BusinessHeadline NewsLetters

THINGS TO AVOID IN BUSINESS

Dear Editor,
THE ultimate goal of every entrepreneur is to make profit. When the business is making profit, it will be able to sustain itself both in the short term and the long term.

However, there are certain things which should be avoided in the business to ensure sustainability of the business enterprise. The following are some of them;
(a) Tax evasion: There is a tendency among some entrepreneurs to avoid paying tax to Zambia Revenue Authority (ZRA) through tax evasion. This is a serious offence which has dire consequences such as seizure of the assets by the creditor’s’ bailiff. Every business entity in Zambia is required to remit the appropriate tax to ZRA.
(b) Lack of keeping records: Record keeping in every business enterprise is very important in that every amount is properly accounted for. When proper records are kept, this helps in determining whether the business is making profit or loss.
In this regard, it is important to employ an accountant who can prepare the various accounts for the business. Planning becomes easy when there is an accouting system in place.
(c) Failure to liquidate debt: It is a common practice for the business enterprise to be indebted to the suppliers of goods and services for instance.
The business can also owe the landlord where the business premises is a rented one. When the business contracts the debt, the debt obliga-tion must be liquidated or rather settled on time according to the agreed terms.
If the debt is high, there is a need to come up with a payment plan where the payment is spread over a period of time.
(d) Lack of financial discipline: Financial discipline is of the essence in every business venture. It can spur growth of the business whether in the short term or the long term.
On the other hand, financial indiscipline occurs where the business owner gets money from the business for personal purpose.
What happens is that the entrepreneur does not distinguish between business expenses and the personal ones. This trend if it remains un-checked, it can lead to the liquidity problem in the business.
Ultimately, bankruptcy can be the end result. To avert this problem, the entrepreneur must put herself or himself on a monthly salary.
(e) Over borrowing: The growth of the business is gradual as it takes quite some time. The entrepreneur should strive to avoid over borrowing money with the sole motive of growing the business.
The entrepreneur should be aware that the borrowed funds have to be paid back with interest within the given time frame. It is necessary to borrow a reasonable amount which cannot cause some financial strains when the payment falls due. Failure to settle the borrowed funds can culminate into liquidation or closure of the business entity.
(f) Lack of diversification: “Don’t put eggs in one basket,” goes the adage. This implies that the entrepreneurs should not focus on one line of business but invest in other business sectors which are viable.
If the entrepreneur is in the manufacturing sector, there is a need to diversify into other businesses like crop farming for instance. In es-sence, business diversification means the act of changing from one form of business to another.
When you diversify, it does not mean that you forgo other forms of enterprise. The underlining issue is that the old business will be running along with the newly established enterprise.
(g) Employing incompetent employees: Every employee in the business enterprise has a critical role to play to spur business growth. Having said this, there is a need to employ well qualified and experienced workers who can make meaningful contributions to the business.
(h) Team work: Team work is of the essence towards the success of the business. Steve Jobs, a renowned author coined it rightly by stating the following; “Great things in business are never done by one person. There’re done by a team of people.”
(i) Getting free goods and services: The business is detached from the entrepreneur. As such, the entrepreneur is not supposed to get free goods and services from the business.
This can lead to reduced profit which in turn can impact negatively on the financial status of the business entity. No one should get free goods and services because these are meant for business purposes and not personal use.
Getting of free goods and services by the entrepreneur is a common trend. This should not be entertained owing to the fact that it is a loss.
(j) Overspending: There is a tendency among some entrepreneurs to spend on the business expenses beyond the available financial re-sources. The underlying principle in business is to maximise revenue and minimise expenditure so as to sustain the business operations.
When it comes to spending, there is a need for priority. Don’t spend money recklessly. This can affect the financial position and ultimately ruin the business.
It must be stressed that the primary objective of every business enterprise is to make profit. Once the business is profitable it will succeed and be sustained. For the aforesaid to be realized, there is a need to avoid the above highlighted factors.
ELEMIYA PHIRI,
Lusaka..

Related Articles

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker