COURSE CODE: BUS 111

COURSE TITLE: INTRODUCTION TO BUSINESS

NUMBER OF UNITS: 2 UNITS

COURSE DURATION: THREE HOURS PER WEEK

COURSE LECTURER: DR.ERNEST JEBOLISE CHUKWUKA

INTENDED LEARNING OUTCOMES:

At the completion of this course, students should be able to:

1. Understand clearly the meaning of Business.2. Understand clearly why they should study business.3. Analyse different types of business Organizations.4. Ascertain Entrepreneurship opportunities, functions and procedures as well as features

of small business.5. Understand clearly the concept of business communications, Marketing environment

and cooperative society.6. Understand clearly the various causes of business failures and how to avoid it.

COURSE DETAILSWeek 1-2: The concept of Business

Week 2-3: Why we study business

Week 4-5: Different types of business organization

Week 6-7: Entrepreneurial development and opportunities

Week 8-9: Small Business enterprise and marketing environment

Week 10-11: The concept of business communication, causes of business failures and cooperative society

Week 12: Revision

RESOURCES

Lecturers Office Hours: 2-4pm

Dr. Ernest Jebolise Chukwuka

Books:

• Entrepreneurial Development, Principles and Practice in Nigeria by Prof. Johnny Eluka. Jun Publishers (NIG),Garriki, Enugu (Recommended).

•Development of entrepreneurship: The Nigerian Perspective by Emmanuel K. Agbaeze, Precision Publishers Limited Enugu, Nigeria.

•Strategies of starting and sustaining a business without incurring high interest loans: A guide to financial freedom by Dr. Ernest Jebolise Chukwuka, Alabaster Academic publishers, Asaba.

CLASS WORK

• Must be done in class

• Class attendance + class work (class assignment and class test): ~ 30% of final grade.

• Exams:

• Final, comprehensive (according to university schedule): ~ 70% of final grade

Assignments & Grading

• Academic Honesty: All class work should be done independently, unless explicitly stated otherwise on the assignment hand-out.

• You may discuss general solution strategies, but must write up the solutions yourself.

• If you discuss any problem with anyone else, you must write their name at the top of your assignment, labelling them “collaborators”.

• NO LATE HOMEWORKS ACCEPTED

• Turn in what you have at the time it’s due.

• All home works are due at the start of class.

• If you will be away, turn in the homework early.

• Late Home work (Home work) will not be accepted, but penalized according to the percentages given on the syllabus:

WEEK 4-5

TYPES OF BUSINESS ORGANIZATION

In summary, business is the sum total of organized efforts by which people engaged in commerce and industry provide the goods and services needed for the maintenance and improvement of the standard of living and quality of life of an individual/group. Thus business is organized solely at the individual’s initiative. The entrepreneur takes it upon himself to bear the risk of assembling resources for the purpose of engaging in the provision of goods and services, in the hope that these will meet the requirement of the people, and that the people will be prepared to make adequate payment for the goods or services thus produced or rendered.

Each entrepreneur acting solely on his selfish motivations – the maximisation of profits, might not help to achieve the objective of business i.e. ‘improvement of the standard of living and quality of life’ of the people.

To instil some order in the operations of business, the State issues guidelines for business operations in any country. Some of these regulations cut across all types of business organizations – incorporated or unincorporated. These include the :

Registration of Business Names Acts of the Federation and the registration of Business Premises Laws of the different State Governments.

The former aims at ensuring that no two business organizations bear identical name and that no organization uses any word that will imply government’s involvement without prior approval.

The intending businessman/woman (a ‘to be’ entrepreneur), after identifying all the business opportunities available to him, can now go ahead to determine the form of business ownership he wants. He takes certain things into consideration, such as the government laws and regulations surrounding the business being planned, his plans for continuity, his ability, amount and availability of capital needed and other vital issues.

Here, we shall treat Five (5) Types of Business Organization/Forms of Business Ownership in Nigeria. These are:

1. THE SOLE PROPRIETORSHIP2. PARTNERSHIP3. PRIVATE LIMITED COMPANY (LTD)4. PUBLIC LIMITED COMPANY (PLC)5. CO-OPERATIVE SOCIETIES

(A)THE SOLE PROPRIETORSHIP

This form of business is known as the sole trader or one man business. The sole proprietorship is the business that is owned, managed, financed and controlled by an individual.

This is the commonest, easiest and simplest form of business to establish and dissolve. It is equally the oldest business unit and most popular around the world.

Advantages of the Sole proprietorship

The advantages of sole proprietorship include:

i. It is easy to start when compared to the formalities required to start other business types

ii. The total income and profits belong to the sole owneriii. Freedom of action: the sole proprietor has no restriction as he

determines how the business is run.iv. He is his own boss: He does not have to take orders from anybody.

He can start and finish work at his own choice. He has no board of directors to sanction or question his decisions.

v. Tax Savings: Since the business is regarded as his private business, no tax is paid on the business other than the private one paid by the sole owner thereby saving tax on the business.

Disadvantages of Sole Proprietorship

There are some disadvantages of sole proprietorship, which are:

i. It lacks stability and continuity: The sole proprietor is the business; his personal qualities determine its success: if he falls sick, his business falls sick, and if he dies, the business generally dies also.

ii. Limited Financial Resources: There is a limit to the amount of capital he can provide. He cannot borrow from the stock exchange.

Lack of access to extra funds may therefore hinder the growth and expansion of the business.

iii. Risky and Insecure: A one man business is very vulnerable to trade recessions.

iv. Unlimited Liability: Although the owner takes all the profit, he is personally liable for all the debts and obligations of the business. He does not have the advantage (which a limited liability company has), of being able to protect himself, by limiting his liability to the capital he has put or agreed to put in the business.

v. Lack of opportunities for the employees: Due to the nature of the business and character of some owners, opportunities for growth by the employees are either not available or slim. This accounts why some one-man businesses do not have highly qualified employees.

vi. Management difficulties: Most of the sole proprietors have little or no management abilities, hence they find it difficult to carry on any major diversification that needs professional management inputs.

(B) PARTNERSHIP

A ‘PARTNERSHIP’ is an association of two or more persons with the common purpose of making a profit through the pursuit of lawful objectives. The people forming the association are called PARTNERS, and they agree from the short capital each will bring into the business, what specific functions each will perform and how profit will be shared.

