Top Seven Reasons Why Small Businesses Fail in Kenya

There are more than 7.41 million Small Businesses operating in Kenya. Sadly, up to 60% of newly established SMEs in Kenya fail during the first five years of business, with 20% of new small businesses collapsing within the first year.

To help give your start-up business the best chance of survival, we asked banking experts for their opinions on the top reasons why small businesses fail and how to prevent being one of them.

Read on; Top 5 Tools For Small Business

Lack of a Business Plan

A strong business plan can assist you in obtaining the funding you require to launch or expand. According to experts, failing to have a strategy leaves your company open to mismanagement, one of the most frequent causes of small business failure. A company strategy will keep you focused and on the course, even on a rough day. A business plan is crucial to starting a new company and attaining your objectives.

Lack of Research

A lack of consumer demand for a company’s product or service is one of the most typical causes of new enterprises’ failure. Thus, research is one of the most crucial things to perform while starting a business. This research should address your competitors, your target market, and what will tempt them to work with you, as well as present and future trends in your industry.

Lack of Funding

For small company entrepreneurs, frequent pitfalls include running out of money or failing to comprehend the costs associated with starting and maintaining a firm. Understanding the fixed and variable expenses should be taken into account when writing your business plan because not all small company owners have the funding to meet the expenditures involved with establishing a new venture. Remember that “cash is king” at all times, and bargain in all areas of your business.

Failure to Recruit and Retain a Competent Work Force

The recruiting, management, and retention of workers are one of the main issues small company owners confront. Long-term success depends on your ability to build a diverse staff with complementary skill sets and values consistent with your company. It’s crucial to draw in the proper candidates and foster an environment at work that encourages retention.

Read on; How to Get the Best out of Gen Z Workforce

Poor Financial Management

In addition to lacking the startup capital you require, small company owners who are unable to control their cash flow or remain on top of all their financial obligations run the risk of failing miserably.

Small business owners need to prioritize cash management because if their cash flow is unbalanced, they will quickly find themselves in trouble. You should take every precaution to minimize that company risk.

Read on; Stabilizing Your Finances in the Advent of an Economic Downturn

Poor Marketing

A consistent flow of sales and clients is essential for a successful small business, and achieving that requires a marketing strategy. A solid marketing plan will strike the perfect balance when it comes to luring new clients, depending on the nature of your business and who your target demographic is. There are many inexpensive ways to advertise your small business, but you must keep track of the outcomes.

Failure to Adopt

Larger economic issues (such as interest rate fluctuations, government assistance, and aid) may influence small businesses. You may need to shift course as a result of a poor recruiting decision, a poor business decision, or the wrong product or service. Your small business may be impacted by changes in interest rates, funding from the government, and other factors.

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