The time is now… to walk the entrepreneurship journey with you (Part 1)

The micro, small and medium enterprises (MSME) sector, and Small Medium Enterprise(SME) sector in Kenya has over the years been recognized for its role in provision of goods and services, enhancing competition, fostering innovation, generating employment and in effect, alleviation of poverty.

In 2017, it was reported that MSMEs employ approximately 14.9 million Kenyans with the unlicensed enterprises contributing 57.8 per cent contribution to gross domestic product is estimated at Sh3.3 trillion against a national output of Sh9.9 trillion representing a contribution of 33.8 per cent in 2015.

There are 2 categories of MSME owners, differentiated by their motivation to venture into the sector. One group of MSME owners depend solely on the enterprise they build from the ground up, while the other group are in employment and looking to enhance their monthly employment income- popularly termed as side hustle owners. The second group may eventually bow out of formal employment to run their MSME full time.

The motivations on running an MSME include

1. Money- Any dedicated entrepreneur with a good idea and great timing can make a lot more money than they ever could in a traditional position.
2. Flexibility- One can work their own hours, wherever they feel like working, and set their own goals and responsibilities.
3. Control- one has a say in strategic direction, work culture and the business operations
4. Teamwork- One gets to choose their strategic partner and core team that they work well with. In some ways, your company’s team will be like your family
5. Legacy- the desire to leave behind something that outlives you.

Owners who solely rely on their business for sustenance identified a service or social need around them and set up their enterprise to serve it. While the cluster of individuals in formal employment looking to venture into business, struggle to figure out what to do. Renowned business leader Dr Tayo Oyedeji answers their lingering question on how to go about starting their MSME or SME.

1. Don’t step too far from your core competence

-if you work in banking you understand finance better. Find something that is in your natural sphere of influence.

2. Always start small

There are no guarantees in business. A business can fail despite the best laid plans. The International Finance Corporation (IFC) reported in 2018 that 46% of MSMEs in Kenya close within a year of founding.

3. Work with a partner

This is especially relevant to those already in formal employment. It is important to have an on the ground person running your MSME or SME, it cannot be run by proxy. If that is not feasible, give a small equity to your most senior employee. That way someone in the business has ownership stake that binds them to the firm

4. Recognize the place of institutional support in your day job

Formal employment gives a sense of security entrepreneurship does not, with guaranteed salary and benefits. Ensure that you deal with the uncertainties of entrepreneurship before making the jump.

5. Don’t leave you day job until your hustle can pay the bills

Ensure the income being generated in your business can sustain you and your family’s living expenses

6. Don’t Compete with your employer

This will keep you from violating direct competitive and supplier clauses. Did you know Phil Knight ran Nike as a side hustle for about 10 years while working at PwC? 

Make this your day one in kicking off your entrepreneurship journey, if it has been on your New Year’s resolution list for a couple of years now.

Sources:

https://www.entrepreneur.com/article/249417

http://www.smestoday.com/categories/527-state-of-msme-sector-in-kenya.html