Why Most One-Man Businesses Collapse After Owners’ Demise —Experts
Lack of succession plan, tendency to own everything, lack of established processes and lack of discipline are some of the factors responsible for the collapse of many one-man businesses in Nigeria after their owners’ demise.
These factors, among others, were enumerated by business experts during the official launch of the book ‘The Entrepreneur’ written by Country Chief Executive Officer, Hi-Nutrients International Limited, Prince Olabode Adetoyi, who also used the occasion to mark his 50th birthday.
The event held at the Civic Centre, Victoria Island, Lagos on Saturday.
In his presentation, a consultant to the Enterprise Development Centre of the Lagos Business School, Mr Bayo Rotimi, noted that the owner of any business that survived the first five years and beyond, given the challenges in the business terrain, deserved commendation.
While he recognised the acumen of such business owners, he, however, frowned at the attitude of most one-man business owners who would hold on to the business, preventing others from buying into it, to make it bigger.
Rotimi added that one-man business stood in a good stead if the owner allowed such thriving business to be opened to a merger or acquisition arrangement, in order to spread the risk and exploit the prospects.
He said many of the one-man companies collapsed shortly after the demise of their owners because there were no succession plan; they failed to open it up for a merger or acquisition, and they wanted to own everything among others.
He said, “If you run a business for five years and beyond in Nigeria and it survived, despite the challenges facing businesses in Nigeria, it should be noted that such business owner has done well.
In Nigeria, most people establish business and hold on to it. This way the business cannot grow. There is a need for business owners to start thinking of building a business that will outlive them. They must build a legacy.
The company owners must allow for mergers and acquisitions so that the business will be taken to a higher level.
The foreign companies are looking at Nigeria for companies to partner with. And when they looked at Nigeria but they needed to see a company that had discipline and followed best international practices in their processes.
While commending Adetoyi, who had successfully ran his business, Hi- Nutrients International Limited, for 15 years, and in 2018 got a successful merger/acquisition with a French conglomerate, Neovia Group, he described him as a man who had the capacity and passion for the kind of business he was involved in.
He noted that Adetoyi, who was his student at the Lagos Business School, was always in the habit of searching for knowledge by also attending conferences, training and seminars. He attended the prestigious Harvard Business School in the Unites States of America among others.
He advised business owners to always search for relevant knowledge in their chosen business sector in order to build capacity and be up-to-date in their specialised field.
Adetoyi, while also talking about his journey as an entrepreneur, said he had to quit a well-paid job with an official car, and established his own private business, Hi Nutrients International Limited, which produces vitamin mineral premixes for livestock industry, aquaculture, cattle and horse feeds, among others, in 2004.
He said the journey was rough but he persevered and made a success of the business, which made it attractive to Neovia Group.
Adetoyi said he had made up his mind while in the university to be an entrepreneur and he had vowed to play at a global level, which he said God had helped to achieve.
He advised Nigerian youths to take their destiny in their own hands by striving to be employers of labour rather than running after non-existing white-collar jobs.
While he also advised business owners to open up their business for mergers/acquisition, he urged them to resist the temptation of choking their business by holding onto to it.
He said, “While I run my business, I look at succession plan. I ensure that I kept all records of the expenses on the business. I can produce all the receipts of whatever I bought in the course of running the business.
“As one-man business owners, we don’t need to choke the business by holding onto it all alone. We must be open to mergers and acquisition. Look for noble investors.
“ When you carry the whole load, you might break your neck. Then you need to spread the risk. Many companies outside the country are looking for partners. But they will carry out their checks. They will do credit check, integrity check and they will look at the financials and your processes.”