The success rate of entrepreneurs is 20% over a period of 5 years! Yes only 1 out of 5 succeeds with the majority falling by the wayside. A staggering failure rate and we rarely highlight this fact so as not to scare potential entrants.
And the code is not too difficult to decode—it’s the Learning/Experience Curve Effect. You need experience of investing own funds and gaining hard knock life lessons before you become a Pro.
Unlike in exams where you can calculate Learning Curve Formulas without feeling the actual pain—In business it’s your own hard earned cash that is used for experimental purposes. The investor hopes for the best of returns but results often at complete varience with planned profits.
Here are 2 case studies of ex drivers for an International NGO who each got $40,000 as pensions in 2013. They researched on tobacco opportunities including investing in field day tours. They used funds to procure inputs and followed due processes like other tobacco farmers but met the learning curve formula when a hail storm passed through Macheke. For the little that survived, they were served with Paper 2 with market prices not in their favour.
In one season pensions wiped out!
These were drivers used to long country trips on food assessment visits earning them thousands of dollars every month. The first mistake they made was to INVEST BIG and quickly amounts equivalent to what they used to earn from employment. The rush to quickly skip the learning curve and earn monies often the disaster trap.
Why many fall into the trap—Just like they say in Economics that prices are sticky downwards—Downgrading life styles is a sticky process. This is a very difficult and painful process few are well prepared for. A very costly experience which guides investment decisions.
From earning $4000 a month to join the streets and starting from the bottom and invest in a $1000 business and be patient to let it grow is akin to a jail sentence. But on the streets you have to go through baby steps till you are able to walk and run.
The 30 day monthly salary comfort is removed when you join the informal sector. And you need not carry your formal employment titles such as Professor, Actuarial Scientist, Project Manager, Senior Banker, Accountant, CEO etc
Our advice is take your time in analysing informal sector trends. Get enough case studies in addition to a lot of researches. Take the plunge and be realistic on your targets. It is so easy to lose it all in a blink of an eye. Engage professionals for advice and preferably those who have been on the ground for years.
