Today, we shall continue our management discussion by looking at “Business Structure for Sustainable Growth”.
I will discuss it through the following sub topics: Introduction, Motivation for starting a business, Choosing the Right Business Structure, Forms of Business Structure,
The four basic growth strategies, Organisational Culture, Organisational Structure and How to Create a Customer Centric Strategy For Your Business.
The writing style is simple and conversational to enable as many people as possible to grasp the essence of business management.
Business structure is concerned with the forms of business an entrepreneur can engage in. It explains the way a business is organised; who owns the company, how profits are distributed and which managers perform what jobs. In our secondary school study of commerce and economics, we were taught the different ways a business may be set up; like sole proprietorship, partnership, Limited Liability Company and corporation. These are forms of business structure.
My concentration today will not be so much on these forms of business structure but on sustainable growth. Toyota was founded 28th August, 1937 (83 year ago); Guinness started 1759 (nearly three centuries ago).
With all the preaching against alcohol because none of the two dominant religions in Nigeria supports its consumption, Guinness still declares profits in billions of naira. Who are those drinking Guinness alcoholic products? Coca cola started 29th January, 1892 in Atlanta, Georgia. Despite all the advocacies and campaigns against sugar consumption, Coca cola is still making billions in profit while our local drinks like Zobo and Kunnu with all the local flavours are going into extinction.
What is the problem? Are Nigerians not consuming alcoholic drinks anymore? At times business failures are attributed to witches and wizards, family curses or the political and social situations of the country; every one blames another person or object for their failures, but not themselves.. Look around and see the large number of thriving companies (yester- stars) that are extinct; why is there a huge rate of business failures? You need to know that any organization can go down. If big sized organizations that were seemingly ‘well managed’ can go into extinction, how much less your small sized “I go chop Nigeria Ltd?”
This discussion will address the root cause of corporate failures- the motive for starting the business.
MOTIVATION FOR STARTING A BUSINESS
What is your motivation for starting a business? One of my mentees came to me with a good business proposal and I asked him this same question. He replied with a song that all he wanted was just to make money and be rich. In as much as getting rich or becoming wealthy by legitimate means is good; going into a business with the sole aim of making money isn’t a good motive.
Knowing the motive for starting a particular business is critical because it is the driving force that will keep you going no matter the challenges you might face in the course of the business. That you will experience some challenges is sure but how you respond or react to them is a great determinant of success or failure.
You need to answer the following questions: why do you want to go into business and why must it be that particular business? What level of knowledge of the business do you have? Will the business sell in that particular environment you intend to site it? What is the cost involvement?
Answering the question of what motivates you is very critical as it determines so many other things such as;
• The business structure
• Financial requirements
• Culture (This is majorly encapsulated in the vision, mission statement, purpose, value and organization structure)
• Commitment to the business as well as to employees
• Customers who need the services.
• The human and non- human raw materials required for the business, local and international sources of the materials, the type of employees required (their expertise and/or qualifications), etc.
• The Accounting structure and/or policies
• The succession plans, etc.
Most people go into business for the wrong reason(s), you shouldn’t do so. The primary motive for going into any kind of business should be to create value not to make money. Many of us are in business for the wrong financial reasons and that is why we put too much pressure on ourselves and the business to make money in the shortest possible time.
Ordinarily you are supposed to start a business using the P and P formula. What is that? We will discuss it in subsequent lectures. When your motive for starting a business is to create value, you will definitely make money. Do you know why? Money is also a value.
To be continued next week.
Sunday Ade Bello is a multi-talented and an analytically inspired management trainer, writer and examiner. He is the CEO of WorkLife Training Professionals, Lagos.