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INDABA ON WHY 80% BUSINESSES FAIL IN 5 YRS

07/07/2022 08:24:00 Mhlengi Magongo

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ZULWINI- Poor management and leadership are some of the main reasons why startup businesses fail to grow, especially in the first five years.

Start-Business Foundation (SBF) in partnership with the Ministry of Commerce, industry and Trade, DHL Eswatini, Eswatini National Youth Council (ENYC) and Regent Business School have organised a two-day conference to discuss such issues. Wandile Zishwili one of the co-founders of SBF yesterday said the start-up business entrepreneurship conference seeks to bring solution to issues affecting entrepreneurs, businesses, and individuals at start-up phase. “After doing a study we discovered that most businesses or entrepreneurs in Eswatini are challenged by the following: access to finance, lack of information, lack of professional skills to sustain businesses and access to markets,” he said.

Zishwili said their unique business model seeks to bridge the gap in assisting entrepreneurs’ access their business necessities. He said they will unpack the business financing model which he defined as the the process of providing funds for business activities, making purchases, or investing. Zishwili said they would also discuss the skills acquiring model which include increasing sophistication relative to business and metacognitive awareness of that sophistication. “We are passionate about small business development and we have developed a business model that not only recognizes that business start with people but needs people to succeed,” he said.

Zishwili added that this forms the cornerstone of the business which have been instrumental in the establishment and sustainability of a number of businesses since their establishment in 2019. “We will unpack the business financing model and unpack skills acquiring model. Our collaborative entrepreneurship system will be discussed as well as access to global markets,” he said. The co-founder also mentioned that they will also discuss business networking which is imperative to startup businesses. He said they would also be E10 000 cheque giveaway to outstanding business as well as a certificate of attendance next week Wednesday. The business sector requires consistency and support to grow and businesses locally continue to fail because the lack the necessary skills.

Most businesses fail to reach five years operating because the owners lack the basic skills needed to grow and sustain the business. This was mentioned by the Small Enterprises Development Company (SEDCO) business entrepreneurship mentor Musa Dlamini. Dlamini was speaking during the capacity building on entrepreneurship development for Micro Small and Medium Enterprises (MSME) in the country at Sibane hotel. Dlamini said basic business skills and knowledge are necessary tools for people looking to join and survive in the business sector. He said local entrepreneurs tend to focus more on the startup phase of the business and neglect the productivity phase. “Entrepreneurs investment more time in raising capital to open businesses which they find difficult to operate,” he said.

Caused

The mentor said this is caused by the fact that they lack the knowledge and understanding how the business sector they chose operates. Dlamini said business sectors operate differently and the knowledge of how they operate can be acquired by educating yourself. He said the country has experts in each business sector and the knowledge they possess has contributed to the 20 per cent businesses that are able to survive beyond five years. “The businesses that have managed survived are because the owners have a learning objective and they are involved in entrepreneurship training course which help improve their skills,” he said.

Dlamini also mentioned that poor management of funds and lack of support also contributes to the fall of the business. The mentor also mentioned that most affected business sectors are farming and agriculture, technology and innovation, and manufacturing. He said those who invested in wholesale and retail businesses were able to grow because of the entrepreneurship lessons they received from institutions like SEDCO.

Ministry of Commerce commercial field officer Clifford Dlamini said people need to understand the form of business before executing productivity. “Most businesses fail because people venture into sectors they do not know how they operate; they restrict their knowledge in the planning phase which affects the long run,” he said. He further mentioned that after receiving capital, it is important to then have lessons and training in the sector chosen to add on the knowledge already acquired.