These conditions are generally embodied in what is called a

‘DEED OF PARTNERSHIP ‘ which is usually drawn up by a solicitor. This form of business organization is not very popular, except for people in professions, such as Solicitors, Accountants, Engineers, Doctors and Management Consultants.

TYPES OF PARTNERSHIP - ARE OF TWO (2) TYPES

There are two (2) Types of Partnership namely:

1. Ordinary Partnership2. Limited Partnership

1. Ordinary Partnership: In this type of partnership, each Active Partner may take part in the management of the business, and each partner is liable for the debt of the firm, since all the partners have equal contractual rights, powers and responsibilities.

2. Limited Partnership: This is a partnership in which the liability of the limited partner is restricted to the amount of capital he has agreed to contribute to the business. In this type of partnership, there must be at least one Ordinary Partner who is responsible for all the debts of the partnership and who therefore has greater powers, rights and responsibilities than limited partners. The limited partners therefore take no part in the management of the firm

Limited Partnership, according to Nwankwo (1985) is very rare for the following reasons:

a. The right of the limited partner is also limited. Though, he can have access to the books of the partnership and offer advice. He is prohibited from taking part in the management of the firm. If he takes part in management, he incurs the same unlimited liabilities as the ORDINARY PARTNERS

b. Although there may be many partners, there must be at least one ORDINARY PARTNER.

c. The limited partnership must, nevertheless, be registered with the REGISTRAR OF COMPANIES

d. The advantage of limited liability can be better secured through the limited company

KINDS OF PARTNERS

There are Three (3) Kinds of Partners namely:

1. ACTIVE PARTNER2. SLEEPING/DORMANT PARTNER3. NOMINAL PARTNER

1. Active Partner: An Active Partner is one who takes an active part in the organisation and management of business. He is normally treated according to the provision of the Partnership Deed.

2. Sleeping/Dormant Partner:A Sleeping/Dormant Partner does not take part in the organisation and management of the business. He merely contributes capital to the business.

3. Nominal PartnerA Nominal Partner only consents to his name being used as one of the Partners in the business without having real interest or contributing money to the business. He may be a retired politician, army/police or a big business professional.

PARTNERSHIP DEED (AGREEMENT)

A PARTNERSHIP DEED (AGREEMENT) is advisable in any Partnership. It normally outlines/contains what each Partner contributes to the business, be it financial, material, or managerial. In general, the Partnership Agreement Defines the Role of each Partner in the Business Relationship.

Some of the typical articles contained in a partnership agreement are shown here-under as a checklist to guide one, when writing such agreement. They are:

1. Name, Purpose and Location of Partnership2. Duration of Agreement (If known)3. Financial Contribution by Partners4. Role of Individual Partners in Business Management5. Authority of Partners in Conduct of Business6. Nature and Degree of each Partner’s Contribution to the business7. How Business Expenses will be Handled8. Separate Debts9. Signing of Cheques and Management of Bank Account10. Division of Profit and Losses11. Preparation of Accounts and Recording Systems12.Drawings and salaries13. Absence and Disability14. Death of a Partner (Dissolution and Winding up)15. Rights of the Continuing Partner16. Sales of Partnership Interest17. Settlement of Disputes and Arbitration

18. Additions, Alteration, or Modifications to partnership Agreement. How to determine goodwill and calculate amount to be paid on retirement for each partner

19. The Method of Audit to be adopted.

DISSOLUTION OF PARTNERSHIP

A Standard Partnership usually has a Deed or Articles of Partnership, which are drawn up to regulate the running of the firm. Subject, however, to whatever terms or agreement between partners in such a document.

A Partnership is dissolved: -

a. If entered into for a fixed term, by the expiration of that termb. If entered into a single adventure or undertaking, by the term termination

of that adventure or undertakingc. If entered into for an undefined time, by any partner giving notice to the

other or others of his intention to dissolve the partnership. In such a case, the partnership is dissolved as from the date mentioned in the notice as the date of dissolution and, if no date is mentioned, as from the date of communication

d. By death or bankruptcy of any partner or at the option of other partners. If one partner changes his shares in the property with the payment of his separate debt.

e. If the objects for which the partnership business is carried on become illegal, e.g. where the business involves trading with an enemy country or where some partners belongs to an enemy country.

f. On application by a partner, the court may order dissolution of partnership in any form of the following cases:i. When a partner is adjudged a lunaticii. When a partner is incapable of performing his part of the

partnership agreementiii. When a partner is guilty of conduct regarded by the court as

calculated to prejudicially affect the carrying on of the businessiv. When a partner wilfully or persistently commits a breach of the

partnership agreement

v. When circumstances have arisen in the opinion of the court, which render it just and equitable that the partnership is dissolved.

ADVANTAGES OF PARTNERSHIP

1. Freedom and Flexibility of Actions: Members of a partnership enjoy freedom and flexibility of actions as against the owners of a corporation

2. Availability of Capital: It is a method of raising capital since the partners can contribute more capital than an individual (sole proprietor)

3. Tax Benefit: Members of the partnership enjoy tax benefits as they only pay their personnel income taxes.

4. Access to Capital: Banks are likely to have more confidence in lending to a group of people than to one person. Partnership is also more likely to have access to more credits from financial institutions than a sole proprietorship

5. Specialization: It is usually a method of improving the management of the business since partners specialize in different fields which are normally tapped for the progress of the business.

6. Continuity: The death or retirement of a partner may not necessitate the death of the business. There is greater continuity in a partnership than in the case of a sole proprietor

7. Ease of Formation: It also enables new people to be introduced into the business since the formation is easy.

DISADVANTAGES OF PARTNERSHIP

1. Unlimited Liability: Liability in an ordinary partnership is unlimited. Each member is liable as a member of the partnership to the extent of his personal capacity, for the debts and obligations of the partnership to the extent of his personal wealth. This is called joint and several liabilities – It means that each partner can be sued jointly with the other partners or individually, for the debts and liabilities of the partnership, sometimes, even after withdrawal or retirement. The liability in a limited partnership is limited.

2. Problem of Continuity: The partnership has no perpetual existence. Unless provided otherwise in the partnership agreement, the death or resignation of a partner may result in dissolution of the partnership

3. Individual Commitment: Each partner can enter into a contract for the partnership which is binding on the rest of the partners.

4. No Legal Personality: Like the one man business, a partnership as such has no legal personality and cannot sue or be sued. The individual within it can still be sued.

5. Cannot own property: The partnership cannot own property in its own right. All properties of the partnership are deemed by the Law to be invested in the partners jointly and severally as trustees.

