Confused? Wondering why I'm posting an article to teach you how to fail your business?

No, this post is not going to teach how to fail your business. Rather, this post is going to list the actions that can and will send your business down the toilet drain.

In my line of work (that has something to do with failed businesses), I have came across many local businesses that had failed due to a variety of reasons. There are many factors that can cause businesses to collapse and admittedly, some of these factors are outside the realm of their control. However, a great deal had failed due to simple and obvious mistakes that could have been easily overcame.

Be Arrogant
Some entrepreneurs started their business with humility and eagerness to learn. They listen to their mentors, listened to their customers and go to lengths to satisfy their customers. However, after a few years of being in the business, arrogance crept in. They thought,'Well, I've been doing this for a long time and I have to say I am pretty successful."

This thinking is the beginning of their downfall. You see, in the beginning, their customers' needs drove their business. They didn't have a customer base, so they'd do anything to gain more customers. Once the customer base was established, they didn't have to work so hard anymore because customers are now going to them voluntarily. Consequently, because they think they are the masters, all they do is present their 'much-wanted' products to you. They are the masters, of course, you will buy them. Or so, they thought.

Lesson to be learned - The customers are ALWAYS the masters, not you.

Ignore your bankers
This is another pitfall that most business fall into and never get out of. There was this one small company that appeared to be doing well. They had won awards and gotten loads of publicity. They were a company driven by innovation and ambition. However, their books say differently.

They had taken a loan to fund a project, which had gone on to be completed. They enjoyed the fruits of their labor but had forgotten that the fruits should be used to repay their obligations. When their bankers came to call on them, they were indignant that someone would dare to inform them that their loan needs to be paid. After all, they were a 'successful' business because all the newspapers said so.

When you get a loan, you are legally bound to repay your bank in the terms set out by your bank. Do not take these bank contracts lightly as it will be a mistake that will cost you your business.

What happened to that company? Well, their bankers sued them due to non-payment. Although their bankers were open to a repayment proposal, the company thought they could fight their bankers using their status and connections. In the end, the legal case against them was publicised in paper and due to their high visibility in the public eyes, their carefully-built reputation crumbled.

Don't Keep Financial Statements
That's right. If you don't want to measure your profitability, don't bother to open an accounts ledger for your business. If you don't want to know your business' financial health, don't record your purchases and income.

Most of our small local businesses do not keep any accounting books for their businesses. This may be acceptable if your business is a simple one, like a nasi katok stall. For a simple business like that, the ledger is already in your head!

However, for a slightly bigger operation, for example, a clothes retailer, it is highly recommended that for the retailer to keep a ledger. This is because a clothes retailer would have additional expenses or income categories to keep track of. A clothes retailer would have multiple suppliers, rental expenses, or debtors. Without a financial statement to list out cash inflows and outflows of the business, you can be deceived into thinking that you are making profit.

I once handled a company who was shocked when I broke down its financial structure to them. They thought they were making a lot of money because their sales volume was high. They did not realise that expenses were even higher. They did not take into account their delivery expenditure as they do deliveries themselves. They did not take into account travel expenses when they collect their goods from their supplier.

Contrary to popular belief, you DON'T need an accounting degree to keep financial statements. A simple profit and loss account is sufficient for you to keep track of your business cashflows. Just remember to include anything that was spent or paid for the business.


The above are just the simplest mistakes that was made with crippling consequences. The points are easy traps to fall into regardless of whether you are a seasoned businessman or a green entrepreneur.

By sharing some of my encounters, I hope that you will learn something out of them. No matter what, keep that entrepreneurial spirit alive and on fire; and you will achieve success.


Until next time,
Entrepreneur I Am

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