be exposed to the risk of business failure.
“To commence a business without enough financial support further increases the risk, and to start such a business without enough planning and necessary information to run the business is to increase the risk of failure almost to the point of certainty”.
Continuing, Dr. Obeleagu-Nzelibe said, “At least, three out of every four businesses fail yearly.” And causes of business failures are as follows, inadequate sales, competitive weakness, heavy operating expenses, receivable difficulties, poor location and poor management.
She urged people who are starting new businesses to avoid sales on credit and ensure adequate cash flow, to do everything possible to increase productivity, avoiding heavy borrowing so that an economic reversal would not be too heavy a debt load and if there is outstanding debtors, such people must be pursued for collection vigorously.
The committee on small scale business administration contends that 90% of such failures could be traced to lack of planning, inexperience or inadequate managerial competence and the remaining 10% are accounted for by neglect, travel and disaster.
Experts in risk management pointed out that there are constantly ups and downs in every business’ life. Changes in economy, politics, government policies and regulations can affect business and lead to failure.
Although business owners can take some stringent measures to remain in business, yet, they run into business troubles in a matter of weeks as a result of loss of a key client or monopoly of a key product.
Since risk is prominent in everyday business life, practical efforts should be made to reduce risk, but uncontrollable risk should be covered by buying an insurance policy with an honest insurance broker.