START UP: RHYME & REASON

A few years ago, we had a brilliant business idea for one of our divisions whose industry we felt was on the wane. We conducted a lot of research– focus groups, questionnaires, spoke to owners of similar businesses across the world, got in contact with the manufacturers of the technology we needed for the endeavour, negotiated exemplary rates for equipment, poured through mountains of training manuals, designed uniforms and arena simulations– the works. The idea was great and the market was ready. Unfortunately, the venture required a handsome amount of money that we clearly didn’t have.

So what was this venture, you ask? We wanted to start the very first outdoor laser tag gaming experience in Kenya. In fact, it was going to be the very first in Africa, outside South Africa. The experience was engaging, the initial overheads while very high, could be recouped in a period of 14 months, running costs were minimal and since the technology was so very new, we could set up in any location within no more than 15 minutes with a maximum of 10 staff members needed. The capital intensity of the venture made us set off to find an investor in the business. We hankered down and wrote a very detailed business plan outlining what the business was, how it would work, why it would work, how much money we required and how the investor would recoup their investment.

The biggest challenge facing this venture was not the money. We got at least 3 parties interested in it and they were willing to back it for a share in the whole Sticks & Stones business, not just the events and experience arm, Tantrum (thrown by Sticks & Stones). Given that the ‘gaming’ involved simulating warfare, our biggest hurdle was getting government approval for the business. Given the sensitive nature of security in Kenya (at the time, Kenya had gone to war in neighbouring Somalia against the Al Shabaab militant group and a number of terrorist retaliatory attacks had taken place in the country), we simply couldn’t seem to get the right to launch the business. After months of trying, knocking on doors, and meetings with security heads, we finally gave into the fact that as brilliant as the business idea was, it was never going to get government approval.

There is a hilarious meme making rounds on social networks: If you see the number of youth calling themselves CEO’s, MD’s, Founder, Directors, Boss in Africa, you’d think that unemployment is a myth on the continent.

In the last article, we pointed out the disparity between people who actually owned a business and people who dabbled in business as a side gig/hustle. (I personally deplore that word-hustle). The resilience and pure determination of people trying to make something out of nothing is not just admirable but astounding and should be encouraged at the highest level. At the very same time, while we laud and celebrate these efforts to start and become business owners, an important question to ask is ‘what motives lie behind the desire to start a business?’

So far, one lesson that life has imparted in me is that, there are two reasons people do things. The first is because it’s the right thing to do and the second because it has some personal benefit. The former involves a lot of personal sacrifice and pain with little reward or recognition. The latter, well lets just say the term ‘by any means necessary’ comes to mind. Let us look at the latter.
Most young entrepreneurs we encounter have the wildest and most bizarre ideas as to what it really means to own and run a business. For them owning a business is the elevator to becoming rich, successful, free and famous (the four horsemen of business apocalypse as I have named these). And who could blame them? There’s actually a popular TV show here in Kenya that touts through its name the rallying cry of many people in the country right now: BYOB — Be Your Own Boss. (In my day, these initials were the precedence for a bad party). These lofty expectations very soon evaporate once the real realities of business set in. Dealing with an unpredictable market, mercurial clients, everyday red-tape, undependable suppliers among other business maladies soon weeds out the steadfast from the fence sitters but not before draining them of their money, morale and beating them into submission.

Like any street carnival, there are a lot of cheerleaders applauding and ululating the sudden explosion of new entrepreneurs. Governments, big businesses, investors, development agencies and individuals… and they should! Businesses are said to be employing more and more people according to statistics.

But, as Robert Bloch famously said – The man who smiles when things go wrong, has thought of someone else to blame it on.

Without pointing any fingers, the unemployment situation in Kenya is at an all time high. There are many qualified individuals churned out of local and even international institutions that simply cant be absorbed into the job market. As it stands, even those with jobs have little to show for it: Poor and sometimes dangerous working conditions, absurdly low pay, little or no job security… the list goes on. More companies and organisations are downsizing– Coca-Cola downgraded its operations and moved to South Africa in 2016. Oserian, a flower growing entity, had to lay off 400 employees while its neighbour, Karuturi shut down thereby leaving 2,600 people jobless. The numbers from the government, however, tout more job creation by counting businesses that have been newly registered as jobs created – The man who smiles when things go wrong, has thought of someone else to blame it on.

While this may be true that newly opened businesses are a form of employment or present employment opportunities for the unemployed, what the data fails to capture is that most of these new businesses are ‘side hustles’ for those already in employment. Even when these new businesses are not side gigs, the prevailing conditions– taxation regimes, cost of power, real estate prices, infrastructural deficiencies, etc. — present such a momentous task for any new business that as evidenced by old businesses moving or closing shop all together, pretty soon, these new businesses wind down.

It is not just a matter of easing the process of starting a business, this ease should extend to providing support both technical (in terms of training and mentoring) and infrastructural (better roads, cheaper power, cheaper and faster ways to clear goods and services) as well other forms such as tax incentives and breaks.

On the flip side, it is not just a matter of the government playing its role. If a business was started for the wrong reasons, providing a support structure for it won’t save it. Watering weeds does not transform them into vegetables. The self importance and grandiose many new entrepreneurs seek translates into reckless and inexcusable behaviour in the name of business. That is how we end up with C.E.Bros (highly charismatic and erratic business leaders that like the inflatable tube men appear big and larger than life only to turn out to be full of hot air).

One of the parties that we had approached as potential investors in Laser Tag said to us that they knew the Laser Tag business would never happen in Kenya. However, they were still very ready to invest in Sticks & Stones because ‘investing in the right people leads to better results than just investing in the right idea.’

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