According to a survey by the Kenya National Bureau of Statistics (KNBS) in 2018, 7million Kenyans were unemployed with 1.4 million out of this figure desperately looking for jobs. It is said that necessity is the mother of invention, these words ring true looking at the emergence of the micro, small and medium enterprises (MSME) sector. Individuals looking for financial independence are setting up start - up companies, which operate across various industries.
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
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.
-if you work in banking you understand finance better. Find something that is in your natural sphere of influence.
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.
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
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.
Ensure the income being generated in your business can sustain you and your family’s living expenses
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.
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