Ten sure signs of overtrading in small businesses and their possible solution


Small businesses by nature are more volatile. Their owners tend to try out so many ways of doing things within a short period of time. This in most cases land them in the trap of overtrading. Overtrading in common parlance simply means trying to achieve too many with too little. Small business owners usually allow their ambition and emotion to supercede the reality. The failures of small businesses are largely linked to the negative and ugly effect of overtrading.

Small business owners can shield themselves and their businesses from overtrading by being on the lookout for signs of overtrading and corrective actions taken. In this article are TEN signs of overtrading and also possible ways to eliminate their effects.


  1. Rapid growth in fixed assets. In this age of constant technological breakthrough, small business owners acquire sophisticated assets (especially IT related) on a daily basis. This is often without a corresponding growth in investment opportunity that the asset can be employed to generate adequate returns.
  2. Drastic increase in sales. Growth in sales is a normal thing. In fact, that is the essence of business but, when it becomes so drastic; its benefit will be lost. Growth in sales is like a two-edged sword- too low bad; too high bad. Many small business owners equate business success with rapid growth in sales (this is arguable anyway).  And they achieve this by employing more sales staff than needed.
  3. Rapid increase in receivables. Small businesses usually employ so many incentives to increase sales and one of such incentives is to allow unnecessary long credit days. This usually place undue pressure on the need for additional working capital without additional benefit to the business.
  4. Over reliance on short term debt (usually in the form of overdraft facility). Because of the principle of equity gap (a situation where a business has little owner fund and is not in a position to raise capital from the stock exchange such as The Nigerian Stock Exchange), many small business owners tend to resort to bank loan. There is nothing bad with this approach if well managed and monitored. Problems only come when too much reliance is placed on it.
  5. Sudden jump in inventory. Sudden growth in piled stock is a warning sign that overtrading is around the comer. May be in the bid to meet the surge in demand due to aggressive advertising, a company may pile up stock just to avoid the effects of stock-out which is another area to avoid in business
  6. Rapid decrease in cash balances and its equivalent. Companies quickly go bankrupt once it cannot meet its short-term obligations over a protracted period of time. A profitable business can still go bankrupt if it does not have a healthy cash flow.
  7. Stagnancy in owner(s) equity. Owner’s equity is that portion of capital of a business that is permanent is the business for use. Significant disproportionate growth with debt finance is a danger sign that overtrading is creeping in.
  8. Little or no growth in reserve. Reserves by nature are supposed to be growing. It is a warning sign that there is danger as soon as it stops growing.
  9. Unusual increase in trade payables. In as much as I personally encourage small businesses to tap into the potentials of trade credit, problems come knocking when its use goes out of proportion. The business will loose its reputation and eventually go bankrupt if it is known to heavily rely on trade credit that gives rise to trade payables.
  10. Irrational emphasis on advertising. Small businesses start inviting overtrading as soon as they start competing with multinationals on the amount they spend on advertising and sales promotion.


The mere identification of these signs is a vital step in eliminating overtrading and its effect. More specific countermeasures are listed below

  1. Improved receivables and inventories control. Small business managers should keep an eagle eye on these variables so that they don’t go out of proportion. Good working capital management is a must in this regard.
  2. Increase owner’s equity. Small businesses should increase equity investment. As tough as this may be, small business owners should not see it as impossible. After all, that is part of the entrepreneurial spirit. You can consider using Business Angels or Venture Capitalists to raise equity.
  3. Investment appraisal. Proper investment appraisal should be carried out before investing in fixed assets.
  4. Employment of good cash management technique. Cash budgeting and other cash management techniques like Baumol Model should be used to make a calculated guess on the company’s cash need and necessary arrangements made.


I hope you enjoyed the time you invested in reading this article.

Finance and information security professionals- emerging heroes in the new age.

 Finance is the life blood of every economy. Some people will tell you that ‘money rule the world’ while some will say ‘money makes the world go GAGA.’ Money management skill has never been this important in human history as it is today. A research carried out by an independent researcher shows that the demand for people with technical competence in the area of finance will increase by 30% in the coming year (2010)

As true as the above may be, information and information security experts are one set of people that has the power to put everything to a halt under a twinkle of an eye just by clicking a mouse.

Now, imagine the potentials an individual will have if he/she is able to combine these two wonderful technical skills. Am sure you will want to be among these few heroes that will rule this world in no distant time. If you are, then read on as this article will give you useful tips on how to become finance professional and IT professional.

A friend of mine will always tell me that ‘it all starts in the mind.’ This is to say that you have to be mentally ready as there is a lot challenge out there facing these set of people. The finance professionals are busy battling the ever complex and volatile world of finance while the IT guys are there struggling against the bad smart guys that want to steal peoples information at all cost especially financial information.

