Over the recent years, Uganda has been consistently ranked as one of the most enterprising countries in the world by various surveys. Being a young population, where more than 60 percent are below the age of 30, the collective creative consciousness doesn’t come as a surprise.
Owing to high rates of unemployment in the country, many young people opt to set up shop in various fields, with dreams to make it big.
However, it’s been reported often that up to 90 percent of businesses don’t make it to their first anniversary, and about a reasonable number of the remaining 10 percent too, don’t make it to three years in business.
Now, there are 5 key factors that make these businesses fall too soon, here on the list:
1. Paying others first
One of the most important money management lessons in George Classon’s classic ‘The richest man in Babylon’ is, “Pay yourself first”.
Although, “paying yourself first”, may mean putting aside savings before any expenses in personal income, the same statement translates to saving aside money for reinvestment in the business.
The concept is as important as blood circulation is to human life most especially during the early stages, that is zero to three years.
A good entrepreneur will re-invest in their business before paying off the bills, and the business will close in on to a break-even point faster.
2. Lack of passion and focus
Most young people start businesses without considering the passion they have for what they are delving into. One prominent entrepreneur once said that “you’ll never work a day if you love your job” and I can’t agree more. Richard Branson of Virgin Group wrote in his classic about management and leadership, The Virgin Way, that: ” Don’t enjoy it, don’t do it”. If you have no passion for a thing, don’t bother doing it, because it is tantamount to wasting your time for nothing.
It is clear that most people go into business for the money, failing to understand that the money follows what is born out of their passion entwined with an effort to problem-solving, vis a vis what other people’s needs are.
Crude focus on the money is a huge distraction. It diverts one’s focus from following their business plan rightly. Out of the excitement that comes with money-related thoughts, most startupers will delve into new things that they don’t really need to be in. And in the end, they end up forgetting the fundamental truth that; you can’t do everything because a jack of all trades is master of none.
If you spend more time on distractions, you will fail. Focus on the things you do well.
3. Poor record keeping and accounting
Any serious entrepreneur should be crazy in love with numbers and able to check and balance their cash flow on a frequent basis. Failure to embrace one’s numbers as the basis for day-to-day decision-making is an outright recipe for disaster.
Recently, billionaire entrepreneur Strive Masiyiwa contended that every entrepreneur should learn how to do a simple balance sheet of their business, by themselves without help. “You cannot build scale if you don’t drive it from Financial management,” he said.
It is almost always certain that if you’re not growing, by how your numbers look, you’re failing.
4. Poor selling skills
To escape the bad omen of failure, one will have to master the art of selling. “If you can’t sell, you should not be in business”, says Vusi Thembekwayo, a venture capitalist and one of Africa’s most accomplished business speakers.
To have your selling right, you must have your sales strategy right. Special consideration of the instrumental 4P’s must be in place and clearly engraved in the business plan. If you don’t tell a compelling story whilst keeping it real about producing quality products, you’ll only make accidental sales.
So, build strong relationships first and show your potential customers that you care about their wellbeing other than the money. Then, honestly, show them the need for change from other products to yours.
5. Failure to persevere
It is worth noting that starting a business is one of the hardest ventures one can ever undertake. However the more complicated the battle, the more glorious the victory.
Elon Musk, the richest man on earth, invested his proceeds from the sale of PayPal into Tesla which didn’t make a profit for many years. He had invested another big chunk of the money in SpaceX which had about 3 rockets bursting into flames a few meters from their launch pads. During that period of trials, Musk worked a record 100 hours a week, sometimes taking a nap on the workshop floor. All his companies were once almost bankrupt, but he persevered, and then great things began to happen.
Due to the intensive work needed to put a startup together, most people will burn out while at it, and the end result will be giving in. Being resilient a little more is what makes the difference.