Lack of training major cause of start-up failures

• According to the Economic Survey of 2006, three out of five businesses fail in the first few months of establishment. KCA Journal of Business Management indicates that lack of skill and poor access to credit are major contributors to business failures. The report indicates that 49.5 per cent of successful businessmen have undergone some specialised training.
• There is room for talent. But statistics indicate that training will make a huge difference in the success of a start-up. Training also enhances progress. Imagine driving in a forest you have never driven before and there is no road.
• Running a business without training is like that. It enables you to have a plan in place which will also incorporate the goals and growth aspects of the business. It equips one with tools to use in the day-to- day running of the business.

Kevin runs a technology business in Nairobi. He supplies computers and other communication equipment. He also maintains and provides inputs like cartridges.
He gets money, but he spends it in equal measure on his personal bills. Cash flow management is a problem while staff turnover is too high given his poor management of human resource. He has been doing this for the last 10 years with no significant change.

The story of Kevin exemplifies that of many Kenyan entrepreneurs who are working hard in their endeavours but get it wrong in management. Most small business owners are untrained and ill-equipped to manage their enterprises. They may be academically qualified, but lack skills.

This is shown in the number of businesses that fail after the boom. Entrepreneurs get excited at the sight of money. Those with little discipline start to spend it on their personal objectives, leaving their finances in shambles.

On the other hand the disciplined ones expand haphazardly driven by greed and impatience, causing a shortage in the cash flow and subsequent failure.
Does training make a difference in running a business?

According to the Economic Survey of 2006, three out of five businesses fail in the first few months of establishment. KCA Journal of Business Management indicates that lack of skill and poor access to credit are major contributors to business failures. The report indicates that 49.5 per cent of successful businessmen have undergone some specialised training.

There is room for talent. But statistics indicate that training will make a huge difference in the success of a start-up. Training also enhances progress. Imagine driving in a forest you have never driven before and there is no road.

Running a business without training is like that. It enables you to have a plan in place which will also incorporate the goals and growth aspects of the business. It equips one with tools to use in the day-to- day running of the business.

Mr Odhiambo is the Managing Consultant of Elim Consulting.

Email: wodhiambo@elim-consult.com