Topline Business Mentors

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pricing your products incorrectly is one key reason why a business can fail. Find out more. Call now

How Sole Trader’s Business success quickly turned to failure

It is surprisingly easy to sabotage your business and kill your entrepreneurial dreams. Read about Ryan and how a partnership led to business failure.

Ryan (not his real name) started a retail business with just over Kshs 50,000 four years ago . He sacrificed a lot of time and gave up almost all leisure activities over the next few months as he struggled to build up his business. Eventually, Ryan got a few lucky breaks and within a year, his business, Home Retail Shop, started making monthly sales of Kshs 350,000 on average. This left him with about Kshs 75,000 business profit each month and his friends began to admire and talk about his business prowess. One of Ryan’s friends’ , whom we will call Dominic, heard about it and approached Ryan to get into a joint business venture with him to sell digital technology services. Dominic, who is a digital guru, said he wanted to take advantage of Ryan’s great marketing skills to grow their new joint venture which they named Digi-P . Ryan invested all his Home Retail Shop profit reserves in Digi-P. Over the next few months, Ryan’s Home Retail Shop continued to thrive. Digi-P was also starting to stabilize.
All went well until Dominic persuaded Ryan that they should rent more office space for Digi-P instead of continuing to share on single room for the two businesses. Dominic also hired two new employees for Digi-P. Previously, both businesses had been sharing one office assistant who performed multiple roles as receptionist, messenger and technical assistant . After these changes, Digi-P share of expenses rose by Kshs 125,000 per month . This did not, at first, affect Ryan’s Home Retail business which continued to run successfully.
Soon thereafter, Dominic started experiencing some major domestic challenges from his extended family and was not concentrating on Digi-P. He convinced Ryan to let him ‘borrow’ about Kshs 200,000 from the Digi-P business account and promised to return the cash within 10 days. After getting the soft loan, Dominic disappeared for several weeks and did not repay the money on time, as promised. When Digi-P share of rent and salaries were due, Ryan, who was now alone, decided to divert money from his Home Retail Shop and paid Digi-P’s bills of Kshs 160,000 since Dominic could not be traced.
Dominic eventually resurfaced, but without any cash, and still unable to focus on business. Subsequently, Digi-P lost their biggest client account because Dominic missed two key delivery deadlines. Dominic begged Ryan to advance another Kshs 90,000 from Home Retail and assured Ryan that he was awaiting a personal bank overdraft facility which would be approved within the next few days. In total, Ryan had now diverted Kshs 240,00/= from his Home Retail business to support Digi-P. This is in addition to his initial investment of Kshs 180,000 from Home Retail Shop profit reserves .
Needless to say, when the bank declined to grant Dominic an overdraft, Digi-P was unable to refund Ryan the Kshs 240,000/= that he had loaned out. Ryan could not pay his own suppliers and as a result, they refused to supply Home Retail with new stock unless he paid in cash. When confronted by Ryan, Dominic disputed the facts concerning what he owed and became openly hostile. That night, after Ryan left for home, Dominic secretly packed up his computers and executive furniture and moved out.
With all his savings gobbled up by Dominic and Digi-P, Ryan could now only afford to buy a quarter of his usual stock volumes and, as a result, his Home Retail sales fell to about Kshs 100,000/=. Since he needed cash to live on, he bought ever reducing stock quantities until his sales shrank to Kshs 20,000 by the end of the third year. Ryan had now accumulated not only personal debts but owed six months rent arrears for the Home Retail Shop. At this point, the landlord evicted Home Retail Shop. All Ryan’s furniture, office appliances and remaining stock were confiscated by the landlord who vowed not to release them until the rent arrears were paid. In three short years, Home Retail Shop rose quickly to success, only to collapse because Ryan made some simple and avoidable errors in judgement.
To protect the privacy of the people involved, all personal details and business names have been changed.
What personal and business lessons do you find in this story ?

Are you a business owner who wants to find more customers ? make higher sales ? improve your cash flow ? make higher profits ? Avoid bankruptcy ? These are common goals for most businesses ; but sometimes you may feel that you have exhausted all your efforts and yet the business is not making progress.
A good business mentor will help you evaluate your business to understand whether you have the right business system. Together with the business mentor, you will review your products or services and assess whether they are actually meeting the needs of your customers or even whether you are giving the customers the value which you have promised them.
During mentoring sessions, you will be able to confidentially share your greatest concerns about the business and even analyse the financial aspects of the business. This helps you to find out whether you have sufficient working capital to sustain the business in a very competitive environment.
A business mentor will become your confidential guide as you map out a new pathway to succeed or excel in your business.

Benefits of having a mentor
1. Expert Advise: Expert advise, based on the experiences of the mentor, so that you can take the actions in your business that will lead to success and avoid making decisions that may lead to failure.
2. New Perspective & Insights: Getting a different perspective about your business instead of being locked within your own thinking. Especially useful when you have been unable to overcome a particular problem and you have exhausted all your ideas to the point where you are feeling confused
3. Networking: Growth in your networks by taking advantage of the mentors own network of business and professional contacts which have been built up over many years.
4. Skills Development: The mentor will help you develop the skills needed to improve on how you are carrying out some tasks such as supervising your employees, maintaining accounting records, filing your taxes, controlling your stocks, managing your cash flows
5. Building Confidence: By having someone to work with through the difficult times and to commend you when you have done well, you will build confidence in your own abilities.
6. Building Persistence: The mentor will encourage you to keep going even when nothing appears to be working. Business mentors have faced difficulties in their own business experience and will give you genuine encouragement to persist until you overcome the difficulties.
7. Access to methods and strategies: The mentor will introduce you to methods and strategies which have been successfully applied, are time-tested and can be relied upon to work within your kind of business.
8. Trusted Advisor: The mentor will become a trusted confidante with whom you can share your frustrations, fears and disappointments when you face the inevitable storms and setbacks in your business or when you experience self-doubt.

What role will the mentor play ?
Your business mentor will act as a trusted advisor and will also give you feedback concerning how you are handling the day to day operations of your business. The mentor will be your confidante with whom you can share your thoughts and plans. In return, you can expect the mentor to probe your decisions and give you a rational and balanced assessment before you commit to any action.

How the mentoring process works

1. Analysing your business idea in order to understand your product or service, the value delivery, purchase criteria and market focus.
2. Business system analysis with the aim of identifying and examining each value-adding process
3. Identifying the Key Success Factors of the business
4. Establishing the existing gaps in relation to each Key Success Factor and selecting the most appropriate gap-closing measures
5. Testing the financial viability of the business and recommending any interventions that may be necessary to ensure financial stability