6. Delay in Taking Decisions: For policy implementation and decision making; members are always waited for, for their individual consent or opinions. This action slows progress and sometimes good and big opportunities are missed during the bureaucratic process.

7. Limited Borrowing Power: Partnership borrowing power is limited as it cannot issue debenture and it cannot appeal to the public to take shares. Thus, it cannot borrow from the stock exchange.

8. The amount it can raise is limited to the amount the partners can contribute; either from their own resources or by borrowing privately from friends and relations.

9. High Business Risk on Members: Unlike public limited liability companies, which have many shareholders, partnership risk is always concentrated on the few members when such negative risk occurs.

However, partnership has not been able to work successfully in Nigeria. This is due to ‘Nigerian factor’, which always come in the form of tribalism, religious fanaticism, greed, poverty and poor value system.

(C) LIMITED LIABILITY COMPANY (LTD.)

A limited liability company (Ltd.) is a more popular and more common form of business association, especially where production and trade are required on a large scale. A company may be limited in a number of ways such as:

a. By Share: Where a company is limited by shares, it simply means that the company is formed on the principle that the obligations i.e. the

liability to pay debts and other costs, of each member of the company is limited to the value of shares which he has taken in the company. If the member has already paid a part of the value of such shares, then his liability is limited to that portion of the value of the share still remaining to be paid by him.

Let us assume that Peter and Company Ltd. had an initial share capital of #1,000,000.00 in share of #1 each, and this was subscribed and allotted to 1,000,000 people.

The liability of the shareholders, after the shares had been allotted but before they had been paid for, would be #1,000,000.00.

If Peter and Company Ltd. incurs debt totalling #1,500,000.00, once each of the 1,000,000 shareholders pays up his #1, he is free from further obligation. In other words, the shareholder’s liability is limited to the #1,000,000 they have undertaken, to shareholding. They need not be concerned nor will their personal and private wealth be affected, by the #500,000.00 debt remaining after they have paid their #1,000,000.00

(b) By Guarantee: A company can also be limited by guarantee. In this case the members’ liability is limited by the constitution of the company, to the amount the members have agreed to contribute to the company, if the company winds up and goes into liquidation. In effect the members are placed in the position of guarantees of the company’s debts up to the agreed amount. That company is accordingly described as limited by guarantee. It is important to note that in this type of business organization, it is not compulsory for the members to subscribe or contribute money to the company while it is in operation. Only when it is wound up do the members need to contribute in order to liquidate the debts and other liabilities of the company. The law assumes that the working capital of such a company has already been obtained from other sources, such as grants, fees, subscriptions and endowment. It is also noteworthy that no distribution or sharing of profits is contemplated in such companies, and that it is a form of association that is favoured by non-profit-making enterprises.

(c) By Both Shares and Guarantee: This is a most popular and common form of business organization. Examples of this type of company are Unilever, john Holt, etc.

A Limited Liability Company can be a Private Company or a Public Company. Each type, whether Private or public has its own advantages and disadvantages.

PRIVATE LIMITED COMPANY

This is formed to enable a sole trader, a small group of business association or a family to carry on a business. It’s special merit derives from the fact that it gives the business a legal personality and limits the liability of its owners to the amount of capital they undertake to subscribe to the company.

The members of such company are not personally liable for its losses or other obligations beyond the value of the capital they have undertaken to contribute. The Nigeria Companies Decree 1968 defines a private company as one whom Articles of Association:

(a) Restrict the right to transfer its shares(b) Limit the number of its members to fifty (50), excluding

current and past employees of the company(c) Prohibit any invitation to the public to subscribe for its

shares or debentures.

Advantages of a Private Limited Company

1. Its maximum membership of fifty (50) is greater than the maximum membership of twenty (20) in a partnership. A private limited company can therefore raise capital from more members than a partnership.

2. Unlike a partnership, it has a legal personality and can sue, be sued and own property in its own right.

3. Liability is limited: This means that the private wealth of the owners is protected in case of the insolvency or bankruptcy of the company. This is not the case with partnership.

4. Unlike the partnership, members can leave management of the firm to Executive Directors to operate and exercise control more remotely at the shareholder’s meeting

5. A private company can raise capital by issuing debentures, which a partnership cannot do. (a debenture is a type of debt instrument that is not

secured by physical assets or collateral. Debentures are backed up only by the general creditworthiness and reputation of the issuer). Both corporations and governments frequently issue this type of bond to secure capital.

Like other types of bonds, debentures are documented in an indenture. Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. An example of a govt. Debenture would be any govt. Issued treasury bond (T-Bond) or Treasury Bill (T-Bill). T-bonds and T-bills are generally considered risk free because governments, at worst, can print off more money or raise taxes to pay these types of debts.

There are two (2) types of debentures:a. Convertible Debentures – most attractive to investors because of the

ability to convert it into equity shares of the issuing corporation after a specific period of time, as well as most attractive to companies because of the low interest rate.

b. Non-Convertible Debentures – they are regular debentures that cannot be converted into equity of the issuing corporation. To compensate, investors are rewarded with a higher interest rate when compared to convertible debentures.

Debentures are the most common form of long-term loans that can be taken out by a corporation. These loans are normally repayable on a fixed date and pay a fixed rate of interest. A company normally makes these interest payments prior to paying out dividends to its shareholders

Features of Debentures

All debentures have specific features. First a Trust Indenture is drafted, which is an agreement between the issuing corporation, and the Trust that manages the interest of the investors.

Next the Coupon rate is decided, which is the rate of interest that the company will pay the debenture holder or investor. This rate can either be fixed or floating and depends on the company’s credit rating or the bonds credit rating.

For non-convertible debentures, the date of maturity is also an important feature. This date dictates when the issuing company must pay back the

debenture holders. However, the company has a few options of how it will pay. The most common form of repayment is called a Redemption Out of Capital, in which the issuing company makes a lump sum payment on the date of maturity.

A second option is called a Debenture Redemption Reserve; in which the issuing company transfers a specific amount of funds each year until the debenture is repaid on the date of maturity.

It is very useful in a family business where the intention is to retain ownership and control within the family while at the same time obtaining the advantages of limited liability

Disadvantages of a Private Limited Company

1. Its shares are not quoted on exchange. They are therefore less marketable than the shares of public companies

2. Because its membership is limited to a maximum of fifty (50), its resources (funds) are limited, i.e. the number of people it can appeal to for funds is restricted.

