10 Oct 2013

Young entrepreneurs have been warned to be wary of customers who ask for goods and services on credit and then fail to pay back.

In an interview , Ms Lenna Richard, who was funded with P78 000 by the Youth Development Fund (YDF) to set up Gabrielle Hair Salon, warned that most businesses collapsed because they failed to collect debts from customers who obtained goods and services on credit.

“Most youth owned businesses collapse because of bad debts. So the youth must guard against providing goods and services on credit,” said Ms Richard.

Narrating her experiences, Ms Richard said customers used to have their hair done at her salon on credit and then failed to pay back. She said this resulted in her salon nearly collapsing as it was running at a loss.

She said others used to pay off their debts and immediately asked for credit, which resulted in another cycle of debt. Ms Richard said she stopped offering services on credit because her business cash flow was suffering. Ms Richard had been dreaming of owning a hair salon for the past six years.

Her dream was realised this year when she received P78 000 from the YDF. She revealed that another challenge that she faced in her business was that of poor work ethic, as some of her employees sometimes did not turn up for work, resulting in loss of income.

“Some of my employees are unreliable and they fail to come to work even when they have set appointments with customers. It’s sad to have to turn a customer back because an employee failed to come to work,” she said.

She added that such customers also lost faith and trust on her hair salon and ended up seeking services elsewhere. Ms Richard revealed that there was fierce competition in the industry as the new salons had to compete for customers with larger and more established salons and informal hair dressers.

To counter such challenges, she said, it was important for her to always be available at the hair salon to ensure that customers get the best service at the most reasonable prices so that they come back for more. She also revealed that her business was doing well as it could generate as much as P500 per day.

“My business started operating in May this year, but I am already paying back the YDF. I am living proof that if you do your research, work hard and stay focused, your business will be successful,” she said. Ends