5 common mistakes that kill start-ups – and how to avoid them

The idea of owning a business is one many — if not all — of us have given serious thought to. However, few manage to start and run successful business ventures.

According to the Kenya National Bureau of Statistics, 2.2 million micro and small enterprises closed in the five years to 2016. The reality is that more start-ups fail than succeed, particularly in the first year of business. A lot of the time, this can be chalked up to rookie mistakes. Here are some of the most common errors entrepreneurs make.

1. Going it alone

Most successful companies were started by more than one person. It may be a cliché, but it doesn’t make the saying any less true: No (wo)man is an island. You may have a great idea, but you should not handle all aspects of taking it to market if you’re hoping to find success. Find partners who know more than you do and make use of their strengths. The entrepreneurial journey can be difficult and lonely. Having like-minded and passionate co-founders helps overcome the lows or the times you feel like throwing in the towel.

Mikul Shah, the managing director of EatOut Kenya, a portal that connects customers to restaurants, is on record as saying that when starting an idea, stick to what you know and delegate what you do not know. If you are good in technical work, find someone else to handle management.

Danson Muchemi, the CEO of JamboPay, learned this the hard way: ‘’When I started two IT firms, I thought it would be easy. I was wrong. It was tough. I was the secretary, sales manager, accountant, engineer and CEO of the business all by myself.’’


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2. Choice of location and scope

The choice of location when venturing into a business is a make or break factor. Where you set up your company determines several key factors, including target market, attitude to your brand and availability of resources like skilled labour. Also, consider what you think is the location of your customers.

This is what Julian Kyula, the CEO of Mobile Decisioning Ltd (Mode), which provides mobile-based financial services, had to say about the geographical scope you set out with: “Whenever you have a business idea and you limit it to a certain region, always ask yourself, whatever it is that I am doing, what makes me think that someone from Mexico or Bulgaria would not appreciate it?”

3. Improper book keeping

When venturing into business, especially for the first time, many entrepreneurs overlook the importance of book-keeping in the initial months because the figures are ‘manageable’.

But this attitude can hurt you in the long run by hiding the financial details you need to know to see how to improve your business right off the bat.

Listen to Njeri Rionge, a co-founder of Wananchi Online: “Consider new ways of thinking and working. As an entrepreneur doing business in Africa, or as the CEO of a company, if you anticipate needing financing for your business at some point, then transparency of your records should be considered from the outset. Things are busy in a small company and many make the mistake of thinking they will get round to things or that they can’t afford to invest in IT systems, for example, but this will create issues later.”


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4. Lack of a marketing strategy

Tom Osborn is the founder of GreenChar, a clean energy Kenyan start-up that produces charcoal briquettes. His advice to young entrepreneurs like himself is to develop both their business and personal brand, and position themselves to get noticed.

“I think in Africa there are a lot of young entrepreneurs who have great ideas but never get noticed or go past the small-scale level. I think one reason is that they poorly position themselves and the organisation. They don’t know how to tell their story. They don’t know how to create their brand,” says Tom.

Chris Kirubi, an investor and entrepreneur, puts it this way: “If you understand an idea, you can express it so others can understand it. However, if you can’t explain it, you don’t really understand it.”

5. Inability to pivot

Pivoting means being able to re-invent your business to remain relevant and adapt to the times. For instance, what we today know as Twitter was once a podcasting platform called Odeo. When Apple launched its own podcasting platform, Odeo was forced to reinvent itself. Joanne Mwangi, the CEO of marketing firm PMS Group, once put it this way: “Money does not come coloured … I can have money that comes from construction (and) I can also have money that comes from garbage collection. It can all fit in my wallet. Don’t block yourself …. If this business is not working, what else can you do? Throw your hand at various things.”


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