3. Because it is not quoted on the stock exchange, it cannot raise funds through the stock exchange

4. It is difficult to determine the value of its shares5. Its Article of Association limit the transferability of its shares. This

further limits their marketability.

PUBLIC LIMITED COMPANY (PLC)

While two subscribers may form a private company, at least seven (7) members are requirement for a public company. In addition, while the maximum membership of a private company is fifty (50), there is no maximum number fixed for a public company. Before such a company is incorporated in Nigeria, for example, the subscribers must file two (2) major documents with the registrar of companies. One is the :

1. Memorandum of Association; and the other is 2. Article of Association

Advantages of Public Limited Company

1. It has greater facilities for raising additional capital: Unlike the one man business, the partnership and the private companya. Its shares are quoted on the stock exchangeb. The absence of restrictions on their transferability makes its shares

more marketablec. It can appeal to the public to subscribe to its sharesd. Although it has a maximum of seven (7) members, there is no

maximum limit to the number of its shareholderse. The value of its share is more easily ascertainable

f. As a result of all these factors, it can appeal to virtually all the whole world to subscribe to its capital, compared with the partnership whose maximum membership is twenty, or the private limited company whose maximum membership is fifty (50)

2. It has Stability and Perpetuity: becausea. Unlike partnership, it cannot be dissolved, because of the death,

resignation or bankrupt of a member.b. Unlike a one-man business, it has continuity of management, because

it does not fall sick or die because the director has died.c. Unlike the partnership and the sole proprietor, it has a legal

personality; it can sue and be sued.3. It has Limitation of Liability, like the private limited company

a. The member’s obligations are limited to the value of the shares he has undertaken to subscribe to the company

b. His personal wealth or assets cannot be encumbered with the company’s debts beyond the unpaid value of his shares in the company.

4. It has Borrowing Powers: These are greater in a public limited company because:a. It has a legal personality; it can sue and be sued, unlike the sole trader

and the partnershipb. It can own property in its own rightc. Lenders can take a floating charge over the whole assets of the

company. A floating charge cannot be taken on the assets of a sole proprietor or a partnership in Nigeria because such undertaking do not

and cannot own property and because of restrictions imposed by the Bills of Sales Act.

5. It has Potential for Growth: This is greater in a public limited company because:

a. It can raise more capital because of this, and because public limited companies are large they can also:

b. Take advantage of economies of scalec. Bear much more easily the costs of raising funds, or quotation on the

stock exchange and of employing financial and other consultantsd. Buy and sell in large quantities; they have a greater bargaining power in

relationship to producers, buyers and financial institutions than the sole proprietor; the partnership or the private limited company.

6. Capital cannot be withdrawn: Usually in the public limited companies, capital cannot be withdrawn once contributed. When a shareholder wishes to withdraw from the company, he has to transfer his shares to another willing buyer via stock exchange market.

7. Risk Diversification: Due to the flexibility occasioned by easy entry and exit being enjoyed in the public limited company share ownership. It becomes easy and possible for an investment, in many companies all over the country, thereby diversifying his business his business risk by not putting all his eggs in one basket.

8. Wealth Distribution: The public limited company affords individuals the opportunity of becoming wealthy through share purchase in good companies. These individuals ordinarily would not have been associated with these companies, if not for shares obtained.

Disadvantages of Public Limited Companies

1. Formalities and Expenses: Public companies are more difficult to form because many formalities and documents are required and initial cost costs are high especially of being quoted on the stock exchange.

2. Loss of control: the possibility of a divorce of ownership from control is greater than in private limited company or partnership: when there are many shareholders, each is usually content to leave the company management in the hands of the shareholding executive directors. Only when the company runs into very serious difficulty may shareholders be sufficiently concerned to turn up at annual general meetings to question the management.

3. Lack of Privacy: There is no privacy in public limited company because the company must be required to submit a copy of its accounts to the Registrar General, Corporate Affairs Commission.

4. Conflict of Interest: The conflicts of interest between shareholders and the Board of Directors or between the top management and the Board of Directors are always rampant. Shareholders are always interested in their dividends and may not want to hear any story on business expansion, which the management may insist on carrying out. This situation always brings a conflict of interest and in fighting amongst those involved on the high level

In conclusion, the disadvantages notwithstanding, the advantages of the public limited companies (or joint stock company as it is often called) are more and overwhelming. For this reason, it is the most acceptable, most popular and most usual type of business.

20 CAUSES OF BUSINESS FAILURE

Some causes of business failure which a new beginner should guide against are:

1. Poor Feasibility Report2. Lack of Adequate Planning3. Incompetent Management4. Inarticulate Programme of Action5. Under-Capitalization6. Poor Market Analysis7. Lack of Opportunities for Self Growth 8. Filing Behind the Crowd9. Neglecting Business Ethics10.Neglecting its Social Responsibilities11.Poor Communication12.Wrong Location13. ‘I have Arrived’ Syndrome14.Lack of Reward for Hard Work15.Protracted ill Health or death16.Bad Spending Habit17.Crises of Succession18.Lack of Connection19.Unfavourable Government Policies20.Extraneous Factors

1. Poor feasibility report:

A feasibility report is the company’s terms of reference. It shows at a glance the economic justification of the business activities and resources necessary to actualize them. A poorly prepared feasibility report would certainly lead to business failure, as the investor would not only be misled, but also be given false hopes, expectation and wrong sense of security

2. Lack of adequate planning:Planning has to do with forecasting future circumstances and requirements, setting long and short term goals, determining the steps to be followed. As a result, adequate attention should be given to planning in order to avoid business failure. When planning is not properly handled, chances are that such a business would not stand the test of time. The mistake most entrepreneurs make is to engage the services of ‘quacks’ for cheap fees to handle their planning functions.

3. Incompetent Management:Not having competent, experienced and efficient management team is one of the devastating setbacks any business establishment could suffer, since the success or failure of any enterprise rests squarely on the Management.

4. Inarticulate Programme of action:Sound and consistent policies are required if good results are to be expected and poor policies would lead to poor results and eventual collapse of the enterprises. Work planning and the determination of the company’s objectives become effective early when they are expressed in policy form. Policy formulation is an essential ingredient in the successful administration of a business.

5. Under-Capitalization:This has become one of the greatest causes of misery to Nigerian business owners. While a lot of people with very brilliant business ideas cannot get started due to lack of funds, those who take the bold step forward to commence their dream business with the little resources at their disposal, sooner or later, discover that after a while, the business becomes distressed due largely to liquidity crises. (lack of funds to continue in the running of the business).

