Many young people are familiar with the challenges of seeking formal employment in Kenya. The process of filling applications and attending interviews with no guarantee of success can be very discouraging. This has led many people to try out their hand at entrepreneurship.
Becoming a business owner and having a part-time ‘side hustle’ has slowly become the Kenyan dream. Most Kenyans have become so focused on becoming entrepreneurs because of the facade around the whole concept. It is believed to not only be an easier option to venture into but also to be a more financially rewarding experience than formal employment, but this is not always the case.
Some of the questions one should ask are; What exactly does it mean to be an entrepreneur? What is the mentality around entrepreneurial thinking? And finally, is success what defines the entrepreneurship journey? Before we burst your bubble on entrepreneurship let us try and understand it a little further.
To some economists, an entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. They are also able to innovate a certain aspect in a particular field.
For many entrepreneurs, the journey to success is a brutal one. Entrepreneurship is about having the right attitude and the determination to see the business idea through. As much you need to have the right vision and passion to motivate yourself and others you need the determination to build a sustainable organization.
There really is no end point to the journey of entrepreneurship. The goal is to keep overcoming obstacles, growing sales, making money and creating a sustainable business organization that is able to sustain itself beyond your management and direct involvement.
Other than having creativity, passion, dedication and determination, some things that identify with the mindset of successful entrepreneurs and their style of logic include:
- Entrepreneurs are action oriented: They are more interested in going out into the market and proving their concept works as opposed to develop the best theoretical plan.
- Entrepreneurs are ready to embrace risk: They are ready to face tough situations and have a non-defeatist attitude.
- Entrepreneurs are opportunistic: They relentlessly follow opportunities without worrying about having all the necessary resources in place. Their thinking is not constrained by their current reality but they are able to identify various possibilities.
- Entrepreneurs can operate in ambiguity: They are able to work and prosper in uncertain conditions by developing their opportunities from the many possibilities.
Despite these mindsets, there is definitely no system for becoming a successful entrepreneur, not everything that works for one individual can be applicable across the board. However, the intensity that is needed in the earlier stages when you are trying to maximize on opportunities and establish your business can relax to a more casual approach once the business is on a growth phase. This will help you further to capitalize on the opportunities.
However this growing trend of entrepreneurship has its own unique set of challenges especially when it comes to funding business operations. Many entrepreneurs are finding it difficult to access funds for their businesses. Indeed, unavailability of capital is touted as one of the leading causes of business failure in Kenya.
There are a number of funding options available to businesses if you know where to look. A business owner must identify which source of funding is suitable for the different stages of their enterprise growth. Here are some ways of obtaining money for their businesses.
- Use Retained Profits
This refers to the money generated by a business as it trades profitably. These profits can enable you to undertake business ventures with little capital only that you maintain re-investing your profits. Below is an example of how retained profits works:
- January 2015:- You invest Ksh. 20,000 in farming
- April 2015:- You sell the farm produce for Ksh. 80,000 and reinvest Ksh. 70,000 back to your enterprise.
- September 2015:- You sell the second batch of produce for Ksh. 160,000 and reinvest Ksh. 140,000.
- Save money in a Chama
The Swahili word ‘Chama’ refers to a group, formed by friends who share the same financial interests. You can start saving by joining a reputable Chama in your location. The advantages of being in a Chama are:
- They are a great avenue to learn about financial matters due to the interaction with other members.
- They are qualified to access many types of loans including the Uwezo Fund and Youth Fund.
- Chamas enable you to save significantly
- Asset Based Financing
This is the perfect option for an enterprise that has been in operation for a short period of time, and has accumulated some assets that can be off-set for financing. Asset examples include; stock, and property. Asset finance tends to be faster and cheaper than conventional loans.
Examples of local banks that offer asset-based financing for small enterprises include:
- KCB Asset Finance
- Equity Bank
- NIC Bank
- Commercial Bank of Africa
- Seek Out Venture Capitalists
Venture Capitalists can invest in your business if you can pitch a good business plan to them. They may also require equity ownership in your business. Venture capitalists may be able to mentor you as you run your business in its formative stages.
Examples of Venture Capitalists that work with SMEs across the country are:
- Grofin
- The De Silva Group
Most new businesses usually do not start with loans from banks. Small businesses and start-ups find it easier to get money from groups or individuals than banks. This does not mean banks are not perfect for small enterprises; on the contrary banks are increasingly tailoring products for SMEs.
Being an entrepreneur gets harder over the years, this is when your determination and character will show. Successful businesses are like marathons, not sprints, except the fact that there is no finish line. You have to make it a lifestyle. Good luck!
Have you tried your hand at entrepreneurship and how did you manage your funding? Please comment below and let us know what you experienced.
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