Phakathi Group CEO, Others Explain Why Young Entrepreneurs Fail in Business

Phakathi Group CEO, Others Explain Why Young Entrepreneurs Fail in Business

ENTERPRISE54 – While entrepreneurship presents massive opportunities to curb youth unemployment, many young entrepreneurs are ill-prepared for the realities of doing business. This is according to expert speakers set to hold entrepreneurial workshops at the upcoming Business Opportunities and Franchise (BOFE) expo, to be presented in partnership with Eskom at the Coca Cola Dome in

ENTERPRISE54 – While entrepreneurship presents massive opportunities to curb youth unemployment, many young entrepreneurs are ill-prepared for the realities of doing business. This is according to expert speakers set to hold entrepreneurial workshops at the upcoming Business Opportunities and Franchise (BOFE) expo, to be presented in partnership with Eskom at the Coca Cola Dome in Northgate, South Africa, next week.

Experts in the field of business development say Generation Y’s aspiring entrepreneurs have been raised in an environment where things move quickly and gratification is instant. Therefore, many of them lack the endurance to stay in business when the going gets tough.

Success doesn’t happen overnight

Young entrepreneurs are handicapped in that they ‘don’t have the patience gene’, says Tshepo Phakathi, Group CEO of Phakathi Holdings, whose KAELLO initiative promotes entrepreneurship and mentors thousands of young aspirant entrepreneurs.

Phakathi says times have changed: where business once took around 20 years to achieve substantial success, technology now makes it possible to penetrate markets faster. However, it still takes years to achieve success, a fact that escapes too many young entrepreneurs. “Too many young entrepreneurs want it all yesterday. They see successful business people, and don’t realise what they are seeing is just the end result of years of sweat and tears. So when they launch a business and they have not achieved the expected levels of success in a year or two, they give up, or they launch a new business in a different sector.”

Phakathi points out that the people who tend to make it in business in the long run are those with endurance. “What takes time in business is building credibility and contacts – there’s no substitute for time,” he says, adding: “It takes 20 years to get 20 years’ experience.”

Phakathi will address workshops at BOFE on the topic ‘The 8 fundamental laws of success’. One of these, he says is the ‘law of attraction’, in which what people think about and want the most can manifest into reality through a series of mechanical processes.

Applying old principles to modern business

Simon Mtsuki, motivational speaker and MD of SGM Motivations, says Generation Y tends to expect instant results and instant success in their own businesses too. “Too many young entrepreneurs go into business with the ‘America dream’ approach – they expect things will happen quickly, or funders will step in and make it happen, like it happens in the movies. Of course, this is not the reality. And when entrepreneurs are faced with the harsh realities of starting a business in the real world, they might give up, or turn to unethical practices.”

Mtsuki notes that the old tried and tested advice about working hard and being patient still hold true in the modern context. “Young entrepreneurs today need to understand the importance of process. There is no easy money and businesses don’t succeed overnight. Entrepreneurs also need to own this process – no mentor or funder is going to step in and make the business succeed. They need to understand and appreciate that sweat, energy and time are needed. They must look to the old principles – patience, hard work, getting burnt and trying again – and apply them to modern business.”

Aiming to ‘burst the bubbles of naivete’, Mtsuki will address aspiring entrepreneurs at BOFE about attitudes that hamper business growth, focusing on the need for entrepreneurs to own their journey to business success, and highlighting the fact that with the right approach, all entrepreneurs have greatness within them. “Look at the apple,” he says, “its greatness is in its seed. People are the same – abundance lies within.”

Common traps for entrepreneurs

Brian Walsh CEO of the REAL Entrepreneur Institute, says misconceptions and naivete cut across all age groups. “Whether you’re young and starting your own business or older and leaving a corporate to start a business, the challenges are the same,” he says.  “Often, people go into business for the wrong reasons. They may go into the wrong line of business, thinking this is a lucrative field, but it is not really something they can be passionate about.”

Others, he says, may launch a business in a field they are so passionate about that they neglect to find a model to monetize their passion. “Too many entrepreneurs are so blinded by enthusiasm that they fail to do sufficient market research. It’s important that entrepreneurs first find a business they love, then determine how to monetize it, then identify whether there is a market for it and who the competition is. It’s also very important to try and avoid using borrowed money – this is one of the biggest traps people fall into,” he says.

Walsh will address the BOFE on the topic of ‘The secret to success’, explaining why business people struggle, and outlining strategies for success in setting up and running a business.

Building a network of experts

Jean Chawapiwa, who has a long background in executive management roles, founded the Win Win Solutions 4 Africa Consultancy around a year ago. She says entrepreneurs such as herself may be skilled and experienced, but that some aspects of running one’s own business come as a shock nonetheless.

“One of the biggest shocks for me in moving from a corporate to owning my own business was not having an IT helpdesk,” she says. Chawapiwa says the expertise ‘on tap’ in a corporate environment is suddenly not available to the entrepreneur, forcing the new business owner to grapple with the practicalities of getting IT systems up and running, drafting contracts, managing finances and handling HR functions. “You need to identify your own strengths and weaknesses, and determine the value of your own time. Then you need to extend your network to include experts in areas where you have weaknesses – such as lawyers, accountants and IT support,” she advises.

Chawapiwa says she discovered that administrative tasks can take up a lot of the entrepreneur’s time and are often better outsourced. “In the beginning, I found it challenging to put together costing sheets and invoice up front. I discovered the hard way that signing contracts, asking for payment upfront and efficient collections are important. The entrepreneurs who come to me for advice through entrepreneur development organisation Junior Achievement Africa ask the same things – how to cost and how to invoice,” she says.

Chawapiwa will address a workshop at BOFE on personal development for business success, sharing some of her key learnings in the move from the corporate world to owning her own business.

“People need to be aware that there’s a big difference between working for a corporate and working for yourself. There are models to follow to be successful, and you need to maximize your strengths and get support in areas where you’re weaker,” she says.

Rural entrepreneurs being left out

Percy Mphaho, founder of Vision 2015 and veteran rural businessman, says funders and big business are missing a massive opportunity by neglecting the rural market.

“Rural entrepreneurs lack access to information, funding and mentors,” he says. “In urban areas, business people have access to a great deal of information about funding, best business practice and more. But if you drive around rural areas, you find isolated spaza shops where the owners don’t have business bank accounts, lack IT, and incur unnecessary cost by having to travel to the nearest town to buy small lots of goods for resale. If they had access to information, banking, technology and mentorship, they could significantly improve their profits. They could, for example, collaborate on procurement to save money and benefit from economies of scale.”

Mphaho says big business, the IT sector and the banking industry have a ready market in rural enterprise. “There is a rising middle class in rural areas across South Africa, eager for technology and information,” he points out.

Mphaho will speak at BOFE on the challenges facing rural business, and the opportunities these present to banks and big business.

The BOFE Watt-A-Buzz Zone, presented by Eskom and www.entrepreneur.co.za, will feature full programmes of free workshops and presentations by expert speakers. For the full agenda, go here.

BOFE exhibitors range from proven big-name franchise operations to innovative business opportunities in varied sectors that are at the edge of new trends, technologies and market needs. Exhibitors also include service providers that offer support to business owners.

 

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  • Peter McCann
    September 9, 2014, 5:02 pm

    Obviously, having an adequate market and sufficient funds and resilience are required – in other words, market, money and management. The North American experience is that 80% of new businesses fail in the first five years. My sense is that many markets can sustain a new business if there is sufficient money and sufficient resilience to withstand the setbacks that always happen – always. My guess is that those who have struggled in life are better equipped to be entrepreneurs, and those who have been pampered are least suited.

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