‘We can learn a lot from failed startups’

KABELO MASOABI

LERIBE – The most common reasons small businesses fail include lack of capital, an insufficient management team, flawed infrastructure of the business model, and unsuccessful marketing initiatives, and Makalo Molapo says he learnt this the hard way. The 36-year-old man from Maputsoe was a year ago forced to shut down his printing shop following a one-year struggle to manage it due to inefficiency in business skills. However, the ambitious college dropout says he plans to make a massive return to the sector, after receiving business mentorship from the Basotho Enterprises Development Corporation (BEDCO).

Molapo says he has learnt that a business plan is a very important strategic tool for entrepreneurs. He learnt that a good business plan not only helps entrepreneurs focus on the specific steps necessary for them to make business ideas succeed, but it also helps them to achieve short-term and long-term objectives. A great idea is meaningless if not backed by proper financial management, he says, echoing Benjamin Franklin who once said, “If you fail to plan, you are planning to fail.”

Molapo says he now understands that wisdom better. “While a business plan is essential to entrepreneurship, not every entrepreneur sees the need for one. Many are reluctant to have their plan written down and I was one of them. “I started a printing business in February 2021 and 12 months down the line it collapsed and I had to lay off four employees in the process. The shop also manufactured T-shirts on a small scale.

“Though I had a good idea, I failed to execute it in a workable and long-term way because I was stubbornly mismanaging the profits,” he says, in regret. “Again, no one wants to be told that their ideas are bad or more precisely, unviable. This is one of the most common reasons why small business plans fail to take off. “The solution is to do your research, find viability for your product or service, talk to your prospective customers, and get as much feedback as possible,” Molapo also observes.

A large number of business funding experts support the idea that having a good business plan is not enough. Even excellent business ideas can be useless if one cannot formulate, execute and implement a strategic plan to make a business idea work. Creating a business plan involves a lot of thought, said BEDCO’s Micro Enterprise Project Manager Lebohang Mafela, while speaking at a recent business forum held in Botha-Bothe.

Among its tasks, BEDCO also assists new and existing businesses with developing and implementing business plans. “Of course, you need to consider what you want to do and use that as a starting point. It does not need to be complicated. At its core, your plan should identify where you are now, where you want your business to go and how you will get there. Writing a good business plan can go a long way towards reducing the odds of failure. Well, without one, things will never be sustainable.

“You won’t know how much it will cost to start a business, its expected expenses, revenue, price, etc. This means you won’t be able to properly plan your operations,” he added. Molapo says he has learnt of some basic reasons to write a business plan. “One, in order to raise money for your business, potential investors or lenders want a written business plan before they give you money. Most small businesses underestimate how much money they will need for their operations.

“This leads to a severe capital crisis early on, which will discourage employees and deter investors from considering you. Not enough capital means not enough innovation and not enough talent. That’s when growth becomes impossible. “Two, as an entrepreneur, having a business plan helps you to define and focus on your business ideas and strategies. You not only concentrate on financial matters but also on management issues, human resource planning, technology and creating value for your customer,” he adds.

“Three, having a business plan helps you identify potential weaknesses in your idea. It also helps identify experts and professionals who are in a position to give you contributory advice and share your plan with them.  “A business plan will help you to communicate your ideas with stakeholders; a business plan is a communication tool that you can also use to convince people to work for your enterprise, to secure credit from suppliers and attract potential customers.”

In short, Molapo adds, “With these reasons as a checklist, it will be easier to launch and manage your business. It will go a long way in ensuring that your small business plan succeeds in any competitive market.”  “Nevertheless, other business experts show that even with the best of intentions, a significant proportion of small business plans fail. “They advise that this should not be discouraging news if one is planning to start a business – what this means is that there is a lot one can learn from startups that fail.”