On this premise, it pre-supposes that for you to be a successful ‘hero’ in this our age, you must have an in-depth knowledge of both finance and IT

Note that I didn’t say certificate, but rather, knowledge.

Below are list of areas that have been forecasted to explode soonest

  • Asset Management
  • Fund Managers
  • Risk managers
  • Compliance Auditors (governance professionals inclusive)
  • Security Cloud Services –  e-mail security, web content filtering, authentication and network firewall monitoring
  • Date Security
  • In The healthcare sector, Electronic Medical Record systems operators
  • Secure software development and web application security – those with knowledge of C++, C, Java. And .NET
  • Those with knowledge of virtual: storage, servers, desktops and application security will hope to smile as there is a debate going on right now as regards the adequacy of traditional physical computing environment.

There are dozens of knowledge bank out there that you can tap from. Some of them are: ACCA (Association of Certified chartered Accountants), CIMA (Chartered Institute of Management Accountants), AICPA (American Institute of Certified Public Accountants), ISACA (Information Systems Audit and Control Association), ACFE (Association of Certified Fraud Examiners), CCNA (Cisco Certified Network Associate), MCSE (Microsoft Certified Systems Engineer) and ACEH (Association of Certified Ethical Hackers). Subscribe to their journals and get useful insight. If you can, get certified with one or two of them, but if you cannot, no problem, all you to do is get their materials and read them. If you read their materials, the only difference between you and a person certified will be the privilege/ preferential treatment given to the bearer of such certificate.

In this internet age, with a properly configured Laptop and internet connection, you may not even need those paper qualifications but your technical competence to consistently deliver high quality service over the net. You will be surprised at the amount of people waiting to grab the service that you are willing to offer- especially the IT services. Chances are that you want to climb the corporate ladder. If that is the path you choose to follow, then you have to get certified so as to be relevant. The SKILLS needed to pass these professional exams are not too difficult to grab. All you need is just the right MOTIVATION to become a professional accountant or an IT professional.

Information Technology Financial Risk- how to reduce it.

 Information technology on its own has no financial risk attached to it but if used wrongly can magnify the risk involved in finance. Take banks as an example. Prior to the time of the deployment of information technology infrastructure in banks, the level of financial losses directly linked to operational efficiency was relatively low compared to what it is now.

In those days, banks only worry about the risk associated with internal controls. But today, they also face external risk that is directly linked to the deployment of IT infrastructures. The in-house thieves are always on the look out to advantage of known vulnerabilities that exist in the banks IT while the external thieves are constantly looking for ways to break into the database of banks and other financial institutions.

Looking at all these, one may think that all hope is lost as the offensive guys are constantly modifying and perfecting their evil strategies to beat all countermeasures. In this article are loads of useful tips that financial institutions can use to manage their IT related financial risk.


  • Fortification of internal control. The most effective way to mitigate against internal financial risk is to have a strong internal control in place. A well implemented internal control is half the battle of risk associated to internal factors. Job rotation and mandatory vacation works as added tonic to the effectiveness of good internal control
  • Workers incentives. It is often said that your control is as good as the motive of those that implement it. You may have the best control in place, but without the presence of properly motivated and encouraged workers, the intended benefits of these controls will all hit the rock.
  • Education of staff. Educating your staff on the inherent risk of information technology gadgets goes a long way in reducing the stress associated with financial risk in information technology gadgets.


  • Use of tested, trusted and reliable IT solution providers. Companies should avoid going for ‘cheap articles’ that has no quality. Cheap articles cost more in the long-run. The extra monies that would be spent on fixing known vulnerabilities might exceed the initial extra cost that would have been made on the original equipment.
  • Use of “honey pots” and “honey nets”. These are terms used to describe attempts made by companies, especially banks and other financial institutions to lure hackers into firing their shots on a simulated corporate network. This works well for security purpose as it will help company’s security professionals analyse hackers new tricks from it. The only downside of this is that it may send the wrong signal to stakeholders (especially shareholders that will be thinking that their investments are no longer safe). They may not be well informed and will assume that the company’s real network is that porous.
  • Educating their customers on how to use their facilities- especially online users. Often time, customers tend to sue companies and claim huge amount of money in the form of compensation. Companies that make it part of their policy to educate all their customers on any new information technology gadget acquired always save a lot of money that would otherwise be spent in legal tussles. This education can be as simple as sending out newsletter to all their customers periodically.

The tips you get from this article and the ones you got from other information security related articles will help beef-up your IT security base. So fell free to read up other articles in the financial information security section of this site.

Maximizing return on information technology investment – six tips to make it real.

