Problems of Overtrading in Small Business

Problems and solutions of overtrading. Overtrading is one of the challenges a small business may face when the business begins to grow. What is overtrading? Overtrading is when a business is selling faster than what its resources can support. In other words, it means taking more jobs than what a business has the capacity to execute. This situation usually happens when a business seems to be profitable and sales begin to increase in a dimension that is beyond the company’s projections. Ordinarily, increase in sales is good for business. But if the sales are growing too fast in such a Continue ReadingProblems of Overtrading in Small Business

Reasons for Business Partnership Failure

Why a business partnership may fail. There is more to business partnership than two people coming to form and run a business. People enter into business partnership for different reasons. But whatever the reason may be, the common denomination in every business partnership is the desire of the partners to enjoy synergy which the relationship may bring. The synergy advantage of business partnership is enough motivation to bring in partner(s) into a business. But unfortunately, there have been cases whereby business partnerships have been the undoing of some businesses. Business partnership can be likened to a marriage. Everybody goes into Continue ReadingReasons for Business Partnership Failure

Pros and Cons of Bootstrapping

Bootstrapping as a way of financing startup. What is bootstrapping? Bootstrapping is the term used in startup financing to describe a situation where the owner of a business choose to use his personal savings to fund its business rather than seeking for external financing. Some business owners choose to bootstrap not because they actually like this option as a means of financing their business. If they try other sources and it seems nothing is forthcoming, they may therefore resolve to bootstrap. Sourcing for funds from Venture Capitalists is not as easy as people write about it in the articles. Before Continue ReadingPros and Cons of Bootstrapping

Types of Business Risks

List of business risks you must beware of. Before we start discussing about business risks, it is important we understand what risk is all about. The word ‘risk’ applies to almost everything we do. Therefore, it is not restricted to business alone. What is risk? Risk is the probability that things will not work out as planned. That is, the likelihood for you not to achieve your desired results. So, if we should apply this to business, we now have what can be called business risks. What is business risk? Going by the definition of risk given above, we can Continue ReadingTypes of Business Risks

Importance of Bank Reconciliation

Why must you perform bank reconciliation? If you have bank account(s), it is very important that you perform bank reconciliation at least once every month. Preparation of bank reconciliation statement is not optional; it is a must for every business owner. When I decided to write about this topic, my mind just flashed back to my secondary and tertiary schools days. That was about twenty years ago. I remember vividly that preparation of bank reconciliation statement was one of the topics that our teacher/lecturer focused attention on. They kept reinforcing the need for us to fully understand the topic. To Continue ReadingImportance of Bank Reconciliation