There is no get out of jail free card for running your business. You will surely encounter certain issues on the line and that is the experience. Aliko Dangote is the richest African according to Forbes and a highly successful entrepreneur. No one envisaged he would encounter problem when he commissioned his refinery, which is the largest single-train refinery in the world, estimated at $20billion.
He faced issue with Nigeria National Petroleum Company who initially failed to supply him crude oil despite Nigeria being an oil producing country which means he had to source about 9-10 million barrels of crude oil monthly from USA and other countries.
Well, that wasn’t all, the cabals also tackled him after that and refused to buy and distribute the refined products to retailers across the country. He went ahead to purchase 4,000 CNG fuel tankers and 6,000 dry cargo trucks.
That is business for you. You encounter issues no matter what your experience in the industry, country or as a human.
That is why I decided to put up this post which will be a series of posts on how to mitigate these risks and run a successful business.
Understanding What it means to run a business
A business has 3 main components,
- Management
- Product
- Customers
The business succeeds when the three components move in sync. You aren’t in business if you have a product and there’s no customer or if you have a custom and there’s nothing to sell. If the management or its decisions are bad, they also affect both the products and customers.
This is the core of a business and it is more than just putting up a shopify page or displaying your products on WhatsApp.
Continuity is the goal
Around 45% of new businesses close down within the first 5 years in USA. That number is worse in developing countries. The main purpose of a business is staying in business. When you stay and survive, then you can think of profit, growth, expansion and the likes.
I mentioned in my entrepreneurship burn out post that businesses don’t fail because the idea is bad, but the system is designed poorly.
This is why you need to keep going no matter what.
Build Systems
Ditch hard work and work smart. Starting my recycling business, I was everywhere, trying to get PET materials, logistics, and still handling the sorters. It was hard work but could be handled better because work basically stopped when I am not around.
This can’t sustain a business.
Systems are the only way to keep things running without your presence. Build systems and delegate tasks. Delegate and supervise to monitor loopholes and cracks.
Systems let a business run efficiently even when you aren’t on site. Have a well followed SOP (Standard Operating Procedure) will see you working on the business not in the business.
As the founder, you should be focused on strategy, growth, systems, partnerships, and scaling not handling every part of the business.
Cash Flow Is the Lifeblood
A profitable business can fail if it runs out of cash. Profit look good on paper and for bragging but cashflow is king. Cashflow determines how you pay salaries on time, how you pay for stocks on time, what comes in, and what goes out.
Know Your Numbers
Financial data is a dreadful thing for most entrepreneurs. They shy away from hearing figures concerning their business. That is a huge mistake because numbers don’t lie.
Your financial data gives you the health status of your business. It shows you the sales report, margins, net profit/loss, cost of goods, what is working and not, what you should cut or reduce.
Understanding your numbers lets you make decisions faster and with less emotions.
Leadership Is key
You look at a founder employing someone else as CEO. They are different roles and not just titles. David Bird is the CEO of Dangote refinery formerly CEO of Duqm refinery.
Leadership is not just by title but by keeping people aligned to the shared vision. A leader keep people informed and accountable.
This is why you see stock prices racing high when a company appoints a visionary CEO. You know he is here to make changes.
A business fails when the leader fails in the role.
Final Thoughts
Running a successful business is about structure.
In the next part of this series, I will talk about how to build sustainable system for your business.
Let me know your thoughts below