Module 1 • The entrepreneur 1 Management incompetence
Most of us believe that we have a very good business idea. Some of us will at some point start a business, but only a few of us will succeed. This is due to bad management of the business. Good management is vital for any business. Aspects such as managing staff, debtors and new business opportunities must all be managed well if a business is to succeed. Management functions consist of planning, organising, leading and controlling (POLC).
Planning Management
Organising Leading Controlling
Examples • Not spending enough time in the business. Hands-on management means that the entrepreneur needs to be there.
• Failure to plan ahead whether it is in ordering of stock or doing a promotion to improve sales.
• Not organising the business properly by setting objectives and targets for both the business and the people in the business.
2 Inexperience
Inexperienced entrepreneurs may not know how to run their businesses effectively. Experience only comes with time, which does not mean that you have to be old to be successful. Just do something to which you have been exposed. This, together with an urge to learn and a preparedness to ask advice in areas where you lack skill and knowledge, will help to overcome a lack of experience.
3 Bad financial control
This is probably the main reason why most businesses fail. Knowing exactly what is happening financially in your business is very important. If you do not or are unable to do so, employ the services of a bookkeeper on a part-time basis. That is one way of getting around it.
Examples of poor financial control: • allowing customers to buy on credit without a proper credit control system • carrying too much stock in the business • lack of sufficient working capital (money you need in your business) • bad bookkeeping system • failure to plan ahead (budgeting and forecasting) • no regular financial meetings to consider the financial position of the business.
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