By Moses Nosike
Mazi Samuel Ohuabunwa, Chairman and CEO of Neimeth International Pharmaceuticals Plc, President of West African Pharmaceutical Manufacturers Association (WAPMA). Against the background ofÂ hisÂ position as Chairman, Nigeria Economic Summit Group (NESG); President, Nigeria Employers Consultative Association, (NECA) and Chairman, Manufacturers Association of Nigeria, Ikeja branch, he suggests ways the economy can be improved. Excerpts:
Preventing Business Failures, what is all about?
Preventing Business Failures, is a book which had been researched and writtenÂ with focus on the need ofÂ every business man to appreciate factors that make businesses fail.Â IfÂ Â you look at the environment, you can see that so many businesses have failed and many are failing.
And the environment is littered with such businesses. IÂ also had set up some businesses that failed and it botheredÂ me thatÂ aÂ business I set up failed.
And also, I began the search and research to know whatÂ causes businesses to fail, especially small and medium enterprises, because that is where we have a larger amount ofÂ business failures. And I found out the fact that most of the people who run these small and medium scale enterprises hardly have any formal training in business management. Even those who had didnâ€™t have the practical side of it.
So,Â they do a lot of things without adequate understandingÂ andÂ Â itâ€™s becoming much more expensive to start businesses, and so it becomes painful that those businesses fail.
And also, this matter has been accentuated by the recent global economic crisis which saw many companies fail – big companies. They say if gold will rust, what will iron do? That has been in existence for many years. So , we decided that this is the time to draw attention to the issues. And so we identified those critical issues. We made a case in this book that the business is like an organism, that those thingsÂ Â require an organism to grow.
Lets say human beings also are the things that businesses require to grow. They needÂ nurturing,Â theyÂ needÂ takingÂ care of, they need constant evaluation, just like human beings will need those constant nutrients,regular exercises, medical check-ups,Â businesses need all that also to grow. We identified that, and also went ahead to discuss criticalÂ issues like cash flow.
Many businesses have failed because of cash flow. They may be profitable but they donâ€™t have cash to pay their creditors, and creditors will come and take over the business. So ,we spoke about the key issues of cash flow andÂ how cash flow can be managed.
We look atÂ returns on investment which is another issue whichÂ makesÂ businesses to fail. How doÂ youÂ improve return on investment?Â How do you grow sales?Â HowÂ do youÂ make profit forÂ different types of organisations? Then we look at other factors like finance. How do you have adequate finance ? Many companies have failed because ofÂ poor financing or poor utilisation. We look at issues like corporate image, how do you sustain your corporate image?
How do sustain quality of functions, operations and product quality, good image, good name for your company?Â Today, many companies failÂ not because they didnâ€™t have money but becauseÂ something happened to theirÂ image. You know recently about Toyota. Now, if Toyota does notÂ handle thisÂ problem well, it can cause catastrophe for the company. You remember in those days when Exxon failed, another company failed along with it, that