6. Poor market analysis:Inaccurate market projections would result in the misuse of scarce resources, thereby having a negative effect on the fortune of the business. In the same way, an accurate market analysis would enable the organization to determine its present and future market requirements. But when the market analysis is faulty, the business would automatically fail.

7. Lack of opportunities for staff growth:The staff component of any organization is a crucial factor for success. Personnel (staff) unlike other resources have feelings and aspirations that they look into and hope that their companies would assist in realizing – such as career fulfilment and financial stability. Any company that does not see to its staff financial and career well-being would be a training ground of staff for other companies. When a company continuously loses its best hands, it would in the same fashion crash out of existence.

8. Filing behind the crowd:Filing behind the crowd happens when a business is set up to do just what its competitors are doing and in the same styles. This does not give the organization its own identity in the market place. Business owners must be creative and innovative to existing and new business ideas or product/service delivery system; otherwise innovative competitors would in no time knock one out of business

9. Neglecting business ethics:The fastest way of business failure is by neglecting the rules of acceptable business ethics. Once ethics are thrown to the dustbin, be assured that business would sooner or later fail.

10.Neglecting its social responsibilities:Business succeeds only when members of the community in which such business operates, efficiently patronize it. A business enterprise, therefore, does not exist in isolation from the society in which it has its being. A business outfit must recognize its immediate society, and where there is any special interest, the business must offer it to the wider community. Product/services must be beneficial to the community, reduce as much as possible any harmful effect of its activities in the operating environment, by avoiding the negligent discharge of pollutants, and of course avoiding unnecessary waste of the earth resources. Any company that neglects this would be at dagger with the law and the community in which it operates and the ensuing conflict may degenerate into a situation where it would be difficult to achieve business objective, which inevitably would lead to business failure.

11.Poor communication:Communication is the means whereby individuals in organization exchange information necessary for the smooth operations of the enterprise. It involves the exchange of ideas, facts and emotions by two or more persons within and outside the organization through the use of words, letters and symbols.When there is no free flow of information, production/service delivery would be dislocated, as a policy decision, and objectives cannot be communicated to those concerned and such a situation could spell doom for the organization.

12.Wrong Location:For the success of any business, location determines a lot of things. If your business involves manufacturing, that requires the processing of bulky raw materials, It is only economical to locate your factory near the source of raw materials, otherwise, a chunk of your working capital would be spent on transportation. Also, what is the rational of setting a video-viewing centre in a community of blinds; certainly it is a sheer waste of time and resources. A number of business have failed because they were cited at wrong places.

13.‘I Have Arrived’ Syndrome:Many business owners run out of control as soon as they venture into business for themselves. As this happens, they talk and act bigger than they should. Subsequently, through their unguarded utterances assume more financial responsibilities than their pockets could sustain and thereby dig into their business capital, and before they realize it, a deadly blow had been dealt to their business funds.

14.No reward for hard work:Many business owners in Nigeria are yet to see the need for rewarding staff, which put in more than they are being paid for. They would rather treat all their staff in the same way, unmindful of the grave consequences this could have on staff morale. When there is no ‘Thank You’ for a job well done , the few hardworking members in your team may not find justification to continue working hard, and this may affect the fortune of the business and subsequently lead to failure.

15.Protracted ill health or death:Many business owners are the ‘all and all’ of their different businesses. Some hold their business secrets very tight and confidential that in an event of long ill health or death, there will be nobody who will continue the business, because the business CEO has died with the secrets of the business. The business will also die with the owner.

16.Crises of Succession:Many business owners always fail to plan especially for the future. Some will have two wives or more with many children. These children all have a stake in their fathers’ property and when the business owner (CEO) fails to make adequate succession plans for the business, it is most likely that the children will misunderstand themselves which may lead to struggles and court actions that may eventually cripple the business.

17.Bad spending habit:Many business owners fail to understand the difference between self and business, hence their inability to separate self from business. This leads to the spending of the company’s money, as he deems fit, because he believes that he is the owner of the business. In most cases, this helps to kill the business.

18. Lack of connection:This particular issue has a very strong root in Nigeria. Good connection can help business to grow, and lack of connection can kill a business especially in Nigeria where the Nigerian factor of who do you know, or where do you come from, play a big role in what you get or loose.

19.Unfavourable Government policies:The survival of most businesses, especially small businesses, depends mainly on good government policies, but if there is any bad change in the policies, it will affect some businesses. Many will die if such bad changes are not addressed. For example, when government banned the importation of wheat in Nigeria during the Structural Adjustment Programme (SAP) Era,, many breweries went out of production and equally their dependent allied industries died in the process too.

20.Extraneous/Uncontrollable Factors:These are factors purely outside the control of the business owner or that of his managers. It could be natural misfortune, economic or political crises, as we do experience in the world today.

WAYS OF AVOIDING BUSINESS FAILURETo avoid business failure, the Business Owner (Entrepreneur) must adhere strictly to the rule of the game in managing successful business.The management of the FOUR ‘M’s namely : Men, Money, Materials and Machines should be his management pivot.Furthermore, to avoid business failure, the business owner requires the following, as noted by Baumback (1992): 1. Careful study of the markets2. Wise planning of activities3. Vigilant control of investment, merchandise, personnel, equipment

and building to ensure maximum use for production4. Adequate expense record5. Thoughtful selection of goods6. Strategic location with particular reference to the market, but also

bearing in mind, resources and transportation of goods7. Sound policies, flexible and adequate to obvious business

expediencies8. Strong working relationship with suppliers. Judiciously controlled

credit9. Customer selection and market concentration. Skilfully selected

personnel10.A well planned sales promotion programmes11.Good motivating programmes12.Well forward training programmes13.Good outlets14.Articulate environmental scanning15.Adequate good spending habit16.Must be prepared to take risk17.Good experience and hard work18.Ability to cage fraud or nip it in the bud

In conclusion, any good business owner who religiously applies or practices these suggested methods would be in a good position to avoid/avert business failure, and will continually maintain success in their businesses.

