TODAY, we look at the commonest problem that prevails in most of the small and medium enterprises (SMEs) in as far as managing their businesses are concerned.
The notion that prevails in the minds of the business owners, who dwell on the fact that they are founders of their businesses and are not amenable to advice, is a major reason for most of these businesses of going under.
Recently, a young man told me the problems the small company he has been working for is going through.
He told me that he is no longer working because the company management has put him on forced leave.
According to him the main business activity for printing company which he works for is to solicit for printing orders from various companies including reputable organisations.
Being a business columnist on small businesses I got interested and was eager to get the story and use it as a learning curve for my readers on this column.
The young man told me that he was part of the marketing team involved in soliciting for orders from various companies as already alluded to.
The business which also needed capitalisation of printing equipment was doing fine because so many orders were already at hand through the hard work of the marketing team and that consequently the business made quiet some money at that stage.
One bad feature of SMEs according to the experience I have gathered is the individualistic way of making decisions even when the collective ideas have been reached by the management team for lack of a better
term.
Having seen the bank account swell, the business owner opted to purchase an expensive personal car away from the collective idea of reinvesting the money in the capital equipment and leaving the handsome balance for projected business operations.
The business continued to perform exceptionally well recording handsome revenue.
At this stage pursuing the individualistic style of management, the business owner decided to go on holiday taking with him the hard-earned company funds.
He reportedly returned with no money in the pockets.
At  this  stage  the  employees were demotivated with what was happening and the work performance also dropped from 100 per cent.
Then the orders stopped coming in the company and the machinery kept breaking down due to non-replacement, the salaries and rental expenses started looking huge and having looked at this unfortunately unfolding scenario, the business owner had no option but to stop some employees from continuing with work.
Today, we look at this style of business management as one of the major contributing factors to many SMEs going under.
Mixing personal activities in the style of running businesses by business owners is common and this is usually accompanied by being sole signatories to the company business’ current account.
It is easy for business owner to sign a cheque away from business premises and apply the withdrawn funds to personal matters and if queried by appointed managers, the business owners react angrily like rattle snakes.
This is because of the fact that they founded the businesses.
Prudent management and the total respect of the business is the fundamental principal of running a small business.
From the episode above of the learned entrepreneur, it is important to note that he was planning to fail by using company funds on personal errands and worse still he acted selfishly by not motivating the workers who, to some extent, were responsible for the success of the business.
In this column I have always advised the entrepreneurs to monitor business progression by ensuring that they put themselves on salaries and while waiting to see at the end of the selected period if the business would be able to perform well by way of recording some profits.
The essence of establishing a business is to provide dividends to the business owners to make them wealthier.
This can only be possible if the business is given chance to perform well and grow.
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