This week’s theme for the Startup chronicles, aka “Why some Nigerian businesses fail,” is penny-pinching. We hope that you are both entertained and educated by this story.
A foreign investor came to set up a business in Nigeria. He spent a huge chunk of his funds on equipment but when it came to staff salaries, he believed he could pay a pittance.
He hired a human resources manager to begin recruitment. The HR Manager cautioned him that the proposed salary structures were below the industry average, emphasising that their industry was one of the highest paying in the country. He said that based on his findings on the Internet, there was high unemployment in the country so people would be queuing up to apply for jobs.
The HR Manager found some candidates willing to accept the package based on a hybrid work arrangement but the entrepreneur declined. He said that Nigerians were not trustworthy. All employees had to be onsite. So, the HR Manager went ahead and shortlisted candidates. However, because he was unwilling to pay the calibre of staff required, they employed less experienced people.
The entrepreneur set a launch date. Then, disaster struck.
The team had never worked with the type of technology that powered the equipment. They struggled to set it up. During daily standups, the team began to play the blame game while the launch date drew closer.
Then, the entrepreneur started panicking. He had put everything he had into the company, and now it seemed like it was all for nothing. The equipment still wasn’t set up, and he was running out of time.
One morning, the team resumed only to discover they had been logged out of their systems. The company’s security escorted them out of the offices. Afterwards, the entrepreneur asked the HR Manager to re-advertise their positions and look for more qualified candidates. An employee tweeted about his layoff on social media and the company trended for the wrong reason.
Ultimately, the business spent twice the recruitment cost; missed the launch deadline; and had to lay off employees. The company’s employer brand was tarnished even before its business took.
𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆
As an entrepreneur, it is important to understand the operating environment before entering a new market. You cannot rely only on information you gather from the internet to make informed decisions in a start-up environment. Conduct an in-depth market study.
Originally posted on LinkedIn.
