Entrepreneurship, Business and Life!

Posts tagged ‘entrepreneurship’

A county governors guide to creating jobs through entrepreneurship

So we now have county governments in Kenya. Most governors  state that youth employment, entrepreneurship and women empowerment are their top priorities.However, it seems that many counties do not have good  ideas on what to do with the groups mentioned above. Some are still struggling to figure out what do to with the county itself, so they do not have  time to think about entrepreneurship. Many have not been entrepreneurs.

I am here to help . Here is what they should task their county ministers who either handle the ministries of  industry, economic planning, youth matters or  the docket that has been tasked to develop a strategy for entrepreneurship. Here are some tips towards developing a county entrepreneurship strategy.

1. Analyse the county

Start by analysing what  assets, economic activities or  high potential sectors exist  that could present an opportunity to develop entrepreneurs . It could be agriculture, light manufacturing, mining or even services like tourism, financial services , hospitality etc. It could also be support services to your main activities which are lacking. for example, construction will always require food services close by . It could be unique products or services that your county can focus on due to its  geography,mining potential or cultural make up. Be sure to analyse the county’s history to pick out what the unique DNA of the county is. You will be surprised how something that has been a big weakness amongst your people could be turned into a globally attractive phenomenon. Oh , and crunch the economic numbers as you analyse your county.

2. Analyse the gaps

Clearly identify the gaps that are present and what the economic potential of closing those gaps could be . Also analyse the gaps present in skills , education or infrastructure for the industries identified . Those gaps in themselves could be opportunities. I hope that someone in Turkana is setting up an oil institute with practical intern-ships.

3. Define your county strategy

Once you are clear on where you are and what you have, you can now project into the future a strategy of how do develop the areas where gaps exist. You can develop a set of programs that address fundamental issues that will build up towards other higher level needs in future. Also be sure to build in some quick wins that will inspire and energize the county towards your plan.

4. Categorize

Make sure you categorise the entrepreneurs. Everyone seems to think that entrepreneurs are a homogeneous group and therefore they come up with a blanket plan towards all of them. I don’t understand this craze that governments have of  funding groups. I am yet to see an example of a great company in the world that was started by a group of 15 people. The norm is that  1 or 2 visionary individuals go ahead to build a team that helps them build a company. Fund individuals , not groups.

5. Develop programs

You can develop programs in line with your strategy like Small Business Development Centers,markets creation programs , capacity building programs, affirmative action procurement programs,subsidies , equity or debt funding, international linkages, investor matching or attraction, venture capital or angel investor programs, the list of potential programs is endless . You could also target partnerships abroad with other counties or regions that could be consumers of your products or services , or those that share similar goals with that of your county and hence they can help you build your entrepreneurs capacity. This is the point at which those  “benchmarking trips” can be converted into value adding trips,where you actually go to sign agreements rather than do a “shopping study tour”.

6. Track results (or  in government language , monitoring and evaluation)

Ensure you have a clear mechanism for tracking the success of your programs . Kindly note that how much money you have lent or given out is not a good measure of success. But focus more on how many jobs you have created, how much growth and wealth has been created as well as the return on the investment that the county has made . You can also start a program in a small way, which allows you to learn and grow it in future , becoming more and more effective with every step you take.

At the county government level, once your strategy is in place, you can focus on removing or lowering barriers  for your entrepreneurs. This is where you can develop policies that can help them address issues like  security,internet connectivity,   infrastructure, energy costs ,capital requirements ,red tape in your county ,market research amongst others that are beyond their individual reach but once done ,will benefit everyone. The list of barriers entrepreneurs encounter in a place like Kenya is long.

You can also set aside funds to set up Research and development  centers and  academic linkages   in institutions of learning. I still cant understand how Kenya has one of the best agricultural universities yet we still practice sub-optimal agriculture. There is a gap between our research, academicians and the market.

A final word to Governors and their teams , dream on behalf of your constituents.Move away from tokenism and focus on value addition and higher level opportunities  . Dont just be comfortable creating micro enterprises, dream of getting companies from your county listed on the NSE or even better NYSE! Dream of them going regional and global! Dream of your people not just setting up kiosks but growing them to be supermarkets and malls. Dream of your farmers selling branded products directly to markets abroad. Dream of setting up industries that are world re-known. Our soapstone carvings should be expensive monuments abroad, our bead work should be a globally competitive industry, our tourism can be more differentiated. And then don’t just dream, but execute.

