Why African Small Businesses Fail, How to Prevent Early SME Deaths
Most African business owners are not patient enough to put a plan in place before commencing. Planning in business can make the difference between a thriving, money-making company and a business on life support.
Time is also a factor in planning especially for new and existing business. It is important that business owners learn to manage their time wisely. Planning all things in advance and ensuring they are done on time is very important for business success. Businesspeople must also ensure that their schedules are achievable, that they give some time to perform their tasks, try to attain accuracy and then hold on to that routine. Additionally, they must give room for adjustments, utilise planners and calendars to meet schedules and plan for upcoming programmes to enable the business to have a proper plan and direction.
Access to finance
Access to funds is known to be one of the chief areas most businesses fail, especially at their beginnings. Small business owners must strive to start small with little money. Before starting a business, entrepreneurs must ensure that they have enough money to sustain that venture for at least up to two years, then slowly and patiently build right up.
Regrettably, most small business owners in Africa have no idea where to get the funds they need so badly to start with. A way out is for entrepreneurs to explore various ways of funding their businesses themselves or check out different organisations that offer capital services to small businesses. Other options are forming partnerships, seeking out investors and getting business grants and loans.
Wanting to do it alone
Although being present is sacrosanct to the growth of a business, some businesses starters in Africa believe that they can manage it all by themselves. Well, in business, this model hardly ever works. Trying to cope with everything alone is one of the most common mistakes new business owners make. Although this style is cost-effective, as soon as the business workloads begin in such instances, the quality and drive begin to depreciate. Employing two or three employees may be more beneficial for small businesses as soon as it kicks off so as not to lose out in the end.
Lack of business knowledge, skills set
This is one of the top mistakes made by entrepreneurs in Africa. It is very vital that every intending business owner have ample knowledge about the industry they are entering, their competitors, target market, existing market trends, advertising and marketing techniques and patterns as well as financial know-how.
In our world today, with the flurry of information out there, the quote; ‘the only thing constant in life is change’ is commonplace. As information keeps changing and new facts and data emerge, replacing old beliefs and trends, getting good information for effective solutions might pose a challenge, not just for new businesses, but to existing ones as well. A way out is to seek for genuineness of the data by cross-checking references and sticking to germane sources especially from veterans in that particular field.
Not possessing the right information needed to start up a new business is like groping in the dark hoping to find some light after delving in. Most business pundits will suggest that if you are not prepared, then take up opportunities to educate yourself. Do proper research, make enquiries, ask other business owners in the field, read relevant books and visit relevant websites.
Being open to new ideas, innovationsMany new startups today want to stick to rules of the old manuscript where the routine and practice no longer create avenues for new and improved methods and approaches. Entrepreneurs must imbibe innovative philosophies if they must break even and stay at the top, even some big businesses struggle with innovation. Also, when people get accustomed to the work patterns, resist change and don’t think outside the box, they are practically no new grounds that can be broken.
In today’s ever-changing global business environments, with improved access to knowledge (via the Internet), collective resources and crowdsourced capital every businessperson can effectively plan for small business success. Every business person today, must plan to maximise the use of technology as well as social media, be ready to listen to those using their products and services, manage cash flow properly, be ready to invest in employees, be trendy, be present amongst many other things.
Instant success expectations
Many new entrepreneurs expect instant profits. It is important for intending businesspersons to understand that you may not get instant profits at the start of your new venture. Experts advise business owners not to expect much profit for at least two years and to always prepare for the worst case scenarios.
Having little or no web presence
This isn’t just for big businesses. Putting your business online is for everyone in this present day, no matter how small your venture is. There are affordable and accessible options to get online presence for starters. For instance, with internet access and a token, West African small business owners can via Vconnect tools; get online presence and generate leads.
Also, the apt use of social media is also a virile online tool. A ready example is opening and optimising an Instagram page which can give a small business many opportunities to blossom even before it has physical presence.
Attracting and sustaining customers
Just as the marketing and advertising budgets are usually small, potential customers are usually wary of doing business with greenhorns. Many prefer going for companies that have years of experience and a large customer following mainly because they want to have quality services all the time. But one sure way to attract and retain them is to offer same quality service at a reduced cost. This will help to boost your service rating and make them recommend you to others.
Dealing on the prohibited
Some African business owners do not want to play by the rules. When a product or service is not backed by legislation, no matter how profitable, the business effort can meet its end anytime. Dealing on the illegal is a sure way business suicide. No individual or group of persons in such circumstance can fight a government repeatedly without failing in the end. The solution out is to avoid such enterprise entirely.
Written by Emma Ossy Isidahomen