By Julie Wanjiru,
You have probably come across the statistic that 90 percent of businesses fail in the first 5 years of existence (it is actually a little over 50 percent but that is beside the point). With odds like that only adrenaline junkies and crazy people would start their own businesses. However, if you look keenly at the numbers and speak to a few founders you will realize that for the most part, failure while a possibility is absolutely preventable. Most of the things that make a business fail are within an entrepreneur’s control.
Here are some common mistakes entrepreneurs in Kenya make.
You’ve seen this movie. A misunderstood visionary hits upon a world changing idea for a product and convinces a close friend to raise some cash and start working on it. The scene quickly cuts to a photo montage with a catchy pop song and you see a team typing, partying having pizza then…boom ready product angel investors and a billion-dollar lifestyle. What they don’t tell you is all the real work happens during the montage over months and years of boring work and failure.
Many Kenyan founders expect success to be near instant and give up the instant they get their fingers burnt.
Success is often a result of insights gained over a long period of experimentation.
- Focusing on the money
Money is important in any sustainable business. However, focusing on it makes founders in Kenya short-sighted. For instance, you could be selling a lot of car parts today but if your customers are constantly unhappy or your competitors are finding ways to undercut you, your success will not last long.
Use other measures to quantify your success. Are your customers referring your product? How many keep using your products? How fast are you gaining new clients and is growth slowing down? How are people rating your service and quality? What is the competition doing?
A new business is essentially an experiment in how best to solve a problem. You need to be willing to change according to the data click here and feedback you get from the market. There is no use efficiently building things nobody needs or wants to begin with.
- Know it all attitude
The product is usually a result of founder’s perception of what problem exists and the solution. The problem with this is that the product is created with the founder as the target market. No matter how technically advanced, revolutionary and beautiful your vision seems to you, if there isn’t a significant number of people willing to buy it, it is worthless.
You must realize that from the very beginning your perception of the problem and solution is an assumption and assumptions must be tested.
Do your research by talking to actual people you think might benefit from your idea. Sometimes customers do not know what they need. Create a minimum viable product introduce it to the market, measure the response and adjust accordingly.
Get a mentor. Inexperience is your biggest foe and getting advice from someone who has done it already will save you time and money.
“Investment and guidance are what entrepreneurs need to turn ideas into reality and they shouldn’t be afraid, “Collins Waswa, and mentor with Centum Foundation explains.
Having a vision and making it happen are two different things. You need to stay on top of your cash flows, hire the right people and maintain a healthy organization culture. Keep stakeholders such as employees and shareholders in the loop and involve them in decision making to limit conflict.
Have a business plan so you can measure your progress. Make sure you are using the right metrics and regularly re-evaluate your progress.
- Not starting
Most Entrepreneurs use lack of capital as an excuse for not starting. You need to put in time and effort in developing your idea before asking for funding. Build a prototype, do some research, talk to potential customers. When Apple began, they built their first computers using parts bought on credit. There are a number of startup incubators and programs such as Centum Foundation willing to provide access to capital and guidance to young businesses. There are many reasons not to start, but with an open mind and creativity you can work through most of them.
Reality is always more complicated than flashy statistics and anecdotes. Get in the field and try it for yourself.
This article was originally published in The Centum Foundation.