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How to prevent your business from failing in the coming election period

The rate of failure for Kenyan businesses is at an all-time high today. With in an increased cost of living, difficult business space and an impending elections coming up, there is need to review ways in which to set up strong businesses. Every year, Kenyan entrepreneurs launch thousands of new businesses, yet they are failing at very high rates. This is happening even in a country that is considered the financial, economic and logistics hub of the region.

Overall, 20 percent of small businesses generally fail within the first year. Although about 50 percent make it to the 5-year mark, and 62 percent survive to be a decade old the lethargy and mismanagement in a number of businesses has discouraged a number of potential owners to venture into the field. For coastal businesses, the statistics can be even grimmer. Eight out of 10 coastal businesses fail within the first 18 months.

These statistics have remained pretty much unchanged over time. And, contrary to popular misconception, the survival rate curve is pretty similar across industries. No single industry has a distinctly higher percentage of startups that fail. This is the case even for the restaurant industry. Mombasa is popular with the dine in’s, restaurants on the streets, hotels and a vibrant tourism market compared to any other county in the country. The number of MSMEs may be bigger in nairobi, but it sure exposes the weaknesses within the country.

MSMEs businesses lag substantially in sales, profits, employment, and survival. Mombasa entrepreneurs often find themselves with no alternative to pulling the plug. And for those that do actually survive, they’re not growing as quickly or as big as businesses owned by other counties or groups.

Why do  businesses fail?

Failure is not something you want to worry about when you start a business. If you want your business to have a chance at success, you need to be aware of and avoid the 8 common reasons why MSMEs businesses go out of business.

  1. Badly thought through business plans. You can put your blood, sweat, and tears into your enterprise, but without a complete, solid and realistic plan to start with, it’s all for naught.

What you see as a perfect business plan on paper may not fare so well in reality. A business plan should be based on current information and market research. It should include:

  • An outline of achievable goals for your business;
  • A clear illustration of the strategies and timelines that should be implemented and met;
  • A picture of an ideal team;
  • Detailed and up-to-date market analysis;
  • The state of the competition;
  • Financial projections;
  • Plans for managing the business’ growth and budget.

While most MSMEs have solid business plans, only a few stick with them. If you start changing your strategies or doubling your spending, you’re risking failure. 

Also Read:

  1. Why MSMEs are still winning in the Kenyan Economy
  2. Mombasa MSMEs on Fire as Kongowea Burns
  3. 8 Tips for a Successful Family Business
  1. Lackluster market research. Ensuring consumers want the goods you sell seems a no-brainer. Unfortunately, many MSMEs fail for the simple reason that no one wants to buy what they’re selling.

You can have enough capital, the most ingenious idea, and a great business plan to get everything off the ground, but if no one wants your product, it’s only a matter of time before your business crashes.

A product needs to fulfill an unmet need or solve a problem. It’s much easier to satisfy an existing need rather than create one and persuade consumers that they should spend money on it. It is with this respect that CrystalPerk has built the Kuza Biashara Account specifically for MSMEs. This account affords an entrepreneur the access to market data, market research with plans that gives the young business a chance to compete.

Knowing the customers’ income level, gender and age is vital for proper marketing strategies. Market research will help you ensure that the product does not miss the mark.

  1. Tough competition. Focusing on your own business instead of others’ is good advice. However, a great many MSMEs lose out to competitors because they did not pay attention to the competitive landscape of their business. How do you compete with the big market sharks without a competitive advantage? Many MSMEs are there for mostly pinching on pennies and would not have a marketing budget. The elections are here, and the fact that there is demand for certain goods/services does not suffice setting up a successful business. Kuza Biashara gets businesses to access their market during these competitive election season.

Even when you launch a new product in the market, it doesn’t take long before new companies start to pop up, vying for their place in the sun. Pay attention to the landscape.

  1. Bad team chemistry. Lacking the correct team composition is another reason behind the failure of many MSMEs . This is a blunder that will result in failure from the start. It is vital to create a team of dedicated individuals with complementary traits and characteristics. While it’s not easy to find the right talent for the job, resources like Facebook and LinkedIn have made it easier to do so. It is not unlikely that businesses will quickly pop up with so called experts in campaigns, fill up a bad team to meet the demand of electioneering…wrong. Fill in the right team to get the best results.
  1. Cash-flow issues. Even big companies with robust marketing strategies can fall prey to the lack of positive cash flow. Cash flow issues are a major culprit in the failure of MSMEs, and this season is one that will get many business owners fingers burned. Do not take credit, on whatever circumstance. Businesses with a positive cash flow have the required operating funds to settle debts, pay employees, reinvest in the business, etc. With your Kuza Biashara account, you can access best plans for your accounts, business forecasts and ensure you build on only products that have a viable market.

Cash flow difficulties occur when too much of a business’s revenues are tied up in accounts receivables. Stocking too much inventory is another way cash flow is disrupted.

  1. Failure to adapt. If you remain rigid, your business will be just another data point boosting the startup failure rate.

It’s worth knowing that the need you’re fulfilling now may not always be there. What will your business do after the elections?

Don’t be another Blockbuster, or Kodak, who only offered a product for a specific life duration. Elections come and go, you need to build a viable business. Pay attention to the market to know when you may need to modify your business plan. Staying on top of key trends will give you ample time to alter your business strategy so that you can remain successful. MSMEs are prone to fail to adapt due to lack of market knowledge. Don’t let yours be one of them.

  1. Unsustainable growth. When a business has an established customer base and a good cash flow, expansion makes sense. 

A common mistake most MSMEs make is taking on more business than they can handle. Businesses should treat expansions as though they are starting all over again. When businesses expand too fast and don’t take the same care with planning, research and strategy, the financial drain of the failing businesses can sink the whole enterprise. there are enough examples of retail businesses that failed as soon as they started expanding. Take Nakumatt and Tuskys for example, do you want to be part of the statistics?

Slow and steady growth is the way to go. It helps to take the time to understand the markets and areas you’ll be reaching if you’re expanding your business’s reach.

  1. Poor management. Management does have an effect on your bottom line. Managing a business takes distinct skills, including in purchasing, marketing, finance, creating a cohesive team, and hiring and managing employees.

MSMEs owners without these skills and their failure to recognize the importance of the very skills they lack are reasons why many MSMEs fail.

Some business owners fall into the overconfidence trap and would rather struggle with a certain aspect of running a business than educate themselves or outsource work to professionals.


Running a successful business cannot be left to chance or luck. With the right planning, market research, management and flexibility, MSMEs  have a better chance of success. Don’t be left behind with this election season, but also don’t be swayed with the quick returns. This period will be highly contested but also it will be the most elusive for many MSMEs. Get involved if you know what to do and how to go about it. With our custom made solutions at CrystalPerk you can enjoy favourable solutions at affordable rates for you business. For instance, Kuza Biashara is targeted to those who want to outsmart their competition, but not outspend them.

The eight reasons above should give you a clear understanding of how to turn around a failing small business to avoid becoming a failure rate statistic.

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