Advertisements

Why it takes so long in Kenya

Every time I am asked how long it takes for a great business to get established in Kenya when it has been started from scratch, I always give the ballpark figure of about 7 years. This shocks people, because a lot of foreign publications on entrepreneurship and business always talk about 2 years, 3 years at most 5 years. The reality of the market in Kenya is that it takes time. There are a lot of spaghetti problems which you will meet on your journey that nobody prepared you for, and they will have real impact on your business , sometimes even on your life (the life threatening kind). Here are some of them.

Cartels 

You start your business, and start making those marketing calls and visiting clients. Soon, they all start giving you the cold shoulder.You get a few small deals and suddenly you find you are struggling to get raw materials or resources that enable you to deliver quality goods and services. You dig deeper and realise there is a group of business people who have a hold on your industry and they dont like newcomers. They will do anything to kill your business from choking your supply chain to sending police or KRA to your door.

Government bureaucracy

It is perplexing just how complex and slow the government can be in responding to local entrepreneurs (while laying red carpets for foreign investors, using our hard earned tax money). Getting licenses, permits and many other things that are not really necessary to your core business can be an expensive and time consuming affair. Someone should set up a business to overcome this animal called Government.

KRA

Taxes in Kenya are like calculus. And worse, they change every year when our minister reads that long speech we all pretend to listen to and only the hotshot accountants can understand what he is actually saying. Before you can afford that accountant who understands all of them and can keep you out of trouble, you get stressed trying to beat deadlines while avoiding penalties. In the meantime, your morning prayer every day is “Dear Lord please keep the taxman away from our nondescript hidden office” .Woe unto you when they walk through the office front door. This actually makes wise entrepreneurs to avoid the media until their books are all cleaned up. In the meantime, “stealth operations” are the order of the day.

Skeptical Kenyan Consumer

Kenyans are very skeptical of new products and companies. Particularly big companies. It doesnt matter that they were your clients when you were at the agency. once you jump out, you have to build your own credibility and they will not be the guinea pigs for it. You are forced to prove yourself by doing pro bono or loss making work in order to come back and say that “so and so are my clients”.

Extortion Rings

Despite paying government taxes, there are areas that have additional tax collectors in form of gangs, which operate openly and even give you receipts for the hard earned money that you pay them. It leaves you questioning whether at some point, our police force deliberately outsourced protection services to some of these territory managers.

Goodwill

For some reason, there are those who believe that over and above the exorbitant rent you will be paying, you need to pay them a lot more money at the beginning for them to be gracious enough to allow you to operate from their strategically located premises. This significantly reduces the period in which you can break even. Imagine having to pay 2 million shillings extra to get a space in a commercial building . Thankfully , this is reducing since  we are slowly beginning have an oversupply of commercial spaces as the building boom rages on.

Peculiar markets

Kenyans tell you they like a product and would spend money on it, then they don’t buy it when you avail it. We have a culture of being polite and too afraid of speaking our minds. All people you will sell to, will always leave you at a space where you think they are buying. 6 months later you figure out they are not real buyers, just afraid of saying no to you and looking bad (or broke).

Dominant market players

Every market has 1 dominant player, few middle players and thousands of broke or unscrupulous players. Look at beverages Coke dominates, few in between, many other unknown brands try to entice you. Beer, EABL dominates, Keroche nips at their market, Kumikumis blind people all over. Advertising, Scangroup dominates, a few struggling local players, former marketing executives fight it out for the crumbs. Telecoms Safaricom Dominates……im sure you get the drift. My assessment is that other players simply try to emulate the market leader rather than carve out their own niche or unique products that sell themselves to frustrated markets.In the meantime, some dominant players can resort to legal means that guarantee you wont get business,like giving unfair incentives to your retailers or suppliers until you run out of your savings and dust your CV.

Ignorant business leaders

Many large business owners might have gotten there through political patronage, corruption or inheritance from their fathers chief gifted wealth in colonial times due to his loyalty to the system. They do not understand the value of a good product or service and getting them to spend is like pulling out their teeth without anaesthesia. Which leaves you, the value selling entrepreneur at a loss of what to do.

Broken legal system 

Someone screws you over, you take them to court.They win and you pay their legal costs and they never pay you your money. You lose faith in the legal system and dust your CV(again,last time you were encouraged to stay on). Months later you see them celebrated in the entrepreneur section as a model business person for the country to laud.

Greedy partners

They want you to do all the  hard work, they want to make all the money.All because you foolishly let them  put in Ksh 300,000 to be a 50% partner because you thought money would solve all your problems. You burn through it in 2 months and are back to scratch. Need I say more? Make sure you share the same Vision, and more importantly VALUES before you partner with anyone. More on this later.

