Planning to establish a startup? Read this first

Kenya: Are you working on a startup? If so, I hate to break it to you, but there is high chance it will fail — recent research shows that 75 per cent of startups fail within their first two years, and the odds are you will not be M-Farm, Ecotact or Supamamas.

But it is not all doom and gloom. Spending the last three years with student entrepreneurs undertaking our MBA programme in Global Business and Sustainability has provided a unique opportunity to understand the challenges startup entrepreneurs face.

Not everyone is an entrepreneur, and perhaps it is best that the world is wired that way.

Startups begin with different dreams but they all face similar challenges, making common mistakes from the onset — it takes more than just a dream to grow a successful business.

From what we have learned so far, common errors include promoting a product that is not that great or useful. Sometimes the social entrepreneur is trying to tackle too many problems at once, or the co-founders have no meeting of minds on the business model. Perhaps they did not think about the product-market fit.

But hard as it may be, do not be discouraged by the statistics.

Whatever your company’s ‘fatal flaw’ may be, you are likely to succeed in your own venture if you take advice from people who have gone through the early startup phase before.

From speaking with entrepreneurs, CEOs and investors during our ongoing open days, we have gathered tips to help people avoid some of the game-ending mistakes entrepreneurs make.

The latest open day’s learning curve was on competition. Before starting out, many entrepreneurs do not consider the competition — they wake up with a dream and start running with it.

However, the truth is that startups are often the small fish in a large, shark-filled tank. Before taking off, you must acquire knowledge about competition and develop a sound competitive advantage through building on your competitors’ business ideas and improving them.

You also need to avoid potential pitfalls, such as simply copying what others are doing or choosing an obscure location to avoid competition. In fact, competitors will devour your business if you have no competitive advantage or if your location does not draw customers.