Why Be An Entrepreneur & Not Self Employed? 


In my entrepreneurship mentorship sessions, I always float this question to my audience: why are you into business? In response, I receive an array of answers  some convincing, others not. That is normal with open forums.

In a study carried out by the Kenyan National Bureau of Statistics (KNBS) last year in Kenya, it was established that over 2.2 million businesses had collapsed over a five year period. Even more shocking, was the revelation that slightly over 400,000 start-ups never lasted beyond their second year of operation. 46% of these firms die off within their first year. 

Youth unemployment remains Kenyas biggest socio-economic challenge. So enormous it is that it shakes the core of the countrys dominance as an economic powerhouse. Statistics put it that one in every six young Kenyans is unemployed. In neighbouring Tanzania and Uganda, the rate stands at one in every twenty on average. 

Ask any Kenyan youth about their occupation and they would respond that they are either gainfully employed (in a job), or self-employed (taken to mean ‘business owners’). More often than not, they venture into self-employment as an option for lack of employment opportunities. They undertake business with neither the requisite skills nor passion for it.

Nonetheless, are these who are self-employed truly in entrepreneurship? Is there a line between self-employment and entrepreneurship? 

It has to be cherished that entrepreneurship is a philosophy of sorts, a lifestyle. Methinks entrepreneurship in being a vocation, one to add value to society. An entrepreneur would identify a challenge and consequently task himself to provide a solution. His main motivation is to fulfil a human need and alleviate a pain point. Despite the challenges they encounter, they keep on trudging on the path to their objective. 

Take Thomas Edison, he who invented the light bulb, for instance. Over 999 times, he failed and never gave up. He said that each time he failed, he discovered one way that he would not do it. His optimism paid off at last. Again, let us examine Jeff Bezos, he who for some days beat Bill Gates to be Forbes Richest Man alive. When he started Amazon, his dream was to provide a link between producers and the consumers and build the worlds largest online retailer! The business made money for the founder after six years of operation. Facebook, the worlds largest social media platform, took five years before it reported a profit. Alibaba took eight years while Tesla, the world acclaimed innovative automobile manufacturer, is yet to be profitable to date!

Coming closer home, Parapet, the regions leading cleaning company, took three to four years to stabilize and post profits. While it may seem business leadership translates to super profits, Business Daily too proves otherwise. The paper is the countrys leading business publication and yet, seven years after launch, it is yet to post a profit!

Did the founders of these businesses give up since they were unable to recoup their investments in the short term? Absolutely not. In fact, with the continued negative feedback on their financial positions, they persisted and got motivated by the need to fill their identified society gap until when their businesses broke even. Hence, entrepreneurship is a philosophy, a calling of sorts!

On the contrary, those who take entrepreneurship to be a profession (self-employment) look forward to financial rewards or compensation. As such, they would get into business to be free most of the time (or so they think), to express their bossiness around, and most popular of all, earn huge payoffs from the business! Some even start a business to be able to live a defined kind of lifestyle. To others, getting their hands into business is an express ticket to wealth generation. Nonetheless, this is getting it all wrong. 

Entrepreneurship is about value creation. The sanctity of undertaking business is to enrich the human race. Their mission in life is made complete by solving a human need. It therefore cannot be a short term affair as for the ‘self-employed’. Entrepreneurs go for the long haul. For instance, Coca Cola has outlived its founders, more than a century after its invention. When the firm started in 1896, it sold nine servings per day in Atlanta. The founder passed on two years after inventing the beverage. Currently, the firm sells an average of 1.9 billion bottles daily across the globe! 

In addition, entrepreneurs are risk takers and dare invest in a venture in pursuit of their objective. They would not fear failure. Failing is just but part of the process of success. Whenever they encounter failure, they keep on working their passion to fruition. A self-employed individual is risk averse, choosing to play safe with the intention of reaping big from their undertaking. Failure discourages them altogether.

However, even more interesting is the ability of an entrepreneur to flex with dynamics on the ground. He appreciates that there are constant shifts on the ground and as such, he/she is prepared to change in tandem to the shifts. This is the reason why those who take entrepreneurship as a calling do not give up. Their flexibility works to their advantage. For the self-employed fellow, their rigidity works against them. Like the dinosaurs of old, their rigidity causes them to fail due to their inadaptability. 

