Self described serial entrepreneur Njeri Rionge ventured into business at age 19, selling yogurt at schools in Kenya’s capital Nairobi and went on to start many other businesses including what is today a leading provider of pay television and broadband internet. In recent years Rionge has focused on working with small and medium enterprises (SMEs) and entrepreneurs to grow indigenous African businesses.
Rionge spoke to How we made it in Africa about entrepreneurship and how SMEs can grow and compete across the continent.
There are many SMEs in Africa but most struggle and collapse in the very early stages. What are some of the reasons for this high failure rate?
There are lots of potential reasons for a business to fail in the early stages but these are a few elements that I often see that can be factors:
You need a good business plan, and stick to it, while at the same time being as flexible as possible to allow for changes in the marketplace. Market research is important and often this is overlooked before a new business is created, but there is also often limited data available in this market. If this is the case for your sector you must do your own research and not rely on existing statistics.
Customer service is critical as well as building a pipeline for new business and converting new clients. Understanding the difference between being a trader and running a business is important, so make sure you introduce structure and systems early on.
[Finally], you need to have the right people around you – you can’t do everything yourself. A lot of entrepreneurs think they need to be good at every aspect of the business but this is not the case.
Looking at the business environment in most African countries; is it really conducive for SMEs to grow and compete with large companies?
There are [many] examples of indigenous businesses that we can point to that have grown to become successful regional, pan-African and even international brands. There is no reason why, especially in this… digital age, we cannot market ourselves… and compete internationally but we have to be prepared to offer goods and services that are to an international standard. So yes, we can compete if we get the basics right and if we up our game in terms of execution.
What kind of an entrepreneur is needed to drive an SME to higher growth levels?
The internet… allows someone who might never have dreamed of starting a business before to become their own boss, to create a website to market and sell their goods and services, and to effectively become an entrepreneur overnight. But running your own business doesn’t suit everyone, and a lot of people do not have what it takes to be that person. You need to be determined, and dedicated, and passionate, you must believe in yourself, and I would say you need to be a good salesperson because at some point you will need to be able to sell your idea, sell what you are offering as a business albeit to a potential investor or to your customers and new clients.
Describe some of the mistakes small businesses make that limit their growth.
Transparency, or rather lack of transparency, can limit growth. It’s important to know what’s happening in your business, to keep track of the numbers and to be able to show a potential investor clearly documented accounts. Transparency will make it easier to apply for funding, or if you come to sell your company. And keeping the business finances separate from personal finances is often an issue for small entrepreneurs or family-owned businesses, so that’s another mistake small businesses often make.
HR and talent management is… something many SMEs struggle with because they don’t have the budgets to compete on salaries with bigger firms. A common problem for small and growing businesses is training staff and then losing them to bigger competitors. So it’s important to choose your key staff members carefully and to keep them motivated so that they are passionate about the success of the company.
Your company Insite recently developed Peach CRM that is specifically targeted at SMEs. What are some of the needs and problems that SMEs face that you hope to help address through Peach?
Peach CRM is an online (cloud) customer relationship management tool, so it offers a small business all the benefits that the cloud brings, as well as doing the job it’s designed to do – to help you to improve the efficient running of your business; to improve your organisational effectiveness.
Startups and SMEs don’t tend to have the big budgets of larger and more well-established companies to spend on the latest IT solutions so in many ways using products hosted on the cloud is an ideal solution for small businesses because hardware is virtualised. This means that the servers are situated remotely and you don’t have the expense of owning and maintaining your own individual server. This gives users the flexibility and high performance of dedicated servers at much lower costs. Another feature of the cloud and the internet of course is that you have access to your data 24/7 from different devices (via your smartphone, your tablet or your laptop) so you can keep track of your business on the go.