Recently, I was in a business dialogue with one of my beloved friends. After several hours of phone discussion, he made mention of something very crucial, he said it's expected that a business goes through some problematic or tough circumstances in its early stage.

Since then, this simple but profound statement has been baffling my minds. It's expected that you as a business owner or an entrepreneur encounters problems in your business pursuits, whether you like it or not.

In view of this, I will like to share with my fellow entrepreneurs or upcoming ones, some of the business hurdles you would likely come across in your entrepreneurial sojourn.

1. Overoptimism
Most of us, if not all of us, suffer from this problem. When starting out as an entrepreneur, we appear so sure about the profitability of our new business idea to the extent that we won't mind to offer our papa's house as a collateral to get the needed capital.

We have a high tendency to expect the best, or at least, a favourable outcome from our business pursuits in a jiffy. The reality proves us wrong. It takes time, lot of money, patience, perseverance and tenacity to reach profitability.

It's very hard to hit the ground running in business world. Let me share one funny experience I have with you. In one of my business pursuits, cucumber farming project.

Before I started I consulted at least 3 successful cucumber farmers in 3 states to learn the ropes. I visited their farms as well. In fact, we paid handsomely to have a business proposal and an operation guide prepared for us to run this cucumber project.

Working with the proposal and a guide from a consultant, we pooled funds to run our cucumber farming project asap. Running 1.5 acres of fully irrigated cucumber farming and an acre of sweet corn at the same time isn't an easy pie.

We spent approximately #3m, I later added personal money (hundreds of thousands Naira) to keep the project running till today.

The funny part is this, my business partners were very optimistic of what we're going to realize as profits. To the extent that they ran plant population of each cucumber stand and the least number of fruits to reap from each with a forecast of selling price.

Then, all my thinking, prayer and stance was once we recoup the initial investment, then we're good to go and very much close to profitability.

Guess what, unimaginable challenge surfaces from nowhere. We couldn't achieve 10% of the projections. Eyes turned red, blood pressure rose, we nearly fought ourselves. The unexpected shock scattered the partner circle!

This is what overoptimism does, it creates an unimaginable shock that can kill your business morale and make you to go into business extinction.

In the example cited above, my partners left the cucumber farming project with alacrity, I am the only one battling with the project now with the hope to win one day and recoup at least our huge investment.

Way out: Strive always to be conservative in your profit forecast. Even if you're sure of making #90 as a profit, put your mind at #30.


2. Underrating the Business Risks.

Excluding risk analysis or underrating business risks is another major problem we face as an entrepreneur or a business owner.

Most of us have that euphoric belief that we can run a risk free business. We go one with business as if we won't encounter any risks. We have that confidence in ourselves to avoid and to overcome obstacles that could cause great loss.

Note it, business is very risky, business is inherently risky and it's more risky if you run business in Nigeria. In fact, you're not an entrepreneur if you can assume business risks.

Merriam-Webster defines "an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.”

The focus then becomes understanding risk and how it factors into being an entrepreneur. “Risk,” as defined by the same dictionary, is the “possibility of loss.”

Some of the major business risks we tend to overlook include:

• Occurrence of major operational problems such as pilfering & misapplication of resources, etc.
• Higher costs than expected.
• Low sales due to downturn in the economy.
• Greater competition than expected leading to fall in sales and low profit margin.
• Funding risk (running out of cash flows before reaching achievable milestones)

Way out: Spend more time to do risk analysis before starting that business. Think through anything you think might go wrong, then come up with your risk mitigation strategies.

Always find ways beforehand to minimize or to spread the risk of your endeavor to increase the odds of your success or minimize the odds of loss.

Let me stop here this morning, I hope to addin the subsequent posts. Over to you, what are those problems you have come across in your business pursuits and how do you overcome them.

Ismaeel Akintayo O
Pelawi Business Consults
#BeBusinessSmart