Better informed businesses have higher resilience
Dr Jasper Grosskurth
While capital is hailed as a key factor in setting up a business, several other considerations have become critical for successful entrepreneurship in Kenya and across the globe.
Important ones include the line of business one wishes to pursue, the amount of profit one is likely to reap, necessity for staff, and paramount, how one goes about to register the chosen venture.
While meeting regulatory requirements when setting up a business is important, overly rigid administrative systems and procedures for unnecessary licences are prohibitive and leads to manifestation of corruption and bribery.
Small business operators often lack time and resources to get informed about complex regulations leading to illegal payments to either cover up mistakes or avoid hurdles resulting from these requirements.
At the same time, there are numerous cases where businesses are required to submit same information to different government agencies in different formats— a lengthy, expensive, and frustrating process.
Past research by Kenya National Bureau of Statistics indicate that despite their significance, three out of five businesses fail within the first few months of operation.
This has been attributed to weak business structures, often a result of the inability to the meet prerequisite regulatory requirements, leading to mistakes whose cost keep rising during business operation.
Accessing authentic data in setting up a business is as important as providing them to authorities.
While awareness is growing amongst small business owners, there still exists a gap that calls for guidance to help them identify and deal with of bribery and corruption.
In sealing this gap, social media platforms have proved a great resource in getting information that helps entrepreneurs operate better structured businesses.
While there maybe questions on authenticity on these platforms, one cannot ignore the positive effect that various discussions on diverse aspects of business have had on some ventures.
Without incurring high expenditures, small business operators can raw from peer experience and experts on these platforms.
Data-sharing among agencies and standardisation of formats could decrease bureaucratic burden on business.
In Finland, for instance, the post office offers an electronic client service through which companies and associations can make declarations to authorities which collect statutory data, allowing users to report data only once.
Countries across the world are reaping benefits associated with tools to reduce bureaucracy and limit corruption for SMEs.
Embracing data to simplify administrative procedures are some solutions. Data analytics can further interpret and derive conclusions specific to corruption.
Businesses owners are encouraged to incorporate anti-corruption policies as part of a business culture and operations.
This means showing employees, customers, and suppliers the company has a zero-tolerance policy on bribery and corruption.
Use of data can also support enacted laws to tip scales towards integrity and prevent corruption.
Corruption and bribery are a key risk that needs adequate consideration while assessing risks in setting up a business.
This then emphasises that besides being able to raise capital, there are other pertinent issues an entrepreneur must take into consideration before they can get their head out in conquering uncertainty of the business environment. — The writer is Managing Director, Dalberg Research, Kenya