There are a lot of factors to why your business is always making losses, it is stagnant or your business seems to be failing. Most of these factors are common, easily noticeable and can be tackled. Just a few ones require deep thinking and observations. The thing is you wouldn’t see it as a threat to your business but actually, it is. One of these factors is familiarity in business. Familiarity in general can be good but in business it is a standing block to your success. Probably you are still wondering what familiarity in business is; let me help you. Below are factors that show that you are practicing familiarity in your business and might be the reason for the failure in your business.
Crediting goods
Recent African retailers are realizing the negative impact of crediting on their business and they are shying away from the practice. You would usually see “for credit, come back tomorrow” and “no credit here” in prints pasted in their shops. Unfortunately some retailers have still not seen the light and continue crediting their goods to customers because they know them or have transacted with them over time. The effect of this is stuck capital, stuck profit, inability to restock and finally if debtors refuse to pay you back, you lose your capital and profit. No matter how much you know your customer, do not sell on credit. Protect yourself and business from all these negative effects. If your customer has no money to purchase, let them buy what they can afford.
Giving out products to friends and family for free
For free? I can’t believe you can actually give out your product to your family and friends for free. What was the real motive of starting the business? For charity or to make profits? if it is for charity, I guess you are on the right track but if it is for profits, you are way out of track. In the past years, I noticed that my mom used to give free goods to her pastor whenever he visited her shop. This went on for a while and the pastor also kept visiting her. Out of frustration I sat down with her and started calculating how much she had lost by giving out products for free. Since then, the visitations ended with a farewell and not with her parting with goods. Business is business and should not be mixed with familiarity unless your business is involved in charity. Only give out free goods on a promotion basis and even with that, to your customers.
Family bugs
Retailing edible goods comes with a baggage of parasites. I am sure you have constantly heard a retailer stocking goods and saying; “these items will be eaten by my children” or “I won’t stock this product because my family likes it”. This is due to the experience they have with their families constantly eating from their retail shops. In Africa, owning a provision shop literally means your family can just walk in and pick anything they want. It may not seem deadly to your business but on the flip side, your business may be collapsing on your blind side. To sustain your business, don’t stock goods that your family likes or make a rule for everyone to pay what they pick from the shop.
This article does not intend to make you a stingy person or take away the gift of giving from you but to make sure that your business is growing and making all the profits that you desire.
