Yakub02
Banned
Business is being set up basically with a view to making profits. However if business is just starting , it is good to allow the business to undergo the teething problem extensively. Some businesses, especially the the one that requires acquiring vehicles for supply, securing warehouse for goods custodian, employing staff for administration and sales require that the business owner set the foundation very well,
Setting foundation very well may mean that the business should be allowed to be operating locally in the area where the business owners and managers are used to . This will allow the business to face the test of time and proper evaluation would have been made out of series of experiences on the business.
The managers and business owner should not jump into conclusion that since the business has recorded profits in the first two years, management can take decision on expansion to other part of the country.
From my experience, i have found out that new successful business can be misleading if the managers are not careful enough. The fortunes recorded at the early stage of the business should still be re invested into the business and build on more expertness of the workers and managers while the business is still operating in the same location .
I have witness a case in which the business owner quickly started expansion at the second year of the business because the business has recorded good profit. However at the fourth year the business wealth dwindled drastically due to the fact that it could not curtail the huge expenses to be incurred due to expansion to other new vicinities.
The overhead costs that can be affected due to expansion can be, Personnel cost, fueling cost, Rent, logistics, Statutory cost like Value added tax and PAYE, insurance and other overheads.
There is need for business owners both the newbies and the existing ones to always be patient at the beginning of a new venture. Then whenever they feel like expannd, they should seek the advices and recommendations of experts before taking such decisions in order to avoid recording losses.
Setting foundation very well may mean that the business should be allowed to be operating locally in the area where the business owners and managers are used to . This will allow the business to face the test of time and proper evaluation would have been made out of series of experiences on the business.
The managers and business owner should not jump into conclusion that since the business has recorded profits in the first two years, management can take decision on expansion to other part of the country.
From my experience, i have found out that new successful business can be misleading if the managers are not careful enough. The fortunes recorded at the early stage of the business should still be re invested into the business and build on more expertness of the workers and managers while the business is still operating in the same location .
I have witness a case in which the business owner quickly started expansion at the second year of the business because the business has recorded good profit. However at the fourth year the business wealth dwindled drastically due to the fact that it could not curtail the huge expenses to be incurred due to expansion to other new vicinities.
The overhead costs that can be affected due to expansion can be, Personnel cost, fueling cost, Rent, logistics, Statutory cost like Value added tax and PAYE, insurance and other overheads.
There is need for business owners both the newbies and the existing ones to always be patient at the beginning of a new venture. Then whenever they feel like expannd, they should seek the advices and recommendations of experts before taking such decisions in order to avoid recording losses.
