You are who you surround yourself with’’. This adage does not only apply in our daily lives but businesses have increasingly realised the need to keep close sources that can provide sound advice — a critical resource in decision making.
The biggest pitfall entrepreneurs make when launching a startup is not knowing the difference between assumption and fact. With small businesses not able to fund market research, advice and market observations now fuel the heartbeat of most thriving small businesses across Kenya.
In Kenya and rest of Africa, young people are increasingly showing their entrepreneurial spirits. In fact, various colleges emphasise on business oriented courses.
It is also no longer uncommon to find people in regular employment who run businesses on the side. These initiatives aim to curb the high rates of unemployment, especially among the youth.
Though the spirit of these small businesses has spread, you would be wrong to think that this is addressing the issue of unemployment.
These emerging opportunities in businesses have done little to curb unemployment. This is because most of these businesses sadly die off at their infancy.
According to Forbes, 80 per cent of entrepreneurs starting a business fail within the first 18 months. The Wasp Barcode puts the rate of failure at three out 10 new companies failing to survive more than 24 months.
Looking at the local trend, the Kenyan entrepreneurs have not been spared of this collapse of small businesses. A lot of times, the businesses fizzle out leaving behind a trail of debt.
While business acumen provides that every entrepreneur must first invest in research before they can even invest in their businesses, this is often disregarded. In other cases it is misunderstood to mean that businesses must engage in expensive research to prepare adequately for take-off.
The reality is that small businesses fail because they begin operating on assumptions only to find a rough road ahead. Most small businesses are started on limited capital, which is not flexible enough to accommodate research costs.
However, entrepreneurs focused on achieving their dream of financial independence must seek alternative routes where the will acquire valuable information on important business components such as market dynamics, workforce needs, analysis of competitors and even sales and expense forecasts.
As a survival skill, entrepreneurs should start reaching out to people who are more experienced as soon as they start having thoughts of starting a business.
It is advisable that they reach out to these networks and even analyze who they are connected to and ask to be introduced. An example is drawn from a discussion on the trends in the technology industry, analysing why Kenyan start-ups were not taking off as powerfully as their counterparts in South Africa.
While other factors may have been at play here, it emerged that the South African start-ups were founded by entrepreneurs who had prior work experience mostly in the industries that they were venturing into.
This way, they were able to leave employment with not only a good deal of knowledge but also a healthy bunch of advisers from those industries.
Kenyan businesses on the other hand were mainly being founded by young, passionate driven, fresh from college youths who often lacked firm networks and with very limited information on their industries.
Another life skill for alternative research is for an entrepreneur to surround themselves with peers who share their passion and interest.
These do not have to be peers within the same industry, even founders in different industries are often dealing with the same difficulties, issues and challenges when it comes to reaching their growth goals.
These connections do not have to be made in face-to-face meetings. The Internet is a potential wellspring for making connections.
Most entrepreneurs assume that their passion and hard work are sufficient to drive the success of their businesses. While these can definitely contribute to the success, they cannot replace the importance of research which does not have to be expensive.
Actually, when seeking information from experienced leaders in the market, benefits can extend to introductions to potential investors and markets. In some cases, advisers end up investing in the business — a double win for a start-up business.
While cash flow is important to small businesses, to curb the deaths of young businesses, entrepreneurs must surround themselves with the right people. This secures growth and a swift move towards long term sustainability.