Before you become an Entrepreneur – Read This
The rise of small business ownership in Africa is a trend world over. And the USA is a good example of what has been done and how to become smarter in your business choices.
There is a broad consensus that a vibrant SMEs (herein referred to as Small and medium-sized enterprises) sector in a growing or established nation is one of the principal driving force in the development of a market economy and vital for a healthy economy. It is therefore based on the understanding that Entrepreneurship undertakes new arrangement of goods and services in the current market to produce new products and services. This rearrangement brings along the process of innovation and creation with four dimensional elements –individual, organization, environmental factors and process, with support from the government, education, and constitution. It is on this backdrop that there is need to promote small business that will anchor the economy against the shocks for the market.
A survey of more than 2,700 small businesses conducted near the end of last year by small business financing company Guidant Financial based in Washington, USA, an online credit marketplace LendingClub Corporation a San Francisco peer-to-peer lending company, found that African American businesses grew by more than 400% in 2018. This is great news, but only until we get to look at what that growth means.
Due to their numbers, more women are entering the workplace as entrepreneurs in significant numbers. More business owners entering the current marketplace are younger than they were generations ago with little or no experience but with much enthusiasm than ever. This is because of the boom in entrepreneurship and the stagnation of the mainstream job opportunities.
With that come somewhat different business types and desirable outcomes. Yes, they want to make money, but the Gen Z group, in particular, puts an emphasis on doing social good as well.
More than 95% of these businesses are mostly sole proprietorship or partnerships which have no paid employees.
Like other SMEs owners, lack of capital and cash flow is among the biggest challenge facing African-American business owners. Lack of experience in running a business is one reason why the desperation levels soar while the SME owner tips to rock bottom. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. In my view, starting business is great, but no two businesses are the same in terms of output and profits. Many black people will engage in what we call small businesses without the view that to start small will really take you a long time to get to the top. Most small businesses like hairdressing and laundry do not require much skill sets which basically dip the profit margin for the SME owner. There can only be so much one can make in small businesses as opposed to management consultancies, manufacturing and utility based companies. The idea here is, before you jump into business; watch out that you wouldn’t just fall into the trap of small business owner. Plan big, execute slowly with ambitious dreams, but don’t settle for small businesses models.
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