My business mistakes and lessons I learned

No one ever succeeded in business without making mistakes. Four leading entrepreneurs share how they made some crippling mistakes and how they rose through the ashes. [Courtesy]

GEORGE IKUA, CEO TRAVELEX

About 10 years ago, I was running a sales automation software business. This was a tool to help sales teams manage their sales prospects, daily activities, sales orders and collections while giving management visibility on the same. We had a great product, a great team, tons of hope and well, naivety to match. Then blunders crept in.

My failure

Mistake# 1:  Seeking fame too early.

We started by seeking fame even featuring in a television panel.

Mistake# 2:  Too much brand awareness and forgetting service delivery and customer satisfaction.

We did things that didn’t matter such as logo design, business cards, websites, magazine articles, and breakfast launches. We believed that fame brings profit or the brand leads to sales. We ended up with a famous product but unfulfilled promises.

Mistake# 3: Building the business around the entrepreneur’s personal life.

The founder is the biggest risk to a business because if he collapses the business follows him instantly. We didn't build processes or internal capacity for the business to operate without me. I was the star of the show which means in case of flu, there was no show!

The result? Angry clients, disgruntled staff, and vexed investors. One day I just closed shop and saw 10 years of my life go down the drain.

Lessons learnt

1.    Forget the initial brand creation and focus more on service delivery. Don't worry if you don't have a website, worry if you don't have a happy client.

2.    Young businesses should think hard before taking on an investor. Once you take someone’s money you are beholden to their internal processes. This can pull the business in a different direction. Resourcefulness not resources is your primary need.

3.    Business failure is not a reflection on you as a person, it is a reflection of resilience character and maturity. I would rather invest in an entrepreneur who has failed severally than a bright eyed startup. Thomas edition attempted the light bulb a 100 times. Rise up and do it again, for when it works no one will remember the failure.

 

LEE KARURI: DEVELOPER AND EXECUTIVE CHAIRMAN, RESORTS AND CITIES

I started out as an architect and founded Dimensions Architects and Interior Designers in 1994 with a friend. I provided services to several leading developers in the region and desired to become a developer too.

In 2005, I ventured into real estate through a joint venture by developing apartments in Kileleshwa together with a landowner. We borrowed money and invested some hard-earned savings into the project. The sales encouraged me to proceed.

Failure

Mistake# 1: Not reading the fine print

Apart from the costs involved, real estate development requires that one conducts due diligence and not leave anything to chance. Unfortunately, we made some mistakes by not going through third party contractual engagements with a toothcomb. Rather than scrutinise third party suppliers contracts in detail, we signed them on trust only to get in trouble later. When disputes arose thereafter, we established that the agreements were lopsided against us and we ended paying a very high cost of settlement.

 

Lesson learnt

1.    Seek legal advice before signing any contractual documents.

If you are in any kind of business with multiple other players, read any contractual terms carefully and if need be, seek third party legal opinion. We now take that approach and only sign a document once fully convinced that all is in order.

JAEL AMARA, DIRECTOR, CONSUMER OPTIONS

15 years ago, we created a female-owned business to carry out market research on behalf of our clients and provide them with solutions that will allow their businesses to grow and be more profitable. Though based in Kenya, we had the dream of conquering Africa, first, by investing in brick and motor in the East African countries.

In the journey however, we incurred serious recurring expenditure that made us make some unsound decisions.

Failures

Mistake # 1: Bank charges we weren’t aware of

In order to “expedite” payments from our clients, we went on a foreign currency bank account opening frenzy so as to transact in the British Pound, dollars and the Euro. At the time it did not occur to us that there were bank charges for each of the accounts. We had to close them.

Mistake # 2 Expanding too fast

Next, the Kenyan outfit grew more and more and became the key support for the regional offices that could hardly stand on their own. It was a classic case of putting the cart before the horse. Our enthusiasm to conquer Africa was faltering. For such a big undertaking, we needed to have a steady stream of income before the expansion. We had acted on hope but ended up closing shop as finances dwindled. It was emotionally distressing to scale down and let go of staff.

 Lessons learnt

1.    We can go further by establishing partnerships. Our dream of conquering Africa is still alive though it has come with tears. We have identified different partners in Africa who are aligned to our vision.  This has made setting our footprints in Africa easier and affordable. Apart from East Africa, we now work in Nigeria, Ghana, South Africa, Zambia, Zimbabwe, Malawi, Namibia, Burkina Faso and Mozambique. My advice to anyone who wants to spread his business on the continent is to look for partnerships rather than take solo flights. Visit the partner if you need to. We became wiser when we took this route.

LUCAS MARANGA: MENTORPRENEUR, STORYTELLER AND PUBLIC SERVANT

The entrepreneurship bug bit me from an early age. To supplement my pocket money, I started a restaurant while still in campus and setup a mitumba business later on. After college, I got a job with a local bank and was employed for what I term as the longest period in my life – 71 days! My future lay in business.

18 years ago, I started Happening Ventures, a tent and event firm. We were few in this business then and things were looking up most of the time.

Rough waters

Mistake # 1: Getting comfortable and uncreative

 About three or four years ago, my business took a hit after enjoying unprecedented growth for 10 straight years. I had become complacent due to the success I had witnessed and never thought of further innovative ideas. I never created new opportunities since I thought the windfall would last forever. We were being outsmarted by smaller outfits that had started a little earlier. We had problems servicing our financial obligations including banks. It was a rude awakening losing our market share in such a short period of time. Though devastated, I picked up the pieces, restricted the business and let others run it.

Lessons learnt

Reinvent your business when you are on top of your game. Never think that any prevailing windfall will last forever. Trying to jumpstart a business when it is down is like swimming against the current. Take a look at the top companies in Kenya and you will see that they are always innovating more when they are on top of the pie.

Second, do not change your lifestyle just because you have made some extra coins in your business. Sadly, some people sell their older model of the car for a guzzler, or move out of one house to a more expensive only for these lifestyle changes to eat deeper into their business savings. Avoid a five-star lifestyle while building your business.