There are several factors that contribute to the failure of
start-ups in Africa and the ability to learn from these failures would support
a new way of thinking to help mitigate these risks.
In this piece, I would be sharing risk factors from working
with no fewer than 100 companies in the technological, FMCG, retail, agro,
fashion, events, confectionary and manufacturing in providing consultancy
services and some of the patterns I found led to the business failure.
Huge Injection of Capital Without Traction
Generating and implementing an idea has to go through
several stages of design thinking to ascertain the viability of such a product
before it is released into the marketplace based on the feedback from
prospective end users.
The fact that some early stage entrepreneurs have already
built a name in the ecosystem can easily make them access funding even when an
idea is still just an idea that has not been properly researched. But because
entrepreneurs sometimes are also very emotionally attached to an idea,
sometimes they can make several assumptions without considering the facts and
then begin to seek capital inflow to kick-start this idea. Traction is
important because it signifies growth, and growth could be seen in the form of
demand which eventually leads to cash-flow. Investing in an idea is too risky
and even more risky for an early stage entrepreneur with limited experience and
exposure.
In order to ensure an idea would scale, it is important to
employ design thinking to limit assumptions.
Not Working With the Right Team
Not Working with the right team has huge consequences in
itself. A start-up should have one core, and it must have the ability to
execute with the team. Because most start-ups bootstrap at their early stage,
they tend to work with whoever is available and not necessarily the skilled and
competent professionals who would hit the ground running and deliver the
required expectations. I remember working in a pharmaceutical start-up where
mislabeling of medications occurred because the professional involved was not
aware of the procedures as a pharmacist would. This could have been a huge
mistake if it was unnoticed until it reached the retailer, who did checks and
found out.
The right time would limit the time a task is expected to be
done. Start-ups should never play down on experience, proficiency and
competence. In fact, it is necessary to develop specific in-house procedures
for hiring that suits the company’s culture.
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