THIRTY (30) MISTAKES BUSINESS BEGINNERS MUST AVOID

The term ‘business’ has come to be one of the most applicable, used, abused, bastardized, misunderstood, misinterpreted and controversial word in all of man’s existence. Many go into business for the love of it, while others do so ignorantly, committing mistakes they never thought of; but which have unfortunately ended their dreams. What are these MISTAKES? They are among others:

1. Wrong Bearing2. Not Getting Registered3. Big Bites4. Mortgaging your Ethics5. Credit Sales6. Diversification7. Profit First8. Not Having a Business Plan9. Taking the Market for Granted10. Under Pricing11. Ignoring Your Competitors12.Converting your Employees into Sex Toys13. Not Advertising14. Ignoring Your Responsibilities to Your staff15.Not Investing on Your Staff (You don’t Invest on Your Staff)16.Not Being Interested in Your cash Movement17.Accepting Partial Loan18.Dishonesty19. Not Caring About Your Image ( You Don’t Care about Your Image)20. When you are not Learning (When you stop Learning New Things

Generally)21.Ignoring the Lonely Voice22.Biting the Finger that Fed you23.Putting the Cart Before the Horse24. Having no Secrets about Your Plans25.Dont be a One Way person26. Lack of Understanding of What ‘Failure’ is.

27. Inefficient Services or Products28. Strike a Balance29. Ignoring Your Competitive Edge30. Not Having Accounting Books

1. Wrong Bearing:Many people are into business, just because others are; or because they have just lost their present jobs and feels that the only solution to their state of joblessness is to enter straight into business, without first getting their bearing right. As a beginner in business, you must as a matter of fact, first of all get your bearing right, evaluating your abilities and capabilities, and above it all, be very sure that your goals of wanting to go into the particular business is achieve-able and realizable.

2. Not Getting Registered:These days’ people go into business (especially business beginners) at anytime, anywhere, anyhow and for anything without due registration and compliance with the law. According to Aderinokun, beginners of business should not make the mistake of not being registered both with their professional bodies and Corporate Affairs Commission.

3. Big Bites:It is always an exciting experience to see one’s dream come true. But many beginners always made the mistake of taking jobs they cannot professionally and competently handle; experts warn that as a beginner, in order to avoid frustration, you should start with the smaller jobs; as smaller jobs have the potentials of bringing bigger ones.

4. Mortgaging Your Ethics:Another common mistake beginners must avoid is capitalizing on their newness in business to do things that are against their business ethics. Business Beginners must not, at any cost, mortgage their professional ethics in order to maintain standard as well as be principled.

5. Credit Sales:Credit sales are a good thing that has happened to the business world. But as a beginner, you must watch against credit sales, as you need money most at this stage, to keep your business running. You should know that customers are not as willing to pay, as they are always willing to buy. So while buying may be smooth and fast, payment may be slow at a snail speed, thereby crumbling your newly started business. Watch out.

6. Diversification:Depending on the nature of your business, it is often dangerous to diversify (or not) from the beginning of operation. If, for instance, your product is seasonal, not diversifying will only tie your fortune to seasons only, while you are dry for the rest of the year. On the other hand, diversification from inception might mean having too much to chew. This may spell doom for your business. Beginners therefore, must not make the mistake of diversifying when the need for such has not arisen.

7. Profit First:One of the most common mistakes business beginners make is their early emphasis on profit. According to Mr. Ishake J. Lawal, MD/CEO of RollyBow Cards Ltd., when he started business he was not interested in the early profit but he believed that what he is doing will definitely bring in money later. He said he concentrated all his attention in making his products (Greeting Cards) acceptable, which he achieved. As a beginner, you should sell your profit to buy confidence and trust, which you will later fetch in the much-desired profit.

8. Not Having a Business Plan:Another common trap beginners fall into is their inability to make business plan (feasibility study). The absence of a business plan can block the opportunities available to your business and deprive you of financial support as well as business partners.

Possibly because of its cost, many business beginners have been dodging this very important aspect of business. Never start a business without a business plan, for it is your compass and flagpole.

9. Taking The Market for Granted:

Another mistakes business beginners made is their not conducting market research before embarking on their ventures. Acording to Wilson Agbaje-ojo, an advertising consultant with Grafik Advertising Associates Ltd., “even market women need to conduct market research”. Beginners must not take the market for granted. Knowing what your consumers want and what they are ready to part with, can be the sustaining factor in your business.

10.Under PricingOne other web that beginners often get trapped in is that of under pricing of their services for the simple reason that they are just beginning, and as such will use lower price tag to fetch in customers. While this might be true, normalization of your price with others in the market may see all your customers returning to their old buying sports. Experts advise that you charge the on-going market price, while at the same time creating differences with the quality products; even at reduced prices, poor quality product will not attract buyers.

11. Ignoring Your Competitors:An in-depth knowledge of those in the same line of business is important in business. This is often ignored by most starters. As a Business beginner, never consider your competitors as being obstructive factors with nothing good to offer. Rather, see them as partners in progress and do not hesitate to seek advice from them when such need arises.

12. Converting Your Employees into Sex Toys:The excitements that come with the jargon, “this is my company, I am in charge of everything” have enormously driven some business owners into seeing their staffers of the opposite sex as objects for satisfying their lustful desires without minding the implication of such behaviours on the business. This has sent many business enterprises to their early graves.

13. Not Advertising:If a good product is manufactured today, and there is no advertisement to bring it to the notice of its intending consumers, it will not be noticed. The mistake of sneaking into the market place unadvertised is one of the major causes of business failures.

14. Ignoring your Responsibility to your staff:A business organization needs human resources as part of its inputs. Individuals joining the company have their own objectives and this is an important element which any business owner must accept first and foremost. The fastest possible way to kill your company is to – ignore the fact that all your employees take up jobs with your company because they believe that the company can help them achieve their needs.

15. Not Investing on Your Staff:When you do not invest on staff development, your company would soon pack up. A staffs who is not developed cannot add value to the organization.

16. Not Being Interested in Your Cash Movement:Many business owners do not pay adequate attention to their cash flow management, that is incoming and outflow of funds in the company. According to Basheer Dolapo Alli, a Chartered Accountant with Ighodalo and Associates, Cash flow management is “an essential ingredients for business success.

17. Accepting Partial Loan:Most people venturing into business own their own, and in a desperate bid to raise cash, often commit the mistake of under borrowing. At the end, the under borrowing/partial loan accepted by the new business owner is not usually enough to sustain the business, thereby leading to business failure.

18.Dishonesty:Starting a business on a dishonest note is highly dangerous for the survival of any business. Real business growth should be anchored on sincerity of purpose, fuelled by a commitment for customer’s satisfaction.

Honesty should not be compromised in business for such business to grow. Prospective business owners, must as a matter of policy guide against dishonest and sharp business tendencies that manifest in companies inability to customers value for their money.

