Please don’t start a business. Unless…

by Sunny Bindra on August 4, 2013 · 12 comments

in Sunday Nation

I want to be my own boss. I want to work for myself, not for others. I should be enriching myself, not a bunch of strangers.

A common echo, seductive in its simplicity. Who wouldn’t want to be self-directing, not answerable to others, keeping all the fruits of one’s labour?

The answer is this: YOU shouldn’t want it. That’s right, you.

Wanting to be your own boss is not a good enough reason to start your own business. That reason is about YOU, and the boundaries of your comfort zone. It is not a good enough reason to take the plunge. If it’s your only reason, please think again.

Wanting to be rich is also not a good enough reason. Sure, everyone wants to be rich. But the sad fact is very few of us are going to get rich through the method of starting a new business. We may think we will, by observing seemingly wealthy business owners all around us. But we are misled, because we are observing the survivors, not the casualties. We are studying the small awards ceremony, not the huge cemetery behind the festivity hall.

Globally, it is believed as much as fifty per cent of all new businesses fold within the first year of operation. That’s bad enough, but in African markets we may have an even bigger problem. South Africa’s trade minister recently revealed that the statistic for his country may be as high as five in seven businesses failing in year one. Even of those that survive, a minority actually make a genuine profit. Most just get by, or lose money continuously.

There you go. That’s why I was telling you not to do it.

Why the high failure rate? The reality is, a whole bunch of folks plunge into business for all the wrong reasons: the reasons contained in the first paragraph above. They rush headlong without a proper business idea, much less a set of capabilities or a business plan.

They join a me-too crowd, and mimic everyone around them. They offer nothing of distinction, and add no special value to their customers’ lives. They make basic errors in pricing and in managing cash flow. They confuse cash for profit. They take customers for granted. They run out of working capital. They start spending on themselves too soon. Then they lose heart, and the business dies.

So don’t do it, folks. Keep the salaried job. Let the money come into your account every month. Find other ways to generate additional wealth. Starting a business only looks simple. And the ones that seem simplest, like opening a small shop or eatery, are often the most likely to fail, because of the huge crowd of people opening those very businesses every day.

Are you still reading? Do you still want to do risk it all? A-ha, perhaps you are made of sterner stuff than most. Perhaps you have understood that working for yourself means working sixteen hours a day, not eight. Perhaps you have understood that you will have to lose your sleep and the balance in your life, but you still want to do it.

If that’s the case, then please meet a second condition: have a decent business idea. Please have spotted a genuine gap in the market, an unfilled customer need. Please do something distinctive and unusual. Please be prudent and dogged. Please focus on your customer and not yourself.

Then, maybe, just maybe, you have a fighting chance. The world has no need for a crazy crowd of mediocre wannabe tycoons; it has a screaming need for a smaller group of thoughtful entrepreneurs who devise fresh new products or do things in innovative new ways, and add real value to others. If that’s you, get started. May you enrich yourself as you bring riches to the world.

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{ 8 comments… read them below or add one }

1 Moses Otieno August 4, 2013 at 1:01 pm

Sunny, your article has made me think a bit more deeply about what motivates me.

As an aspiring business owner, I see a lot of the assumptions I’d made about being self-employed are wrong. However, having been employment for 8 years in public service, I still find myself dissatisfied with the my work environment. I feel I can contribute a lot more to this society by being in private practice.

In the town I live in, I have identified a need for the particular service I’m interested in offering.

For me, making money isn’t the issue; I just need enough to take care of my young family. I’m also willing to sacrifice life’s luxury for a few years as the business picks up. I guess you could say I’m planning to start a business just for the sense of satisfaction, to know that I am making a difference in my customers’ lives directly.

Is that motivation enough to start a business? Am I being too idealistic in thinking this way?

Apologies if I’ve written this like someone seeking advice in the ‘agony aunt’ column.

[Reply]

Sunny Bindra Reply:

Moses:

As long as you’ve identified a need not met, and you understand what it takes to be in business: go for it!

[Reply]

2 Derrick August 4, 2013 at 7:16 pm

I aplause your article, i have been a religious follower of your articles. Though i have to say market research can be a challange to startups, esp in small towns where data is almost non existet, an attribute i also consider as source of failure

[Reply]

3 Simon Ndunda August 4, 2013 at 7:16 pm

Very true, thanks for putting this out there. I wish you had added something on risk lest some people take this as a warning to avoid all sort of risk whereas risk is a necessary ingredient for any sort of business.

[Reply]

Sunny Bindra Reply:

Simon:

Business is all about risk. You will risk all your capital, all your time, all your mental balance. If your anticipated return is worth all that, then it’s worth proceeding.

[Reply]

4 Endre August 5, 2013 at 12:00 am

Great wisdom.But I must add that though most of the the things you point out area true, when I read between the lines and combine with the title, I feel like you are over-warning otherwise would-be brave guys out here who want to go out there and throw their hearts into business. I believe that those who really want to succeed in business will always succeed whether they did research or not, whether they started with business plan or not, whether they questioned why they are getting into business or not etc. I refuse to agree that we must all have business plans in order to start and succeed in business. I know so many successful business pple who ventured and conquered without some of this things, and that does not mean they are not important. What am trying to say is: If your heart tells you to get into business, please run and start it immediately..BUT be quick to learn, adjust, fail and rise, learn learn learn again, stay in the game and one day you will MAKE IT.. that’s my wisdom..

[Reply]

Sunny Bindra Reply:

Endre:

Nothing much wrong with your wisdom. But note I wasn’t asking you to have a “business plan” or conduct “market research.” I was asking you to have a business idea and understand your future customer deeply.

“Heart” is very important, but it’s not enough. It’s way better to have a winning insight first, and THEN show the doggedness to endure and stay the course.

The point of my article was to provide a corrective to the extolling of entrepreneurship as though it’s for everyone. Too many people pile in on wrong assumptions, as though it will be an easy life where you don’t have a boss and keep all the money. The business will be your boss, and on average, entrepreneurs make less money than employees do. That’s because the failure rate is so high.

As my piece concluded: if you have the necessary ingredients, then you MUST go for it.

[Reply]

5 webish August 5, 2013 at 9:10 am

For me, it’s simple,

You don’t have to get it right every time, you only have to get it right the LAST time.

In other words, Fail until you succeed. Thanks for the article Sunny, quite a reality check.

[Reply]

6 Eric Mwiti August 5, 2013 at 4:20 pm

@endre, I understand your sentiments as far as taking risks in a business is concerned. But as brand strategist I also understand where Sunny is coming from.This is true with most of my clients who usually start with the proverbial line of “how do I make more money….where are the revenues…. How can I be successful like so and so…” which unfortunately never bears fruit years to come. My advise? Think twice before the taking the plunge. Ask yourself “what is it about my idea that will change the universe let alone the world? Why am I doing what am doing? What’s the purpose of it all? ” believe me, once you answer those critical questions, backed up with a sound business plan, then your chances of winning are high.
Thanks Sunny for the wonderful article.

[Reply]

Chandesh Parekh Reply:

@Eric, well put; Clear purpose is important – What problem am I solving and is the problem important enough to solve?

[Reply]

7 Emily Waita August 6, 2013 at 9:48 am

Now that’s another way to look at things with a twist ! …… majority go into business for all the “wrong” reasons you’ve mentioned …. I liked ” The world has no need for a crazy crowd of mediocre wannabe tycoons”

[Reply]

8 Andrew August 7, 2013 at 1:29 pm

Nice article with good advice. I really enjoy your insights into real issues especially when it comes to business and technology.

[Reply]

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