The objective of making any worth while investment is to maximize returns from it. Every Accountant and Financier will not hesitate to tell you this, yet you see people making heavy investment in information technology today than ever without really getting the best out of it. Have you ever sat down to take stock of the returns you have made from your investment in IT? If you have, what was your finding? Enough of those questions you may be saying within your mind and you are right. I am not here to bother you with questions but to proffer solution. Hence, the next six paragraphs that follow give valuable tips on how to maximize returns from your investment in IT. One paragraph for each point. Read with rapt attention.

Alignment of Business Strategies with IT infrastructure objectives: as obvious as this may sound, many people still go ahead investing heavy amount of money on IT without taking time to find out if the strategy of the organization is in line with the objective of the IT product. They become so much in a hurry to purchase that new piece of gadget just because the marketer has created some sense of urgency- which is the essence of sales. Take time to analyse your business objective and see if it can be met by the features of the new IT product you want to buy. For instance, if one of your business objectives is to secure your online customers information, does the new IT product you are about to buy have features that can support the transfer of encrypted data through a Secure Socket Layer (SSL) i.e, through a secured medium.

Investing in quality IT products the first time: if the strategy of the business and the objective of the IT product you intend to buy are properly analysed, you will not find it difficult to make the right investment decision. Often time, investing in high and right quality might be expensive, but will save money if it meets and surpasses the need of the business.

Training of staff in the use of IT infrastructure: arguably, your assets are as good as the quality of staff operating it. You may deploy the highest and the most appropriate IT solution, but if your staff members cannot utilize it, you have just wasted your money and time as this will not add any value to your business.

Outsourcing of certain IT project: upon analysis of the above three points, if it is discovered that the business in question lacks what it takes to maximize returns from It, then outsourceit.

Customer Education: in most cases, the potential of IT products are unlocked by the customers through appropriate use. In this case, it becomes the duty and responsibility of the organization to educate its customers. After all, customers are the kings. If you don’t certify them, someone else will.

Constant upgrade: in this our jet age, things quickly become outdated if not upgraded. Fail to upgrade and see yourself closing shop. The good news here is that majority of the IT upgrade are software based. It could be by simply upgrading the drivers (software responsible for normal operation of hardwares).

Oops! What a rigorous process you maybe saying to yourself. I want to assure you that this is not as difficult as it sounds. Just do it and see yourself smiling all the time because you did.

Mobile phone gun – an emerging security threat in Nigeria

You can imagine the shock I had when I saw the headline on AIT – “MOBILE PHONE GUN NOW IN CIRCULATION IN NIGERIA”. I immediately thought of how to spread the news to as many Nigerians as Possible. This swung me into action and I came up with this article to let you know that such danger now exist and give you tips on how to distinguish between normal phone and Gun-phone. Below are some of the features of the SATANIC mobile phone that you and other Security Agents in Nigeria have to look out for.


At first sight it looks like a regular cell phone — same size, same shape, same overall appearance. But beneath the digital face lies a .22-caliber pistol, a phone gun capable of firing four rounds in quick succession with a touch of the otherwise standard keypad. Only when you have one in your hand do you realize that they are heavier

The guns are loaded by twisting the phone in half. The .22-caliber rounds fit into the top of the phone under the screen. The lower half, under the keyboard, holds the firing pins. The bullets fire through the antenna by pressing the keypad from numbers FIVE TO EIGHT.

A sample picture here will make you get the picture clearly.

Deadly Weapon in disguise
Deadly Weapon in disguise

Taking a closer look will reveal to you that there is a sophisticated machine inside with holes that allows the bullet to pass through.


 Interpol sent out a warning to law enforcement agencies around the world. I am not too sure whether the Security Agents in Nigeria acted immediately on the warning signal sent out by Interpol. My advice to innocent Citizens of Nigeria is to be suspicious of every device that looks like a mobile phone in possession of any body that looks suspicious to them. Be ready to run as far as possible in case of emergencies.

For the Security Agents, get the device that can detect this deadly mobile phone. This detective equipment should not only be used at the borders but at strategic points (commercial areas especially the banking areas). It was reported that this gun was first discovered in NIGERIA in CALABAR the capital city of Cross-River state. It is yet to get to Lagos, Abuja, Ogun and other major cities as at the time of this writing.

The Security implication is that the already deplorable security situation in Nigeria will be worsened. This is owing to the fact that Nigerians just like every other people in world always embrace the negative use of technologies. That means; more killings, robbery, kidnapping and what have you. It also means more challenge ahead for the security outfits.


Financial identity theft is what all and sundry needs to be aware of. “Oh my God! How could this happen to me? All my life savings is gone in a twinkle of an eye, am dead…..” was the faint yelling I heard coming out of the office of the manager of a local here in Nigeria. It happened that a woman in Port-Harcourt the Capital City of Rivers State of Nigeria lost a whooping N96 Million to fraudsters that have stolen her online banking identity.  Through the help of non-repudiation, the bank was able to exempt themselves from the whole blame as the woman ignorantly gave out her online information to hackers (men in the middle).                                                                                                                                      It is not my portion; I reject it, back to sender, Holy Ghost fire. I guess are some of the phrases that are probably coming out of your mouth. Well, this Article is written in an attempt to help you identify some of the new tricks and advanced Trojans that hackers have employed and possible ways of countering them.

