Personal Finance

Why your successful business may be failing

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Summary

  • Kenya is an extremely competitive market and that goes on to show why we are the commercial hub of East Africa.
  • How your business adapts to the current market dynamics is extremely vital to your survival.

Kenya is an extremely competitive market and that goes on to show why we are the commercial hub of East Africa. How your business adapts to the current market dynamics is extremely vital to your survival. Below are few tips to help you navigate the rough seas and keep you afloat.

SATURATED MARKETS:

Intense competition means lower margins and some marketplaces have too many players in the game. When the supply exceeds demand, the price is always pushed downwards and in many instances the credit given to customers is extended. In these scenarios you need to be lean and mean by watching every expense you encounter. Saturated markets can be dangerous sometimes as people sell at a loss to recoup their investments then try their hand back again.

NOT MANAGING CREDIT:

You can’t run a business today without giving credit. One week, two weeks or one month payment terms are now the norm in Kenya. If you don’t extend credit your competitor will, so you have to take some risks to do business. However, managing that credit is extremely critical. Do your KYC (know your customer) before extending a credit line. Start with small quantities and have a ceiling on outstanding invoices as you gradually judge him.

Some ways you can check a customer’s credit is via the CRB (credit reference bureau) or calling suppliers who are supplying him with a different product.

POOR SERVICE:

Recently I wanted to buy my dad a Fitbit watch so he could track his steps. It took me two days of calling the supplier and reminding him to send me photos of the models available and the prices to my WhatsApp. After the fourth reminder, he finally did so. This simply implied his lack of service and poor attention to detail. I bought the watch from him but vowed never to return. Learn to be more prompt and attentive to avoid losing your repeat or potential customers.

GOING DIGITAL:

Several times the specific item you are looking for is available in Kenya but the supplier’s online exposure is poor. Creating social media pages is just the first step. You need to constantly update your audience and spend money on adverts to attract more people. Also, a poor online presence means a poor ‘SEO’. SEO means ‘Search engine optimisation’ and is how companies can get their websites to display on the first or second page on a Google search.

EMPLOYEES:

They either make you or break you. Giving them an appropriate salary is just one component in the engine. As a leader you must motivate and nurture them to do and become more than what they are. Several companies invest in their key employees by sending them for courses, seminars/webinars and trainings. Moreover, employees should be treated as an asset not a liability.


AUTOMATION:

Humans will always be prone to error. Keeping manual accounts instead of a simple accounting program like QuickBooks or Tally will remarkably reduce mathematical and accounting errors. Automating can literally apply in every department and help your employees improve efficiency at their job. Recently, we invested in a conveyor belt that assists Casuals with loading.

TAXES:

There is a fine line between tax avoidance and tax evasion. Tax avoidance is finding legitimate ways to pay less tax. An example is the exemption of duties if you are importing manufacturing machinery into the country.

The government in their Big Four agenda is pushing the development of the manufacturing sector and hence an advantage to investors and entrepreneurs.