19. Not Caring about your Image:Jesus said, ‘what do they say I am? If Jesus Christ is concerned about his image, then every individual especially business owners should likewise, be concerned about their image. Because the reaction of people and the progress and the survival of the company depend on what people say you are. It is public perception of your image that determines the realization of your business mission.

20. When you are not Learning:As a chief executive, you will be running down your company if you do not stop seeing yourself as the major/sole performer or hero with answers to all questions. You stand in the position that only your ideas matters, neglecting other people’s ideas, a situation which is not healthy for business success.

21. Ignoring the Lonely Voice:Many new business owners always believe that critics are enemies of their progress. As you launch your business, there is every possibility that both customers and non-customers alike will have one thing or the other to complain of. Rather than turning a deaf ear on these useful customers, beginners are advised to avoid their failure by accepting criticisms in good faith. Ignoring the lonely voices may mean the premature death of your company.

22.Biting the Finger that Fed You: Every business owner, especially at the early stage of operation, received assistance from one source or the other. Many beginners often make the mistake of cutting off all relationships with those who had at one time or the other been of help to them. Isolating yourself from those who helped you might not be good to your business health.

If you received a loan from a friend or an institution, that you are unable to pay, does not mean you should discontinue seeing your financier again. Continue going there, for your presence alone can even grant you additional support from them.

23.Putting the Cart Before the Horse:Most business beginners, possibly because they have just struck a new idea that offers them a bright and exciting future, most beginners care less to put the first thing first before embarking on their ventures. Because they put the show on the road before they are ready, frustration is often the result on their businesses.

24. Having No Secrets About Your Plans:Every business, irrespective of its nature, has secrets not to be shared by others. But it is surprising how most business beginners sit at every available corner, blowing their business plans to every ear that cares to listen. The danger of not being secretive about your plans, before you launch your business, is that you will already have made so many competitors, people who shared from your ideas, and of course, added something extra to it, thereby leaving you dry.

25. One Way:Another wrong thing business beginners do, is that they think, there is only one way of launching an idea. You may have the right idea, but the approach may be wrong. So sticking to only one approach may mean killing the idea. Be open up to many alternatives and count your failures as a learning process and not as mistakes.

26. Lack of understanding of What ‘Failure’ is:A lack of proper understanding of the word ‘Failure’ has sent so many promising and viable businesses to its early grave. As a beginner, you must have a proper understanding of what failure is. E.g. that you are experiencing setbacks or disappointment does not mean you have failed, per se, rather it is a pointer that you have not hit the right way of doing it yet.

Have you heard or remember the story of THOMAS EDISON, the inventor of Fluorescent Tube who was said to have made 999 mistakes in his attempt to invent the fluorescent, but according to him, he said, he has only learnt 999 ways of how not to make a fluorescent tube.

27.Inefficient Service or Product:There is this wrong notion that in Nigeria anything sells. Hence so many people have gone into business to produce any service or product with the vain belief that it will be bought. No matter how needful your service or product may be, they need to be efficiently produced otherwise your warehouse shall ever remain pregnant with goods.

28. Strike A Balance:Yes, you are the BOSS. You are not answerable to anybody. You can resume and close from work at any time; but for you to be successful, you must be able to strike a balance between your work and your relaxation. Working too much may result in ill health and stress, which might drain all you have been working for. While on the other hand, too much of relaxation and freedom will spell doom for your business, spending wantonly what would have been invested back into the business. The choice is yours. But it is always good and advisable that you strike a balance at both for the survival of your business.

29. Ignoring Your Competitive edge:A competitive edge is that feature that is unique in your product or services that make you stand out or different from your competitors. It is your advantage over others, and it is what makes your customers look out for you. Among the crowd playing down on this advantage will mean retreating backward to join the pack.

30. Not Having Accounting Books:One other unwholesome attitude which beginners of business have found difficult to do away with is the habit of not keeping records of their business transaction. They regard themselves and the business as being one; hence business monies can be withdrawn anyhow, anytime. Most of them keep no records of daily dealings, hence making it extremely difficult for them to determine whether they are growing or not.

Record keeping is important for evaluation and assessment, as well as measurement of enterprise performance. Not having records will make you not to be able to determine your debtors’ and creditors’ position. Records are reference points; and is a Must have, for the survival of any business. CO-OPORATIVE SOCIETIES

Co-operative Societies is another form of business organization available for the entrepreneur to choose. Entrepreneurs have the option of joining together to form co-operative societies depending on what they want to do.

Anschel (1969) defines co-operative as an organization engaged in the manufacture and distribution of consumer goods, operated democratically for the mutual benefit of its members and customers.

Warbasse (1947), in his own definition says that a consumer’s co-operative is an enterprise, whose owners are both the customers and users of the facilities as well as goods and services provided.

The business organization where resources are provided together by various co-operators with the view of making profit is called Co-operative Society. Normally, people come together out of their own free will to obtain some economic goods and services, which would be either too difficult or too costly for them to obtain alone.

The Co-operative MovementDuring the industrial revolution, there was distress, which gave rise to cooperative society formation. The modern co-operative movement places its origin from the opening of a co-operation store in Toad Lane, Rochdale, Lancashire, Britain in 1844.

The Rochdale plan type of co-operative society was formed by a group of flannel weavers. They organized as the Rochdale Society of equitable pioneers. They developed certain basic principles, which led to the

success of the earlier formed co-operative ideas of Robert Owen and others. These principles are collectively known as “Rochdale Plan”. The principles are as follows:

a. Open membershipb. Democratic control (one-man, one vote)c. Sales at prevailing prices and with patronage dividendsd. Sales for cash, ande. Educational activities.

The rise of modern co-operative movement in Nigeria originated in far reaching economic, social and political changes. In the rural areas, small farmers and other rural entrepreneurs such as weavers, goldsmith, hunters, farmers, etc were alarmingly indebted to shylock rural moneylenders. These moneylenders exploited the fact that these local entrepreneurs were desperately in need of money to keep their businesses going.

The co-operative organization was formed to:

a. To combat the monopolistic practices of foreign countriesb. Provide an efficient preparation and marketing facilities for export crop

producersc. Help farmers improve the qualities of their productsd. Supply needed credit at various levels to the farmers.

In those days, the export of Nigerian industrial crops was in the hands of the British firm served by the West African Produce Control Board (WAPCB). This body embraced Ghana, sierra Leone, Gambia and Nigeria.

