MY HUSTLE

Why you should not start a business for someone

Losses and disappointment loom large in quickly failing small enterprises

In Summary

• Businesses meant to keep relative busy or out of trouble often fail for lack of strategy

• Best way to help someone who seems idle is to ask the person what they wish to do

Image: FILE

Financially well-endowed individuals often start businesses for family members to help them get an income. There’s another reason: to keep them busy.

The rationale is that getting idle relatives busy keeps them out of trouble. There also are retirees who feel that starting a business would be a great way to kill boredom. Then some people start businesses for unemployed spouses after listening to numerous complaints of boredom.

In all these scenarios, the results are often mixed. The retiree may lose money he or she will never recover. A spouse who started a business for the other may get disappointed if the business fails. Young people may be blamed for not working diligently enough if the business started for them does not succeed.

Regardless of the reasons for getting into business, it’s a difficult journey. Most micro and small enterprises (MSEs) don’t survive the start-up phase. According to a report on MSEs in Kenya, 80 per cent of them do not survive beyond five years. The report, authored by Samuel Too, is titled Survival Strategies for Owners of Micro and Small Enterprises in Kenya. Kipngetich attributes this trend to a lack of strategy among business owners.

“MSE owners tend to start a business with limited experience and lack strategies to overcome constraints that hinder business survival within the first years of operations,” reads part of the report. The constraints listed in the report are: limited amount of start-up capital, poor accessibility to the market and a lack of business experience.

Too many aspiring entrepreneurs are quick to jump into popular types of business, such as hairdressing, retail shops, mobile money services, dairy shops, among others. The assumption is that they will make it as easily as everybody else. It, however, takes more than copying an idea to succeed in business. The choice of product and location matters, too.

You might be paying rent for a shop while your competitors are not paying rent because they own their business premises. Location matters, too; there is a reason why coffin makers are mostly found near big hospitals. A clothing business won’t thrive where everybody else is selling motor vehicle spare parts unless you start selling overalls.

A business is not a regular 8-5 job. It requires a commitment to work on weekends, public holidays and late into the night. People put into a business just to keep busy usually lack the commitment to sustain the business. They might open shop late in the morning, close too early, or not open at all with the flimsiest of excuses.

The best way to help someone who seems idle is to ask the person what they wish to do. People often have plans but lack knowledge on how to move forward with their ideas. Instead of starting a business for someone who neither has the skills nor aptitude for it, why not invest in something he or she is excited about? Even sending someone to technical school could put them on the path towards financial independence.

Every business must have a profit motive to succeed. This also applies to retirees. Take time to understand your environment before you decide where to invest your valuable retirement benefits. Don't just do it because you are bored.