SMEs constitute to 40-50 % of GDP, not only Kenya but many African countries. Additionally, Kenya’s workforce comes 80% from SMEs. These numbers look good on paper and stress the importance of SMEs in the economy. However, a scratch below the surface reveals that more than 80 % of these SMEs do not make it past their 2nd birthday. A collection of factors that work against them ensure that most of them die before they can realize their potential.
A study dubbed Doing business with SMEs in Kenya by Strathmore Business School and Invest in Africa which is a not for profit organisation that supports SMEs scale up through providing access to markets skills and finance brought to light these factors that hinder their growth. Lack of finance, lack of corporate governance, lack of business opportunities, lack of appropriate business skill are what stood out.
A closer scrutiny at SMEs shows even those that have this access to capital, corporate governance and training may still fail due to lack of a growth mindset from their owners. Growth-minded means looking for ways to constantly improve. It means being open to change and embracing it.
What is striking is that SMEs are in a better place to adapt and change since they are small in operations and hence agility in decision making. Big organisations take longer to change tact in operations when things are not going to plan. For example, if John a kiosk owner at the bus terminus realizes that business is slow, he can move his operations to another stage in another part of town. It is easier for him make such a decision to change the location unlike a big organisation like Coca-Cola to decide to shift operations to another country. There are numerous consultations and research to be done due to the magnitude of the operations, they have to look at projections into the future and analyse that those changes are not permanent. For John, if he still finds that the other stage is not as profitable, he can still come back to his original place.
The opposite of a growth mind is a fixed mind which essentially concentrates on one way of doing things. The world today is no place for a fixed thinker, if in doubt, please look at many of the disrupted traditional industries like the taxi, housing, accommodation, sports betting, printing and many others. In all these industries, there are those who tried to fight the changing trends all in vain.
Therefore, when sales take a dip due to the harsh economic times, the unfavourable election conditions, or when a superior brand introduces a new product in your category, you should analyse the change to see what the market is telling you. By being at the forefront of change, you are able to even anticipate change and take the necessary measures to stay ahead of the game.
Another aspect of embracing change is the ability to adapt quickly to changing market conditions. In this age of disruption, access to information and uncertainty, completion can come from your unlikely source. A boy with internet access in his bedroom can develop a better service than yours. Therefore, change is the only constant thing in your business. However, your ability to respond and adapt to change is key to success.