Risk & reward. Thabani Zulu
creates a feeling of success.
4 Social responsibility. This must not be confused with social acceptance, as social responsibility refers to compassion and sharing. If life has put you in a position of prosperity, success means not staying there alone. Lift others with you. It need not be money and donations, but could be any means by which you help to create a future for others. Do give your skills or dedicate your time for the benefit of another human being.
5 Sustainability. Success is also the creation of a legacy. You should realise that you are mortal and that future generations should enjoy the benefit of your hard work. Your family should be able to survive after your death, and your employees should not have to lose their jobs when you pass away. Your name must live on!
Dining with crowned heads
Business is about relationships, granted, but in South Africa this is a bit overdone. Often people are discouraged from going into business because they do not know anyone in high positions or are not associated with prominent politicians. Those in business sometimes spend enormous amounts of time trying to cultivate these relationships instead of devoting the same attention to their businesses. I am not undermining the value of having “connectivity” in business, in fact, I discuss this aspect in one of the chapters in this book. But a winning concept with a winning product requires less of such connectivity. Focus more on your business.
Bringing God into your business
You need the presence of God in your business. You need His blessings. You need Him in every decision you take, every move you make. Here are some pointers on how you can bring Him into your venture:
1 Let your business concept be holy. You cannot hope to succeed if your success depends on the failure of others. Your concept must be beneficial to your customers, must not disadvantage your suppliers, must not exploit your labour, and must not harm the environment.
2 Let your decisions be holy. You will be faced with tough decisions in business. Decide in a manner that pleases God. Do not take the path that will lead you to instant gratification at the expense of your conscience.
3 Let your money be holy. Do not run a business in which you have to look over your shoulder. Stay sure that your conscience is clean, and you will not be putting out fires, bribing investigators and running away from the law. Declare your income for tax purposes. You may not have money to pay, but do not run away. Acknowledge your debts, face those to whom you owe money.
4 Let your relationships be holy. Avoid mixing with those who want to use you in unscrupulous deals for their benefit and at the expense of your business. Let it stay strong! Resist diabolical delights and get closer to God every day. You will face pressure, but manoeuvre through it in ways that will leave your soul unharmed.
5 Let your actions be holy. You have been privileged to be in business. Maybe it is God’s way of providing for others through you. Do not disappoint Him. Give! And give unreservedly. As long as you look after His children, He will look after you.
Chapter 2
Business and risks
What risks am I faced with in business?
How do I manage the risks?
What can cause my business to fail?
How can I avoid failure?
The old adage that business is taking risks for a reward is very true. If you want a safe income stream, rather go for employment in a stable company. You know that at the end of the month you will receive your income. All the risks, including the risk that you might not get paid, are borne by the owners of the company and they should ensure that you receive what is due to you come month-end.
The minute you want to go into business, however, you must accept that you are taking a number of very serious risks in order to earn a reward. Hopefully, that reward is higher than the salary you would otherwise be earning; if this is not the case, there was really no point in venturing into business. Your life must then be a series of processes and strategies to manage the risks you face. Failure to manage these risks can lead to the failure of your business. How many people have you come across who were unsuccessful in business because:
1 they were hit badly by overheads;
2 they had a series of break-ins and thefts;
3 their staff stole from them;
4 their supplier was liquidated and they could not find alternative suppliers; or
5 they were themselves liquidated by the banks because they were unable to repay their loans?
In this book I hope to impress on you that once you get into business, your life must be spent managing risks such as these. I hope to convey the message that although the risks exist, they can be minimised and managed. I do not claim that my management strategies are the best out there, or that my suggestions are exhaustive. Business is dynamic, and there are many factors at play. You will be in a particular situation that demands that you think outside the box and come up with creative ideas to manage the specific risks you are confronted with. I will simply highlight risks and propose management strategies. You will evaluate these strategies and implement them if they suit your specific circumstances.
In the following chapters, we will discuss the dynamics of business. You will realise that in every aspect of your business there will be risks: financial risks, operational risks, legal risks and strategic risks. Doing nothing about them and wishing them away could result in the collapse of your business, which I am sure you do not want.
I spent some time doing research in the course of the development of this book, and what I found was even worse than I had anticipated. Did you know that 85% of new businesses fail in the first five years of their operation? In fact, only one new company in ten survives beyond ten years. I do not know what you think, but I find it alarming. It means that the probability of failure within five years is 85%! Experts blame this high failure rate on poor risk management, poor tactics to get the business known and accepted in the market, and poor financial management.
I went to the internet and found hundreds of companies that have experienced failure, bankruptcy and liquidation. Some of them were highly reputable companies: Automobili Lamborghini in 1978, Daewoo in 1999, Planet Hollywood in 1999 and in 2001, Arthur Andersen in 2002, Parmalat in 2003, and many others. The major problems were in the areas of sales and finances. Let us just look briefly at a few companies that have seen these risks materialising[1]:
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Harold’s Stores, Inc.
Founded in 1948, Harold’s was a Dallas-based chain of stores that sold traditional, high-end, classic-styled ladies’ and men’s clothing. The chain operated 43 stores in 19 mid-western and south-eastern states in the United States, usually located in upper-class areas and shopping centres. Prior to its bankruptcy filing, the company employed 624 people.
When the company was granted bankruptcy liquidation on 10 November 2008, it claimed that “increased competition and a weak economy have left us no choice but to cease operations”.
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Oasis Hong Kong Airlines Limited
This is a now defunct long-haul, low-cost airline that was based in Hong Kong. It operated scheduled services to London’s Gatwick Airport and