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The big issue with small scale businesses BY Timi Olubiyi

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As businesses grow many decisions come to bear from marketing to funding, expansion, investments, operations, logistics, staffing, technology adoption and so on, all to enhance the business productivity. Without a doubt, just like individuals make poor choices and bad decisions businesses do too.

Business leaders and entrepreneurs make bad decisions not because they are not clever or experienced, but because they are humans.

Certainly, humans are never perfect decision-makers at all, a bad decision can occur once in a while or repeatedly and such is the case with business leaders, entrepreneurs, top management, and/or owner-managers of businesses around as well.

As important as decision-making is in business operations, the good news is that business failures have been identified largely to be due to poor decision-making by the operators, owners, or business managers.

Why is this good news? In my opinion, understanding the major cause of past business failures could help restrain many entrepreneurs or businesses from repeating this error clearly.

Since poor decision-making has been identified as a major concern for business sustainability, therefore, making a good choice most of the time is important for any business, though this can be argued.

In business, no matter the structure in place, decision-making is key and is one of the main indicators of a high-performing business or one of the indicators of how healthy a business is.

Remember, not having a decision-making process is in itself a decision on its own. I have observed keenly that a large number of the businesses be it large or small in Nigeria, particularly the ones in the industrialised states and areas, relish taking shortcuts as a normal practice and they hardly ever have an articulated decision-making process within their businesses.

It is rather worse in small-scale businesses where decision-making could be the sole responsibility of the operators or business owners.

In fact, in small-scale businesses, the most common cause of poor decision making is that the operators are so dominant with excessive managerial control that they see decision-making as their sole right without any recourse to the ideas or opinions of employees or others. This is the big issue really.

Furthermore, no initiative or contributions from employees and subordinates are ever considered, key decision making is never participatory and this sometimes leads to business concerns.

A decision-making responsibility before, during, and after any implementation of a task in a business should not be the entire decision of the business owners.

Playing the obvious role of the sole expert in all departments, units, and concerns of the business operations by the owners is never sustainable but damaging, this action has been captured as one of the major causes of the incidence of widespread business failures amongst small -scale businesses in the country.

It is often shocking that once known and thriving businesses can suddenly go under and cease to operate as a result of what most times seem to be poor decision-making and mismanagement.

In the case of big and widely known multinational businesses like Kodak, Nokia, Motion Blackberry and Motorola, the management ignored the shift in technology and failed to be decisive in their decision making particularly on innovations until it was too late despite the vantage position.

Though Nigeria has a tough operating environment and harsh economic factors, however, many of the small businesses and start-ups in the real estate, retail, manufacturing, corner shops, and service sectors among others have lost their relevance due to poor or lack of prompt decision-making.

For instance, just on Ogudu road via Ojota in Lagos State businesses that were once the toast of teeming residences and customers such as Cherries superstore, Terminal 3 restaurant, CCD stores, and The Mr. Biggs eatery Ogudu branch have all now remained permanently closed, failed, sold off or shut down to what seems to be poor decision making from the management.

This is the fate of so many of the medium-small scale businesses in Lagos State and indeed Nigeria, they disappear after a few years of operations and never grow to become intergenerational businesses.

One of the worst things to do in business is to ignore customers’ preferences, revolutionary innovations and also fail to adapt to changes within the business environment as quickly as possible. The high business mortality rate in Nigeria is mainly due to these reasons. Entrepreneurs and operators try to protect what they already have going for them, instead of having a decision-making process that can always suggest innovation and ways of doing things better to meet and surpass customers’ expectations.

Many businesses still follow this rigid path, particularly in the manufacturing, services, and retail businesses, lacking the foresight of the advent of online presence, e-commerce, and technological shift occasioned by COVID-19.

Multiple studies have suggested that engaging employees in the decision-making process can impact businesses positively, make them more committed to business success, have stronger connections with the businesses, increase engagements and also help produce higher quality results.

Therefore, building a participatory decision-making culture is recommended for businesses particularly small-scale businesses at this time.

This strategy will more than likely improve the competitive position and effectiveness of the management, operators, and business owners. Because making decisions is a critical component of effective leadership, hence involving employees in the process will help businesses make better decisions.

Let the truth be told, inexpensive and reasonable businesses built around clothing, housing, potable water, medical care, education, home essentials, shopping and food items will always have economic demands.

Thus, in as much as the adequate and proper decision-making process or policy is in place, that should give the needed competitive advantage and make businesses not ordinarily fail. Good luck!

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