Five business pitfalls every start-up can avoid
Having engaged with more than 200 youth groups running businesses in the country, I can confidently say that a majority of start-ups fail due to avoidable issues, which can be addressed before the business starts.
In Kenya, a huge percentage of businesses collapse in their first five years, but by observing the following tips, entrepreneurs can navigate potential land mines.
1. Financial literacy: We go to school before looking for a job, we go to driving school before purchasing a car, so why do we start businesses without being well equipped?
Financial literacy is at the core of all matters touching on our lives, and we need to make the decision to educate ourselves on various aspects of it.
Any serious business should not compromise on financial literacy, as it will guide growth through a sound business plan, financial management, stock control, risk management, record keeping and compliance.
Guiding tip: Through your financial services provider or an expert in the business segment you want to get into, identify free training opportunities to get a general feel of financial literacy.
2. Compliance with regulations and laws: The lack of understanding of the law and the regulations required to start a business or keep it running have brought down many start-ups as they accrue stiff penalties that eat into capital.
For instance, many youth business groups miss out on Government tenders because they do not understand how Access to Government Procurement Opportunities (AGPO) works. To get the relevant information, seek out information resource centres, such as a Huduma Centre, or get a mentor.
Guiding tip: Before venturing into a business, identify a reliable source (mentor, information centre) to guide you on the requirements needed to operate it.
3. Mentorship: The role played by a mentor in growing a business is critical. A good mentor will help you achieve your dreams faster. The best ones are those who have done what you are trying to accomplish, and are helping you for friendship or self-fulfillment reasons.
Guiding tip: A mentor is there to offer counsel, not to make decisions for your business.
4. Manage your ambition: Being ambitious is a good thing, and from an entrepreneur’s point of view, it is essential, but being overly ambitious can get you off-track easily.
Over-ambition in this context means expecting to be the next Steve Jobs or Mark Zuckerberg overnight. Don’t be a copy of someone else. Be yourself; this what your customers and colleagues will relate to. Through believing in your ideas, unique leadership and a clear plan, you will chart your own success.
Guiding tip: Always set tangible goals that you can attain, but will challenge you. By setting bite-sized goals, you mitigate the risk of killing employee moral and create the opportunity for your business to grow gradually and consistently.
5. Research: A majority of businesses are not well thought through, or are guided by misinformed research.
Before delving into business, understand what is lacking in the market and how you can fill the void. This way, your business stands a better chance of survival when competition rises.
Guiding tip: Once you know your areas of focus, conduct extensive research on the industry and the business in particular. This will help you clearly see your goals and the steps required to achieve them.
The writer is Chai Sacco’s chief operations officer.
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business start upFinancial literacyMentorship