Most of us can attest to knowing at least one or two entrepreneurs who are always shifting from one business venture to another. Closer observation would reveal that such a person rarely establishes any business venture and keeps it running. Research has consistently shown that small and micro enterprises in Kenya have a short life span with estimates indicating that a significant number shut down within the first three years. This trend calls for an examination of what threatens these enterprises given that entrepreneurship holds the key to job creation and wealth creation.
Here are the top five factors that make or break a business:
Unique selling proposition
The poet Ralph Waldo Emerson once said “Envy is ignorance, imitation is suicide. “
Do you remember the quail business? Some years back, some savvy businessmen and women decided to keep quails instead of chicken. Initially, quail eggs were sold at exorbitant prices as they were touted to be medicinal. In a country that struggles with access to proper health care, this was received with gratitude as many began to include quail eggs in their diet. Gradually, other entrepreneurs joined the bandwagon. This marked the sudden demise of the quail enterprise. This incident points to a trend that continues to plague enterprises in Kenya. Most entrepreneurs lack unique selling propositions for their businesses. As a result of this, most enterprises are borne out of a desire to replicate the success of the neighbouring enterprises. The “copycat” mentality results in unforeseen financial costs, financial losses, eventually resulting in the death of businesses. An entrepreneur who sells customized dog leashes might not have a lot of competition hence finding a unique selling point for such a business would not be difficult. On the other hand, an entrepreneur who sells beauty products would struggle to find their unique selling proposition because there are hundreds of similar ventures.
How do you find your unique selling point as an entrepreneur?
It is indeed about the money but there is more to it than the money. Profitability for any business can only be realized against a backdrop of sound financial practices. Entrepreneurs may have a good understanding of what it takes to realize a profit after selling their goods or services, but this does not cushion them from the effects of poor financial planning. It is quite common for entrepreneurs to lack the mechanisms that enable them to separate finances that are meant for the operation of the business and finances that are meant for the business owner. As a result of this, the business can only live for a short while because it is not being “nurtured.” Poor financial planning is often accompanied by poor record-keeping. This may result in overstocking or understocking because the business owner does not keep track of their stock level. Entrepreneurs in the service sector are not immune to the problems associated with poor financial management. It is quite common to find entrepreneurs who underprice their service which leaves a dent in their business in the long run. Financial mismanagement eventually leads to poor debt management because the entrepreneur will keep borrowing money to sustain the business, but their financial skills will keep from making any meaningful gains.
How do you take control of your finances as a business owner? Taking a financial management course that is specifically tailored for small and microenterprises owners is the first step. Knowledge, as it is often said, is power.
Prior proper planning prevents poor performance. It is easy to assume that your business venture will work because your idea is unique. It takes a lot more than a unique idea to thrive. Planning begins with drafting a business plan that will provide the entrepreneur with a road map towards the realization of their dream. A business plan puts your ideas into words and assigns a cost to each aspect of your plan. This disciplines your thinking and enables you to determine whether you are prepared to follow through with your idea. However, planning does not stop with a business plan. A successful entrepreneur must always be on their toes. Product development and growth take research, brainstorming, and continuous improvement.
Human resources management
The founder’s customer service skills or technical skills cannot automatically be transferred to his or her workforce. For this reason, entrepreneurs need to be strategic about whom they are hiring, the skills required for the vacant positions, and the training that is required. Staff retention is essential for business continuity and customer retention. Entrepreneurs need to plan and anticipate their talent needs. In the initial stages, an entrepreneur may opt to outsource or hire contract workers. As remote working becomes more popular, an entrepreneur can have some of the roles filled by remote workers. The following questions can provide a basic quite when drafting your hiring strategy:
- What are the talent needs of the business?
- What is the budget for hiring?
- What is the skill level required for each role?
- What are the procedures in place for onboarding new employees?
- How will the company ensure its employees grasp and maintain its culture?
Mentorship and networking
Even with a sound business plan, good financial management systems, and a unique selling proposition, entrepreneurship is daunting. It comes with a steep learning curve even for the most seasoned entrepreneurs. Associating with like-minded individuals allows the entrepreneur to bounce off his ideas on peers who have gone ahead. This makes it possible to shorten the learning curve and makes one’s venture more productive and efficient. It is an unspoken truth that experience from a mentor beats expertise gained from countless hours of research. Facebook’s Mark Zuckerberg was mentored by the late Steve Jobs. A successful mentor will introduce his protégé to new networks that can open a ton of opportunities for the new venture. A successful mentor will help the new business owner acquire resilience and patience that is required to grow and sustain a successful venture.
For business owners seeking opportunities for mentorship, forums such as the InukaSME can provide a starting point.
By Corazon Achieng