Surviving beyond five years is not a sure success for most entities

Last weekend at an entrepreneurial forum, we had a heated debate on what business failure is. The discussion was ignited by a Mr Wachira during sharing experiences session.

He said he has laboured in his business for the last 17 years yet has nothing to show off apart from educating children and paying essential bills.

Mr Wachira doubted whether his venture could be classified as successful and often wonders whether he would not have achieved the same working for somebody else with less stress. Some participants agreed with him, while others dissented.

Apparently, we have statistics on businesses that close shop with many experts emphasising that approximately three quarters of businesses fail within the first five years.

Although there is plenty of data to prove this assertion, little is done to highlight the plight of struggling businesses that survive, five, 10 or even 20 years such as Wachira’s.

The assumption most of the time is if a business has been around for several years, then it is successful. The fact is most business owners are hustlers living from hand to mouth.

They simply struggle to pay bills and stay afloat and the concept of peace of mind, happiness, financial security and independence that are the hallmarks of entrepreneurship remains a mirage.

Every person starts a business with certain expectations and goals, among them to achieve financial freedom and the joy of being in control of their income and lifestyles.

But unfortunately few take time to develop an elaborate map and strategy to reach their destination. Without a plan, a well defined road map and clear target many business owners get lost in the business world. They keep mark timing and revolving around without making any progress.

As a matter of fact, if you have been in business long enough, you are offering products that address a genuine need and you have customers but you feel like someone running on a treadmill – expending a lot of energy, fully active and sweating but not making any progress, something is wrong.

Although little research has been done on this subject, most small business owners actually don’t make enough money to classify them as successful. We have several that are stagnant and underproductive although their owners wake up every morning to attend to them.

There are several reasons for this sorry state of affairs among them undercapitalisation, which results in difficulties in enjoying economies of scale or latest technology; lack of seriousness on the part of the business owners; financial illiteracy and poor marketing.

It is not a surprise that most business owners do not actually know whether they make profit or not because they don’t keep business record. They often do so many things and mix business finances with their personal money in a manner that is hard to tell where money goes and comes from.

Some businesses are stagnant simply because they have been neglected by owners. It is common to find firms that are technically run by junior employees with owners occasionally popping in to correct money approval purchases.

Unless you invest in a big business, such as listed companies which have structures, able board of directors and independent management where you sit down and wait for dividends depending on the performance, there is no short cut to running own business.

As a business owner you have to take an active role in marketing, instituting systems and ensuring everything runs smoothly in order to make profit and grow rather than just survive. Contrary to what some people think, money and independence in entrepreneurship don’t come easily. Often you have to toil in the sun to eat in the shade.

Mr Kiunga is a business trainer and the author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’. [email protected]