The big problem for small businesses
As businesses grow, many decisions come into play, from marketing, financing, expansion, investments, operations, logistics, staffing, technology adoption, and more. , all to improve the productivity of the company. Undoubtedly, just as individuals make bad choices and decisions, so do businesses. Business leaders and entrepreneurs make bad decisions not because they are not smart or experienced, but because they are human. Admittedly, humans are never perfect decision makers, a bad decision can happen once in a while or repeatedly and this is also the case for business leaders, entrepreneurs, senior managers and/or owner-managers. of companies.
As important as decision-making is in business operations, the good news is that business failures have largely been identified as being due to poor decision-making by operators, owners, or business leaders. Why is this good news? In my opinion, understanding the root cause of past business failures could help prevent many entrepreneurs or businesses from clearly repeating that mistake. Since poor decision-making has been identified as a major concern for business sustainability, it is therefore important for any business to make the right choice most of the time, although this can be argued.
In business, regardless of the structure in place, decision-making is essential and is one of the main indicators of a successful business or one of the indicators of the health of a business. Remember that not having a decision-making process is itself a decision in itself. I have carefully observed that a large number of businesses, whether big or small in Nigeria, especially those in the industrialized states and regions, enjoy taking shortcuts as a normal practice and they almost never of articulated decision-making processes within their companies. . It is rather worse in small businesses where the decision making might be the sole responsibility of the operators or business owners. In fact, in small businesses, the most common cause of poor decision-making is that operators are so dominant with excessive management control that they view decision-making as their only right without any recourse to ideas or opinions. employees or other persons. . This is really the big problem.
Moreover, no initiative or input from employees and subordinates is ever considered, key decision-making is never participatory, and this sometimes leads to business concerns. A decisional responsibility before, during and after any implementation of a task in a company should not be the entire decision of the owners of the company. Playing the obvious role of the sole expert in all departments, units and concerns of business operations by owners is never sustainable but damaging, this action has been captured as one of the major causes of the incidence of business failures generalized among the small – large companies of the country.
A good decision can allow a business to thrive and survive in the long run, while a bad decision can lead a business to failure. A common behavior of leaving things to chance when decisive action needs to be taken is also a poor decision that can have huge consequences for the business. This worrying development of smallholders has cost many their fortunes, especially with the advent of the coronavirus (COVID-19) pandemic which has had a negative impact on the economy and businesses. It should be a moment of decision-making for companies and not a moment of operating on the sidelines. The coronavirus pandemic has changed the world and also marked a new era for business. Therefore, business operators have to make strategic decisions especially in manufacturing, retail and service sectors due to technological disruptions.
However, the economic operators of these sectors mentioned do not take this essential activity into account. The failure of a company or business to make good quality decisions can be the result of many factors, such as inexperience, lack of time, stress, overwork and pressure from stakeholders, among others. All of this can lead to poor decision-making and the eventual failure of any business. The quality of decisions in any business has a direct impact on its performance and overall business results.
Small business operators need to understand that it is healthy for staff to disagree on decisions if viewpoints differ. It only helps in making a proper and effective decision for the business at the end of the day. Leaders must deliberately create a culture where debate and disagreement are welcome. Remember that decision making is the action or process of thinking about possible options and uncertain outcomes, and selecting the best option for the business. This decision making could concern itself with marketing, funding, customer satisfaction, investment and the use of technology in the business.
It is often shocking that once-known and successful businesses can suddenly disappear and cease to function as a result of what most often appears to be poor decision-making and poor management. In the case of large and widely known multinational companies like Kodak, Nokia, Motion Blackberry and Motorola, management ignored technology change and was not decisive in its decision-making, especially on innovations, until that it is too late despite the advantageous position.
Although Nigeria has a challenging operating environment and challenging economic factors, many small businesses and start-ups in the real estate, retail, manufacturing, convenience store and service sectors, among others, have lost their relevance due to weak or lack of quick decision making. For example, just on the road from Ogudu via Ojota in Lagos State, businesses that were once the toast of teeming residences and customers such as Cherries Supermarket, Terminal 3 Restaurant, CCD Stores and the branch of ‘Ogudu of Mr. Biggs restaurant are now all permanently closed, failed, sold or closed in what appears to be poor decision making by management. This is the fate of so many small and medium enterprises in Lagos State and even Nigeria, they disappear after a few years of operation and never become intergenerational businesses.
One of the worst things to do in business is to ignore customer preferences, breakthrough innovations and fail to adapt as quickly as possible to changes in the business environment. The high business mortality rate in Nigeria is mainly due to these reasons. Entrepreneurs and operators try to protect what they already have going for them, instead of having a decision-making process that can always suggest innovation and better ways to meet and exceed customer expectations.
Many companies are still following this rigid path, especially in the manufacturing, service and retail sectors, without anticipating the advent of online presence, e-commerce and the technological change occasioned by COVID-19. .
Several studies have suggested that involving employees in the decision-making process can have a positive impact on companies, make them more committed to the success of the company, have stronger connections with companies, increase commitments and also help produce higher quality results.
Therefore, building a culture of participatory decision-making is recommended for businesses, especially small businesses at this time. This strategy will more than likely improve the competitive position and efficiency of management, operators and business owners. Since decision-making is an essential part of effective leadership, involving employees in the process will help companies make better decisions. Truth be told, cheap and reasonable businesses built around clothing, housing, clean water, medical care, education, basic necessities, shopping, and groceries will always have economic demands. . So, as long as the right and proper decision-making process or policy is in place, it should give the necessary competitive edge and prevent businesses from habitually failing. Good luck!
- Dr. Olubiyi, an expert in entrepreneurship and business management, who holds a PhD in Business Administration from Babcock University in Nigeria, writes via [email protected]; Twitter: @drtimolubiyi
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