If you’ve started a new business or are thinking about starting one, then thinking about failure is inevitable, so you tick all boxed and make a calculated risk.
According to a research conducted, about 75% of startup companies make it past the first year, less than half of these companies make it past the two-year mark. This is a significant improvement over the years but nevertheless it’s still a huge number.
A few reasons and why most businesses fail before they take off is starting it for the wrong reasons, the famous making a lot of money, or not answering to their boss anymore, whereas with time and determination this becomes a reality, it is the worst reason to ever get into entrepreneurship.
More objective questions you should ask yourself before you start would be – do you have a passion for what you’re getting into? What is your USP? Have you done your research if the product or service you are getting into will fulfill a need in the market? Are you willing to learn from your shortcomings and use this lessons to your advantage – Successful businesses build on the failures, are you willing to take charge when an intellectual result is required? – This is especially necessary when you’re under tight timelines.
Poor administration contributes a lot if your business is set to make pass the three-year mark and more, entrepreneurs habitually lack business and administration proficiency in areas that directly keep the business running e.g. accounting, production, hiring, purchasing etc, unless they seek this training before they launch, most of the time it’s a misfortune waiting to unfold, to take care of the problem as an entrepreneur train on managing a business, hire or outsource a skilled workforce. Not being hands on in a business you’ve started can also lead to its demise. Organize, plot and control all activities of its operation, including consistent market research and collection of customer feedback and information.
Your business location is key, a favorable location can help a struggling business to succeed and a bad location can be its downfall even if it’s properly managed. A few points to take when finding a location is where are your clientele, accessibility, competition, safety, and receptiveness of the area
Cash flow is a common blunder many unsuccessful companies overlook, new entrepreneurs underestimate they need for a new company and are hence forced to shutdown before they even have a chance to start, they also project idealistic returns, determine how much money your enterprise will need for starting up and being in business – project for over a year.
One of the most important fundamentals is to have a realistic business plan built on contemporary facts and information with clear outlines of the future, this is crucial even in trying to secure funding.
Marketing is also key and with the current Internet users standing at over 40 million it is paramount to be on social media, a cost cutting way to market as well as engaging your audience.
In most cases these instances can be eased if the entrepreneurs take a proactive tactic to manage business matters. The process of facing these issues is what being an entrepreneur is about, what sets the pace is the approach in dealing with them. Running a business is tough but if the fundamentals are correct, it will be the best thing you ever did.
Organizations in Kenya are contributing to guide entrepreneurs on how to scale up their businesses, Sinapis for example is an organization that empowers aspiring entrepreneurs in the developing world with innovative, scalable business ideas by providing them a rigorous Christ-centered business education, world class consulting and mentoring services and access to seed capital. On average, Sinapis entrepreneurs create 3-5 jobs per year in business. Over 78% of Sinapis entrepreneurs’ businesses survive longer than 3 years. So, for an entrepreneur whose business survives 3 years, they will create on average between 9-15 jobs. In Kenya the average job provides a Kenyan with $3,000 in annual income.