The rate at which Zimbabweans are starting businesses is remarkable. It is commendable because it seems people have been awakened to the realization that depending on a job does not always cut it. At best it is more circumstantial than it is deliberate and by conscious choice. That is part of the reason why most businesses being started are failing to grow. It is, in part, due to people who are starting businesses with no clue as to the dynamics simply because they are just following the crowd. It is funny I have said that already because it is actually one of the reasons why many Zimbabwean businesses fail. Since I have already gotten ahead of myself, here are more reasons why.
Deliberate Choice Premised On Various Reasons
This might sound funny but most people do not actually want their businesses to grow. For some, it is informed by fear thinking they will not be able to handle big business. For some, it can be getting too comfortable in a comfort zone. If someone is running a small business and they get so accustomed to it they can never see the need to grow due to being too comfortable. So that is one of the reasons why many Zimbabwean businesses do not grow – they just do not want to grow.
Poor Or No Investment In Marketing
Most Zimbabwean businesses are not reflective of the importance of marketing. The sad thing about this is that there are businesses that are actually quite good but they are not known. Most businesses assume that the moment they start operating people will just know. Some think that word of mouth is enough but alas that is not entirely true. Some even think that organic marketing on social media will cut it. By organic marketing, I am referring to just posting stuff without paying anything i.e. not using paid ads or boosting posts. It is very characteristic of many Zimbabwean businesses to not be known by a significant number of people. At times I wonder because I see few established Zimbabwean companies using lots of money to market their brands. Yet many other small Zimbabwean businesses do not see the need – at the same time not being established yet.
Cash Flow Problems
You must know that this is actually one of the biggest reasons why a business fails altogether. Before the failure sets in, it all starts with lack of growth. There are so many different types of cash flow problems. For what it is worth, business growth can only occur when the money is available. Many Zimbabwean businesses are realizing poor sales and thus low revenue. This translates into low profits or even zero profits. Lack of profitability means there cannot be surplus money to be channelled towards growth. At the end of the day, business stays in one place or even retrogresses. For some, the story is somewhat different though. Some businesses do realize good sales, good profits and all but they do something terrible – my next point.
Not Re-Injecting Money Into The Business
Most business in Zimbabwe can start quite well and realize good revenues and profits. However, poor financial decisions and leading lavish lifestyles can nullify all those gains. It is commonplace for Zimbabwean entrepreneurs to start spending profits on luxuries at the expense of the business. I know of one real-life example where this issue of not re-injecting money into a business-led to the demise of the business. There was an individual who had business A and decided to open another different business, business B. The business model of business B meant any profits would begin to trickle in at least a year after starting the business.
Guess what they did? They took startup capital for business B from business A – something they did for many months. This meant that they were not re-injecting profits from business A into business A. Guess how it ended? Well, business A crumbled and as of today it no longer exists. Ironically had they still been running business A today it would be more profitable and low-maintenance than business B. Sad! You will also find someone buying an expensive high-maintenance vehicle the moment they start realizing any profits. Many businesses have failed to grow because sooner or later the business crumbles due to cash flow issues I mentioned earlier.
Lack Of Structure And SOPs
Most Zimbabwean businesses are operated haphazardly. If you ask some businesses to give you their business structure they might not be able to. SOPs – standard operating procedures – most businesses do not have them. Do you know why this is detrimental to any business? It is because you cannot monitor and evaluate your business effectively if you have no structure and SOPs. You cannot identify problem areas and neither can you identify areas of opportunity. This is because you are not in a position to collect data, analyse it, and draw insights from it. Even the cash flow issues I highlighted earlier, how can you effectively stay on top of how your money is flowing if there is no structure and there are no standard operating procedures? Most entrepreneurs do not even know the tenets of running a business professionally.
These are some of the core reasons why many Zimbabwean businesses do not grow. The great thing about all this is that it can be avoided or even rectified. As a Zimbabwean entrepreneur, you have to be passionate and deliberate about growing your business. Invest time and resources into marketing your business (anything between 6 and 20 per cent of your gross revenue should be channelled towards marketing). Effectively manage your cash flows, always re-inject most of your profits into the business, plus structure and standardize your business processes or operations.