Start-ups need the right tools to thrive in today’s economy
By Paul Kimani | August 4th 2021
As businesses around the country try to recover from the effects of coronavirus, thousands of small and medium-sized enterprises (SMEs) are still finding it difficult to get back on their feet.
While many SMEs are struggling to survive due to tough economic times caused by Covid-19, several others have completely shut down, rendering hundreds of thousands of employees jobless.
According to a recent World Bank study on socioeconomic impacts of Covid-19 on Kenyan firms, only 50 per cent of small firms (5-19 employees) and medium-sized businesses (20-99 employees) are still operational.
The same study showed that eight in 10 (80 per cent) of large firms (100 plus employees) are still in business. The study attributed this to large firms’ ability to cover running costs for longer periods. This is a luxury smaller firms can’t afford.
When the pandemic struck most SMEs let employees go while others closed down since they were not sure what was going to happen next.
But as far as start-ups failure is concerned, coronavirus is just one of the unexpected external contributors. Even before Covid-19, SMEs have had a general history of failure. Studies show that about 90 per cent of start-ups fail, with 10 per cent of them failing within the first year. About 70 per cent of start-ups failure occurs between the second and fifth years.
Luckily, it is not all gloom and doom. With sound management and the right tools, start-ups can thrive to unimaginable levels. The greatest need is in key areas of people management, accounts and finance, and customer relations.
Most small business owners just want a “plug-and-play” software they can use to run their outfits efficiently in a challenging business environment.
For example, many small business owners worry about how they can easily follow up on their customer pipeline, how to make sure collections don’t fall through the cracks, and how they can get customers to pay on time.
Others who perhaps started with two employees and now have 15, for instance, are grappling with how to ensure the people are well-managed, well-motivated, paid on time and the company remains compliant as far as statutory obligations are concerned.
If you don’t have clear processes and tools to help you manage the business, you will find yourself overwhelmed and sometimes focusing on non-core issues at the expense of growing the business. Usually, businesses with the right people-management tools and embrace transparency in their processes tend to grow faster.
The good news is that technology has made tools to help a business grow readily available at affordable prices.
Businesses should take advantage of such tools to ensure their own survival.
Lastly, it is important to remember that SMEs are the biggest contributor to the country’s GDP and employment. A thriving SMEs sector will in turn lead to growth in the overall economy. SMEs thus need to be supported in every way possible.
Mr Kimani is the CEO and founder of Workpay Africa, an SMEs software development company
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