The first and nastiest of the financial Trojans is “SINOWAL TROJAN”. This is the most active in the financial/banking malwares out there. SINOWAL belongs to a category of Trojan that changes continuously and are updated to steal credentials from financial institutions and High Net-Worth individuals. A variant of this malware is capable of modifying data on the fly. For instance, if the user is making a transfer on a bank Web page, the malware can alter the data of the intended recipient of the transfer. This is possible by the underlying malicious code running between the Web page, i.e. he user will be seeing the right input the/she is making while the actual data of the recipient will be different. This smoothly brings us to the next member of the Trojan family to discuss.

“TROJAN.SILENTBANKER”. This was named by a security company Symantec. This variant of Trojan can capture online banking transactions considered to be well protected by “two-factor” or “multiple-factor” authentication controls, i.e, combination of different authentication methods (it can be Biometric plus password). During the banking or other financial transaction, Trojan.Silent will change the user’s bank account details over to the hacker’s account, all while mimicking what the user would expect to see from a real banking transaction.

“MAN IN THE MIDDLE” or “MAN IN THE BROWSERS”. This Trojan is responsible for illegally transferring money from its victims’ bank account, steal a copy of the bank Web page that displays its victim’s account balances that exists prior to the cash transfer. The victim will always be fooled as far as he/she  checks his/her account balance online. Imagine what will eventually happen when the victim finally hit the bank. Am sure we both agree it will be horrible.

“PHISHING, PHARMING, SPOOFING AND SPAM MESSAGE ” These are social engineering tools employed by hackers to fool their victims into initiating an action that eventually allows them (trojans) to infect/ infiltrate a computer. Though, there are other ways of infiltrating a computer, the above social engineering tools are non-technical way of fooling individuals to unwittingly supplying their confidential information- often leading them to a fake Website or web page. The simple countermeasure against this is to add official e-mail addresses of your financial institutions. Also, try not to click on any link in the body of message. Always copy the link and paste it on the browser. Hope that rule is simple enough to obey.

“PHONY PHONE CALL” is another weapon that these NEGATIVELY SMART GUYS employ. Before now, they use to call their victims, but now, they place their phone number on fake site with official banner of your bank, demanding that you should call for important information. When you eventually call, you will be told that the security of your personal information has been compromised. They will immediately quote one non-existing personal data asking you to confirm it. PLEASE DO NOT FALL PRAY AT THIS POINT. At this point, many people have no choice but to defenselessly give out their personal online banking details. OH! TOO BAD. Please do not be in a hurry. Go the physical office of your bank to confirm. On the advanced side, if you are tech-savvy, use WHOIS and other web tools to find out the true owner of the website claiming to be the official website of your bank. Though, some fraudsters engage the service of privacy Security Company.

One question to ask at this point is: IS THERE NO HOPE FOR THE VICTIMISED AND POTENTIAL VICTIMS? On first look at the prevalence rate of identity theft and other cyber crime, one will think that there is no amount of education capable of protecting online resource users from the activities of these scamsters. However, the best we can all do at this point is to install a STRONG ANTI-MALWARE/ ANTI-VIRUS product on your computer. HEY, D’ONT FORGET TO ALWAYS UPDATE IT. Very important. At the time of this writing, some Nigerian banks have taken the bold step of sending confirmation data to user’s mobile phone, along with a code that must be entered to validate the transaction. Though, this is not without its drawback- Telecom companies.

Oh, less I forget, for those that have already contacted VIRUS/MALWARE, here is a tip for you (though advanced)

  • Disable the system restore before getting rid of the Virus to ensure that the system doesn’t inadvertently back up a copy of the Trojan software.
  • Make sure all virus definition are updated on the antivirus software.
  • Delete the value from the registry
  • Remove and discharge the RAM module

To combat the negative effect of KEYLOGGER software, here is a tip for entering your password. Never enter your personal information serially- especially PASSWORD. What I mean is to enter them alternately. Trust me, this helps a lot in fighting key-loggers software. For instance, if your password is COMPUTER (hey, don’t even try to hack me with – just kidding), type TER, use the left directional arrow on your keyboard to move to the left and type PU, do same and type COM. That way, the key logger would log TERPUCOM. Though, this is in its simplest form. 

WOW! I have no doubt in me that for you to have come this far means that you enjoyed the invaluable tips provided in this article. The only price you have to pay for this is; TAKE ACTION. Find the necessary motivation to implement all you have learnt thus far and keep learning.