Having engaged with over 200 youth groups running businesses in Nairobi, I can confidently say that a majority of businesses in Nairobi and Kenya as a whole fail due to avoidable issues that can be addressed before the business starts.
In Kenya, a business collapses in the first 5 years since instigation. Well, by observing the following I hope to guide upcoming entrepreneurs in adequately preparing and if your business has survived this period, check on the below issues.
1. Financial literacy: Think about it, we go to school before looking for a job, we go to driving school before purchasing a car, then why start a business if you’re not well equipped?
Financial literacy is at the core of all matters touching on our day to day lives. This been said, we all have to accept and make a PERSONAL Decision to educate ourselves on various aspects of finance. It’s advisable for any serious business to consider educating itself (and its employees) on these maters as they will guide the business’s growth.
Setting up a sound business plan, financial management systems, stock control, risk management, record keeping and compliance, a business stands a better chance to improve its profits if not just safe guard its assets.
Guiding Tip: Through your financial services provider or expert in the business segment you are exploring, identify free seminar/training being offered and other key financial experts. This will give you an opportunity to learn from an unbiased expert and get a general feel of how to do business and what is required.
2. Compliance with the regulation and laws: The lack of understanding of the law and regulations required to start a business or keep it running usually tend to bring down a majority of startups as they end up paying stiff penalties which eat into the business by bringing about unexpected costs in capital and time.
Through a Chai Sacco campaign- Vijana tu-Invest- targeting the youth, more than 80% of the business (groups) participating missed out on Government tenders opportunities because they didn’t understand how the Access to Government Procurement Opportunities (AGPO) works.
Vijana Tu-Invest is an initiative of Chai Sacco and The Nairobi City County Government that seeks to empower Nairobi youth groups with the much needed management and financial skill to ensure that projects/business set up by this groups grow and succeed.
To get the relevant information, I would advice that one inquires from information resource center such as the huduma center (before/when registering the business) or get a Mentor.
Guiding Tip: Before venturing into a business, identify a reliable source (mentor, information center) to guide you on the requirement needed to operate. This will save you a lot of capital, time and reputation management.
3. Mentor: The role played by a mentor in growing businesses is unmistakable. A good mentor will make your dreams achievable more quickly. The best mentors are those who have done what you are trying to accomplish before, successfully, and who are helping you for friendship or self-fulfillment reasons. By working with such an individual, you get to anticipate any problems, save on resources and stay ahead of the competition. For instance, Bill Gates has many a times highlighted Warren Buffets contribution to the growth of Microsoft and his CAREER.
Guiding Tip: A mentor is there to offer Consul not make decisions for your business, so learn the difference between asking for consul and advice and always remember to appreciate the guiding force that is the mentor. They have the potential of taking your business to the next level if well utilized.
4. Being overly ambitious: Being ambitious is a good thing and from an entrepreneur’s point of view, it’s essential but by being overly ambitious, one can easily lose track and drive the business down. Overly ambitious in our context means, don’t expect to blow up like Steve Jobs with Apple or to be Mark Zuckerberg because they got where they are by being them. Be yourself and set your own attainable stands, this way, when you show reliability and consistency in growth, your customers and employees will buy into the business. Through believing in your ideas, unique leadership and a clear realistic plan, you will get there.
Guiding Tip: Always set tangible goals that you can easily attain yet will challenge you. By setting small bite-size goals, you mitigate the risk of killing the employee’s moral and creates an opportunity for the business to have a gradual consistent growth. For example, Safaricom got to where they are today through slow and steady goal setting.
5. Proper research: A majority of Kenyan businesses are not well thought through or are guided by misinformed research not supported by facts. This leads to failure or unforeseen outcomes which is very risky.
For instance, at the moment, everyone is opening an education center/institution solely with the misconception that they make money. But what guides this move? Is it the fact that all institutions are building big structures? Or because more people are going to school? Before delving into any business one needs to understand what the market is not offering and seek to fill this void. In so doing, the business stands a better chance of survival when the competition rises. This also helps guide their decision making and planning.
Guiding Tip: Once you know your areas of focus, conduct an extensive research on the industry and the business in particular. Through this you can clearly see your goal, step required to achieve it and what it will take. E.g. Remember Safaricom’s 1st public offering, everyone bought in without analyze the possible outcome. Research guided some businessmen and investors to wait until the share cost went down to Ksh2.50 cents and bought in.
By Observing the above tips, businesses across Kenya stand a better chance to grow and this will lead to healthy competition, improvement in quality, better customer services and eventually grow the economy.
In parting, I would like to echo my opening query; does one buy a car before they can drive, then why invest your saving in a business before counter-checking on the above?