Why the future of our economy depends on MSME’s and how to grow them
According to the 2016 micro, small and medium establishment survey of Kenya, the MSME sector has been prioritized as a key growth driver for achieving Kenya’s Vision 2030 — the development blueprint which seeks to transform Kenya into an industrialized middle-income country providing a high-quality of life to all its citizens by the year 2030.
With a cited gross value of KES 1,780 billion, MSMEs contribute 31.4 % of the entire economy, with manufacturing ranking the highest followed by wholesale and retail trade, transport, storage, and education.
Despite driving the economic engine across Kenya specifically and in Africa generally, MSME’s find themselves dying every year due to preventable and fixable challenges. For example, in Kenya, a total of 2.2 million MSMEs were closed in the last five years, 2016 inclusive.
While we can’t solve all the challenges that MSMEs face, we can help address common ones through training and upskilling the people heading these organizations. This is what ISBI Institute is doing through our flagship program — Advanced Entrepreneurship Program at Strathmore University Business School.
The program has graduated over 160 entrepreneurs during the last 3 years. Take for example, Kenneth Mwangi, the founder, and director of Afric Salt Enterprises, who was struggling to manage the cash flow of his business before joining the program.
During the program, he learnt how to prioritize tasks and focus on that which is most important. He applied this learning to focus more energy on collections; a stricter credit policy leading to a significant improvement in cash flow as well as an improved relationship with his bank — Sidian Bank.
In his own words, ‘The program has been very useful in equipping me with practical insights which I have continuously applied in my business. I have been able to avoid some pitfalls that previously held me back and I can’t wait to see how profitable this venture will be.’
There are many topics covered in the program, this post highlights some of the ideas we disseminate.
First of all, you as the entrepreneur need to understand that as its most valuable asset, the success (or failure) of your business hinges on how you manage your time. This means avoiding procrastination and understanding the difference between what’s urgent and important. Urgent tasks are those that require immediate attention, while important tasks are those that contribute to long-term goals.
In his book, The 7 Habits of Highly Effective People, Stephen Covey created a decision matrix based on the concepts of urgency and importance as shown below.
We make this idea relevant to you as an entrepreneur, so that you’re able to apply it as soon as you return to your business.
Another idea we emphasize is value creation and focus on your company’s core competence. When you enter a restaurant and see Chinese, Indian and Italian on the menu, chances are high that all of the dishes will be sub-par. The problem with MSME’s in the Kenyan market is that entrepreneurs follow multiple revenue streams without thinking of the unique value they bring and therefore, they easily get ‘eaten’ by the competition because they spread themselves too thin.
However, if you take nothing else from the program, we emphasize the importance of focusing on a single problem and building expertise around that rather than having a ‘jack of all trades, master of none’ kind of business. Spending time building experience around a single area of focus makes you more prone to innovate as you’re more likely to understand and listen to the customers as well as reach their untapped needs, making you thrive in a competitive world.
Lastly, one of the main reasons cited in Kenya’s MSME survey report on why entrepreneurs close their businesses is the shortage of operating funds. This highlights the importance of financial literacy, which starts with the idea that your company’s money is not your personal money. Pay yourself a salary to draw a sharp line between the two. We give you more knowledge and tools to manage your cash flow.
To understand the impact of our program, an independent survey conducted by Aston Business School-Birmingham UK on 163 entrepreneurs we’ve graduated showed that they grew the value of their businesses by 106%, doubled their profits, and grew their revenues by 60%.
To learn more about the program visit the ISBI Advanced Entrepreneurship Program page