The first of the agricultural produce marketing co-operatives was that of Obedun Farmers near Ibadan. It was registered on the 19th August 1937. In 1939, the first area Federation of co-operative society was registered as the Ibadan Co-operative Produce Marketing Union. The Ife Union, the Ilesha and the Ijebu Union registered in 1945.

Nowadays, the co-operative societies have since been modernized and even many co-operative banks have been established throughout the country to offer financial assistance and encourage members of the public who operate accounts with them.

Characteristics of Co-operative Society

i. Co-operative Societies are normally registered with the Registrar of co-operatives

ii. They always have to elect policy marketing officials, who in turn employ managers

iii. They raise capitals by charging themselvesiv. They distribute part of the profits to their members according to an

agreed procedurev. They can borrow from financial institutions like limited liability

company vi. Each member is only allowed one vote irrespective of the

shareholdingvii. No proxy voting during meetings

Types of Co-operative Society

There are two (2) Main Types of Co-operatives, namely:

1. Wholesale Co-operative Society2. Retail Co-operative Society;

Other Types of Co-operative Society are:3. Producer Co-operative Society4. Consumer Co-operative Society5. Co-operative Banks6. Estate developers’ Co-operative Societies7. The Thrift and Credit Co-operative Societies

1. Wholesale Co-operative Society:The wholesale co-operative society service (they serve) the retail societies with a high proportion of their goods requirements, using their own transport.

They engage in advertisement for the movement as a whole. This joint marketing is of a tremendous benefit to members. It is possible for the co-

operative society to obtain better prices and also have better storage facilities and transport than each individual member could provide.

2. Retail Co-operative Society:This type buys from the wholesale co-operative society and other sources in order to stock wide variety of goods. The goods are then sold to members at a price cheaper than the market price.

3. Producer Co-operative Society:This is a combination of producers, who usually pool their produce together. Each member must sell his or her produce to the society, who will in turn sell to the public either wholesaler and/or on retail basis at a profit.

4. Consumer Co-operative Society:This is normally the end of the chain of production. Members of the customer co-operative society usually get a membership discount. Since the co-operative shops usually sell to all customers at regular prices. The major objective is to enable members obtain lower prices than they might be able to obtain if they bought at a regular shop.

5. Thrift and Credit Co-operative Societies:Here, the members resources are pooled together to help them cultivate saving habit and thus create avenues for co-operators to borrow money at reasonable rate of interest. When members need loans, they ask the co-operative for assistance. The society will then pool the members saving for investment. Members can withdraw or borrow when they wish.

ADVANTAGES OF CO-OPERATIVE SOCIETIES

1. They help their members to cultivate saving habits through thrift and credit societies

2. Members are helped to acquire some gain, which they could not otherwise acquire, through easier access to credit, better storage facilities, better prices and others

3. Members are not likely to be cheated because of their combined talents, goods and wealth, unlike when they are alone.

4. Through organized workshops for members, they become educated and aware.

5. Members are helped to borrow money at a cheaper rate for their economic development

6. They normally have ready markets, hence no money is spent on advertisement for their goods

7. The openness of the membership brings more funds to the societies and members

8. Members have equal voices despite their contributions9. Members can withdraw whenever they wish, even at a short notice10. Members attend each other’s functions/events/ceremonies united.

DISADVANTAGES OF CO-OPERATIVE SOCIETIES

1. Through easier capital withdrawal by members, the progress of the society can be hindered

2. Co-operative societies cannot sell their shares in the stock exchange3. Many members are neither interested in the management of the society

nor attend meetings4. There may be inefficiency in the society’s management due to poor

qualification of the management team5. The nonchalant attitude of the members may affect their elections, which

may make unpopular candidates to emerge, which will in turn affect the general management of affairs.

PROSPECTS OF CO-OPERATIVE SOCIETIES IN NIGERIA

According to Osuala (1998) establishment of co-operatives societies

will help to:

1. Combat Unemployment: by making jobs available for members2. Combat Rural Movement to Urban Centres: it will discourage the mass

movement of jobless able bodied men from the rural areas to the urban centres in search of white collar jobs which is not even available

3. Improving quality, skills and techniques: it helps farmers, petty traders, craftsmen to be motivated to improve the qualities of their products and services. They receive expert advice on the techniques and modern equipment to be used.

4. It improves the general standard of living of members and others:: farmers and craftsmen obtain better prices for their good through co-operatives. A sense of saving is inculcated through active involvement in the thrift and loan societies, thereby improving the standard of living and incomes of the workers/members

5. It encourages rural development: Through government loans and rural support, co-operative societies are able to establish many small-scale industries in many parts of the country. They also provide their respective localities with basic necessities such as pipe-borne water, electricity and sometimes repair bad roads within the rural communities.

PROBLEMS OF CO-OPERATIVE SOCIETIES IN NIGERIA

1. Managerial Inefficiency2. Mismanagement of funds3. Lack of interest on the part of the members of the co-operative societies4. Poor co-operative education – the staff, co-operators and the general

public are not sufficiently educated as to the objectives and benefits derivable from co-operative societies, resulting in lack of interest and poor co-operative activities

5. Lack of capital: the activities of co-operative societies at every level are seriously handicapped by lack of sufficient funds. Loans obtainable from government are inadequate. Many businessmen are unwilling to part with their money in seemingly unprofitable activities of co-operative societies, therefore, they do not help the co-operative societies

REASONS FOR THE FAILURE OF CONSUMER CO-OPERATIVE IN NIGERIA

Despite the unsuitable social and economic conditions at the beginning of the co-operative movement, the producer co-operatives met with some success, while the consumer co-operative was a failure. The reasons for the consumers

Co-operative failure was largely due to:

1. Failure to keep records and accounts up to date: the members who were appointed to keep these records were not knowledgeable in accounting principles and procedures

2. Lack of trained supervisory staff: because consumer co-operative was introduced prematurely in Nigeria, no effort was made to train the supervisory staff.

3. Lack of mutual trust among members of all consumer co-operatives: each partners tries to dupe his other partners in the business

4. Members were disloyal to their societies: they preferred to buy where the prices were cheaper or where the products involved were of personal interest to them.

5. Member’s ignorance regarding the basic purpose of consumer’s co-operative societies: Because many members of the consumer co-operatives were illiterates, it was difficult to educate them on the purposes of the societies. Also, the officials who were supposed to educate the members were themselves poorly trained and inexperienced.

6. Selling on credit and below market price: members dabbled into selling on credit and below the prevailing market prices.