Bite what you can Chew

The time I have been around the business arena has taught me many lessons and one of those is not to take on endeavours that are more than your business can realistically manage.

Incomplete Temple Structure – India

As small businesses the temptation to look out for that big break is always there. You want to get into the big time and because most of us have grown up in the ‘fast food’ era, we expect everything to work out instantly. Many are the stories of someone setting up a business targeting a ‘big deal’ with the expectation that it will see them take off comfortably.

More often than not, these businesses with alot of potential have chocked as a result of this approach and ended up in limbo. Not so long ago, an Internet Service provider that pioneered the use of internet services in remote areas using HF radio in East Africa had grown into a reputable market player and even had lucrative contracts with some of the Telecoms companies in the region. The desire to continue growing pre-occupied them so much so that when an opportunity to take on a major Internet Access infrastructure project presented itself in nearby Rwanda, they went for the jugular.  As lady luck would have it, they were the successful bidder. Delivery kicked off in high gear, bank loans were accessed to fund the deployment, progress was made on the ground. Midway the project, stuff went haywire. A blend of factors among which were; low capitalisation, loan burden, project management, thin spread of human resource and poor service delivery connived to run them into the ground. Within a month, the business had closed.

Another was an IT infrastructure installation and support company that a friend of mine set up. It too kicked off well with numerous contracts that were efficiently executed. Along the way, their ambitious expansion plans led them into a joint venture with an international company. This Joint Venture meant that they had to commit to certain deliverables. Just like the previous example, they too reached a point where they couldn’t fulfil the expectations and the business went under. Its now just being revived from the woodworks.

In 2006 my company won a tender to network the new offices of a Government of Uganda entity. Using supplier financing (having feared to opt for bank financing), we were able to deliver the work as required in the stipulated time. However, that was just the beginning of our woes. Payment wasn’t forthcoming as per the agreement and the pressure from the suppliers meant that we had to use revenue from other services and products to clear them. This was so hard considering that we had borrowed alot of money from these suppliers. The Government agency took its sweet time and amidst court threats, we almost closed the business. However, somehow we held onto a thin thread with some of the suppliers opting to get the piecemeal payments which took us almost a year to clear. The Government agency eventually paid up 15 months after we had completed and that was as good as a loss. We had received heavy knocks along the way as a result of diverting money intended for activities like marketing to pay suppliers.

Are you ambitious? If Yes, its Ok. Do You want to grow? If Yes, its Ok too. Do you want to be one of the biggest businesses in your field? Its also Ok. However, take note of the fact that like a baby first crawls, then walks before running, you too need to know when to take on what opportunities to avoid being drowned in the sea of failed businesses. Bite what you can chew.