Small and broke private sector

In other developed economies , the private sector is usually much larger than the Government and development sector combined. In Kenya and Africa in general , Government and NGOs form the largest spenders. And both are bureaucratic and rife grounds for corruption, enough to discourage any well meaning entrepreneur. Since every large company wont touch you with a 10 foot pole, you are left convincing your fellow broke entrepreneurs to be your clients and get into the vicious cycle of not paying each other.

By the time you navigate the above maze and survive break ins, skeptical family, debtors, homicidal employees….. time has passed. And a lot of it. Which is why when you see an honest succesful Kenyan business person, salute them and acknowledge that they are tougher and more resilient than a Kenya Army soldier (before they went into somalia that is). However I have found that the rewards to the resilient ones is usually quite large because you step into the promised land and find very few players to share the spoils with. So it pays off and next week ill talk about some of those businesses that I have come across.

The good news is, with the changes happening in the judiciary, government structure, macro economic environment (don’t worry i also can’t tell you exactly what that means but i believe the CITIZEN, NTV and KTN business news guys) its getting better and easier and eventually we will get to the place where it takes those 2 years you read about in western literature.

Celebrating the Entrepreneur

Entrepreneurs are special people. They step into the world, completely unprepared for the challenges that will come their way, with a deep belief that they will succeed and become rich or maybe even change the world. The strange thing is that they all entrepreneurs have this belief. After all, who will start something with the intention of failing?

The journey of entrepreneurship is something that you can never be adequately prepared for.Although  when you think about it, there is nothing in life you can be completely prepared for.School, marriage, career…death. Everything has a level of  risk. Entrepreneurship just seems to have more risks that all the others.Well , except death.

Many entrepreneurs will begin to realise quite early in their journey that things will not go as planned. Everyone of us begins with a lofty dream, believing we will be rich in a year or so. Something that rarely happens. Many writers who have chronicled the lives of entrepreneurs cunningly skip the hard part. They tell the story in a manner that makes you think that Facebook, Microsoft,Virgin  or closer to home Equity bank, Mabati Rolling Mills ,Bidco Oils  were all overnight successes. What they dont tell you about entrepreneurship is that unless you are willing to play very dirty, or have a filthy rich uncle willing to splash his money recklessly on your startup, its going to be a very long ,painful and tiring journey. If you succeed, the rewards are immense.If you fail, you become a much better person,something which only you might know about .Success or failure in entrepreneurship is all part of the learning process.

Every experienced businessman or woman knows that a company is a vehicle that creates value, which you can then sell for a profit. That sounds simple. But its not. Creating value takes time, and even more time is required  to convince others to see that value and pay their hard earned money for it.In fact, many who will encourage you to start a business will be very hesitant to become your client once you do. And unfortunately, you cannot create lasting value through corruption,bribery or doing illegal business. It may seem to last for a while but it will not survive any shocks to the economy. Ask Gadaffi and Mubaraks close business allies how its working out for them now. I will address this topic in detail later.

I am a keen advocate for doing business with integrity. I believe its the only way you will create innovations and value that will stand the test of time. Once you can create one great product or service, you can do the same over and over again. You become confident ,not in your products or services but your ability to create something from scratch and put value into it. That is why you will have immigrant entrepreneurs land in a new country and still manage to set up a business and grow it despite not having networks,capital or godfathers.

So my first post is dedicated to the uncelebrated entrepreneurs out there. The ones who spend sleepless nights trying to solve problems that they will be dealing with the next morning, the ones who have no one believing in them but still press on. The ones who are constantly faced with daunting situations but still hold on to their dreams. The ones who turn down lucrative deals because it goes against their values and principles. The ones who have been auctioned,threatened, had their possessions repossessed but still manage to succeed or at the least survive today and still rise to meet tomorrows challenge. The ones who keep dreaming while everyone is shouting at them to face reality. These are the ones who make this world a better place, because only they can already see the future that is possible and refuse to accept that todays reality is what will rule tomorrow. Keep at it, keep learning, keep growing, make less mistakes because this world needs you.

Lets walk this journey together, and I hope this blog will at least keep you inspired and learning enough to achieve that dream.Hoping that as I share what I have learnt as an entrepreneur, and as one who has assisted many entrepreneurs succeed, you too will write your own success story. You are the true unsung hero and if nobody every salutes you, then I do with all that I have got.