How else can we explain the findings of a study by CB Insights, who undertook a post mortem on 101 start-ups that failed recently? In this study, they found out that the major cause of start-up failure is lack of a human need (up to 42%). Lack of capital only came second with 29% of subjects alluding this to their failure. This is interesting since most business founders blame the lack of capital as the cause of business failure. 

The crux of the matter is the motivation for an individual to get into entrepreneurship. That is what determines whether a business will last or not. Of particular noting is the fact that all the mentioned businesses that have outlasted the times had one common denominator  their founders had the right mind set. To them, business was not a means to earn a living. It was a calling, a vocation. If we re-evaluated our motivation to get into business, we would reverse this failure rate of businesses in our country and region and reap big from the ripple effect in terms of economic growth and sustainability. 

So then, would you rather be self-employed in business or choose to be an entrepreneur? The better choice is quite explicit!

-Ends-

This article was first done for publishing in the Cytonn Investments Plc Blog by Michael Okinda,  the author.  

He is an acclaimed personal branding & business coach under his PBL Africa initiative. 

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Does Past Accomplishments Guarantee Future Success?

vision

The past two months have been a depressing time for me, being a celebrator of local ingenuity in business. Indeed, nothing is as depressing as seeing a business entity, you have literally grown with it since childhood and now, when you are almost in your midlife, you see it gradually go down.

Nakumatt is one instance. I first encountered Nakumatt, then known as Nakuru Mattresses as a small store in Thika in Pilot Estate while still a pupil at Thika’s Kiboko Primary School.  Then, we would sneak from school during lunch hours to go and wander in between the shelves just to awe at the marvelous displays of commodities. It even made Pilot based pupils to puff up their pride since there was no other supermarket nearby that equaled Nakuru Mattresses.

As we aged further, the outfit grew in leaps and bounds to be East Africa’s biggest retail outlet by branch footprint. It opened over sixty outlets in number across virtually all of East Africa’s countries with a workforce of over five thousand employees with most of their branch outlets operating 24 hours daily.

success

Indeed, the conglomerate that grew from a tiny shop in Nakuru with a few sales calls, had gross revenues of almost US D 500 Million. Conservative estimates put their market share five years ago at 20% in Kenya with their Brand Equity Index hitting a high of 55%. With it came many accolades and awards. These include the Price WaterhouseCoopers East Africa Most Respected Service provider for the year 2006 and 2007, Planet Retail ranking as top retailer outside of South Africa for 2008, Planet Retail Award as Second Most Innovative Retailer in the World for 2009, East African Super Brand for 2007 and 2010, recognition by the East African Community as a pioneer East Africa Investor in 2011 and its CEO recognized in the Financial Times Top 50 Emerging Market Business Leaders for 2010.

With all these accolades lining their cabinets, it was expected that the enterprise would be much more stable and vibrant. However, beginning over two or three years ago, cracks started to emerge. Suppliers were paid late, eroding the creditor confidence of the firm. In a flash, stores in the home country and away started closing up as most stores within the domestic market and beyond, further eroding the public confidence that was celebrated before.

But then when did the rain start beating Nakumatt? Many theories have been put through and deliberated. From their strategy to compete their suppliers through their ‘Blue Label’ strategy to their ambitious expansion plans which choked their working capital outlays.

But I beg to differ. I guess the management realized like the iconic Titanic, the firm was too big to sink. And they became lax with time. Internal weaknesses in controls went haywire and losses started building up. Corruption, inefficiency and lack of corporate governance ideals took over. In a way, it is not external factors that brought down this beloved retail giant – internal ones did.

Which brings me to what I needed to communicate – we most of the times take pride in our past achievements to the detriment of forging ahead and firming up our strengths.  Do past milestones surmounted give us a guarantee that our future would be rosy and good? Not at all. The past belongs to where it should be – the past.

Past vs future

This is the main problem most of us have – looking back and taking pride in past achievements and forgetting that we have a life to live ahead. We most of the times blame the external environment – the economic situation, the government, etc. for our own-caused failures.

To avert this, we need to always focus ahead and be mindful of the red flags raised as we trudge along this journey of living. And as I said, ignore what is past. Let it remain where it should be – in the past. Future success is only guaranteed when there are solid plans and commitment to realize the future vision. For whatever achievements you made back then is not significant in the present times. It is history! So do not make the mistake, either as an organization or at the individual level, to glory in past achievements.

 

The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. Both books are available on Amazon. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                              pblogix@gmail.com

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