How to overcome challenges faced by SMEs in Kenya
How do you solve challenges facing your SME in Kenya?
New year new beginnings, but mostly same actions and habits, we are not different from others, just like you we too had made resolutions for businesses last year, but come to think of it, we didn’t manage to achieve any, why because setting goals is one part and making it work is another part which we usually ignore, so looking back at 2021 we tried to figure out what were the major challenges faced by SMEs in Kenya and what can be done to solve them?
What are SMEs benefits
Firstly, SMEs are the major part of the growing economy. Kenya’s Micro, Small and Medium Enterprises (MSMEs) contribute approximately 40% of the GDP with the majority falling in the informal sector. While there are about 7.41 million MSMEs in Kenya, only 1.56 million are licensed whereas 5.85 million are unlicensed. https://kam.co.ke/the-focus-on-smes-is-a-welcome-intervention/
Starting a business had never been easy but not impossible either, if compared the benefits with employment it is sure worth going for.
Challenges faced by small and medium enterprises in Kenya
Some of the major challenges faced by small and medium enterprises are
1. Competitiveness – Most entrepreneurs lack industry specific knowledge and mostly reply on their experience and informal advices from their networks. As a result, they fail to analyze and design strategies needed for their business growth
2. Brand recognition- In the sea of similar products and services with everyone offering the same value, most businesses fail to create their brand images in consumers eyes. As a result, their growth become static
3. Digital transformation- While technology is growing at rapid rate, consumers are moving to ecommerce platforms for their needs, some businesses are still lacking the speed of this transformation and positioning.
4. Business automation- Most businesses do not identify the need of business process automation as a result complete reliance on owners making them burn out.
5. Expertise on changing laws- Tax laws keep changing and not every business owner can understand its implications and application to their businesses.
6. Catering financing- Getting finance for growth has always been one of the major challenges for businesses.
7. Managing cashflow- With limited finances it is hard to effectively manage working capital and regular cash flows.
8. Cheap competition- Most local businesses face cheap imports as their competition which affect their sales significantly.
How SMEs Can Overcome Five Key Business Challenges
Some tips to help overcome SME key business challenges
1. Keeping an analytical eye on top businesses performance and behavior in your industry can definitely give you an insight on what works and what doesn’t, there is no harm in trying it. However, taking an advice of an expert can help a great deal in figuring out where does your business need improvement.
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2. Brand positioning plays an important role in getting your ideal customers’ attention, figuring out what your ideal customers likes, dislikes, values, would definitely help you build a business around it, and make it stand out from competition.
3. There is sure a way out to digitize your products and services, if not at least creating an awareness on digital platform would definitely help you a ton in pulling in new customers.
4. Always consult an expert in field for tax purposes and accounting related matters in order to take sound business decision and also avoid penalties in future.
5. Cash flow management is also an important aspect of business which can be done effectively with the help of an expert advice.Above were few major challenges faced by small and medium enterprises, SMEs in Kenya and globally, we have tried to give solution to them with our knowledge and experience, hopefully if you implement them it would definitely help in your business success.
If you like it do share it with other who might benefit from it, if you are a small business owner do share in comments below what are major challenges faced by you in your entrepreneurial journey.