that seems so good to be true. How could you resist and they are talking foreign currency not your native currency? The moment you sign you realize that you no longer have control of your company and the guys were only paying an access fee to run their own businesses in the country. They actually paid for the license and your business in now hanging on a thread. You have graduated to international predators.
You fight hard to survive, but in your head, you know you cannot afford to refund the money they offered. You do the obvious and open another new line of business as you face your fears. Entrepreneurs do not die. They resurrect at an instant.
Now you have learnt that you can also sell items from China. You travel with friends who are going for a trade mission. Your bank values you since you have some money in there and they are ready to give you some leeway here and there. At the Fair, you get good stuff which you know you can sell back home and given your cash well has not dried up, you order a container. Those guys up there really know how to sell.
You got your goods in record time. Unfortunately, you never stayed long enough to check the quality and when the goods land, you have no clue how to deal with customs or the Bureau of Standards. Traps are laid all over. You feel like a pawn in the chess game. Entrepreneurship is dealing you a suicide and you feel trapped. You cannot dare quit at this point. It’ s a maze where you barely know whether you are near the entrance, mid-air or exit.
By the grace of God and your bank, you clear your goods and get to the market. A customer orders and cash, starts to flow. Though you had predicted a 150 % margin, you are now okay to just recoup your investment and pay off the loan. The customers are ordering well and there is one who is particularly a blessing to your business. He orders the same quantity every week and you are now business buddies.
On the 5th week, he calls you personally and asks that the cash will be sent by the next day as he needs a bigger order. You are excited as this will clear off all the stock and you are a happy man. The lorry is loaded and you watch it disappear with a sense of pride and misery. One day later, at 5pm, you call your dear customer. The phone is no longer in service. You panic. Call everyone and in a week of serious investigations and sleepless nights, you know you have been scammed. The customers have also become predators ready to eat the last morsel of your business.
What are the common pitfalls for an entrepreneur?
Learn to grow organically. This means that though opportunities may avail themselves fast, evaluate them carefully and don’ t be driven by insatiable greed. Scaling too fast has seen so many businesses go burst. Some of the parameters of success are now well researched. Some entrepreneurs have grown through being in the right place at the right time. Do not imagine your success in Town A can always be replicated in Town or Country B. Understand the drivers of business and sometimes growth may be spurred by diverse factors in each region.
Learn to use professionals to avoid these predators. Valuation and legal services are expensive but they play a big role in ensuring that you are not underselling yourself. Some businesses will be undervalued or you may be enticed to become a minority shareholder without understanding the implications in the overall decision making. Listen to online confessions about the entrepreneur’ s journey. I would recommend the Founders’ Battlefield on YouTube where we authentically talk about real life situations. You can easily be fired if you become an underdog in a company which you started. This has happened to many including being advertised as‘ no longer working’ for your very own company! Ensure you have airtight contracts and if in doubt do not engage.
Do not listen and get distracted by every know it all who wants to tell you how to run your business. You are the vision bearer. Stick to your journey but benchmark once in a while.
Know when to diversify to avoid being obsolete. Get a good business coach and learn from them. Weigh your options and also apply your experience to make decisions.
When the business is doing well, the bank will trap you with great loans some of which you may not use to grow your business. Financial institutions are very good as long as the business case and the plan are aligned but will come for your assets the moment conditions change and you are not in a position to pay. Be careful and only take a loan when you have reviewed the worst-case scenario.
Ensure you have cash flow as this is the one mistake entrepreneurs make. Buying long term assets is good but they may not translate to cash when you need it, thus killing the business.
Employees could also be predators if you do not have strict business processes and protocols. So often, they’ ll deliver goods and take your money or collude with the customers and defraud you clean.
The lessons are many but entrepreneurs must always take care of business as they are the business. Taking care of the mental health is paramount. One has to remember, being an entrepreneur is a journey full of sharks including political ones. Learn when to avoid them, feed them but mostly how to feed yourself.
Pauline Warui is the Founder of East Africa Customer Care Centre. You can commune with her on this or related matters via email at: PWarui69 @ gmail. com.