Everyone in this life is a witness of some sort to others, whether we like it or not, or are willing participants there on or not. Everyone’s life is either an example to others on what to emulate or avoid. Everyone’s life serves one of those purposes at least. I have scars and trophies to show for my decade-long entrepreneurship journey I have embarked on whose lessons I would like to share with would-be entrepreneurs and those having just started running their new businesses. By Nimroth Gwetsa, 30 November 2021.

Some of us have walked and got the T-shirt so those following us could run. Our journey, for a decade now, in entrepreneurship has enabled us to see and experience things that work and others that do not. Our duty is to share those insights so those exposed to our testimony do not have to repeat mistakes we have made, but walk further than we could.

One of the biggest impediments to success and growth of small businesses is failure to effectively resolve “key person” risks, particularly of the centrality of the founder in every aspect of the life of the business. It makes sense initially for the founder to be central to ensure awareness and influence of every aspect of the business and to lower costly overheads. However, that level of involvement should not be sustained for too long, for it will return later in life to bite you.

1. Delegation

Find a way of taking some load off yourself much earlier by getting some extra pair of hands, even if from an intern, to allow you space and time to reflect on other aspects of the business while others are taken care of by those extra pair of hands under your leadership.

2. Delineation

Always remember to treat your business as a separate legal entity. In my interactions with many of my counterparts, I have seen how others have blurred the lines and regarded their businesses as extensions of themselves and personal property. The blurring has been more prevalent in the business and financial administration areas.

Sometimes you would find the managing member easily making binding personal decisions, and even business ones about personally investing in other ventures, and easily funding those ventures with the other business’ money without that business having a stake in those ventures, or there being no formalised agreement or structure to note such movement of funds.

3. Personal Development

We ought to increase our basic knowledge in management finance, personal and business tax implications and enhance our understanding of how we could maximise gains by stretching and leveraging our resources.

Because of our ignorance and naivety, we often let money slip through our fingers by our failure to restructure our business activities in ways that can maximise income and reduce overheads, including incurring unnecessary tax charges. If we cannot increase our financial knowledge, we should at least try to procure services of a good accountant we could build lasting business relationship with.

4. Income diversification

One other biggest lesson I have learnt is that every entrepreneur and small business owner should strive earlier on in the life of the business to have at least two types of income in place, one for fee income and another some form of annuity.

The fee income would be varied and enable the business to earn a premium from the application of yours or workforce’s knowledge. This type of fee is usually irregular and sometimes has longer sales cycles, hence its quantum is usually large.

The annuity income is small but regular. Its purpose should be to fund regular expenses and fill the income gap caused by longer fee income sales cycles. The annuity business does not have to be a serious venture, but sufficiently important to provide regular income to sustain the business while converting large business transaction opportunities.

The annuity business is often taken for granted by entrepreneurs as it does not bring large fees. Many ignore it, preferring to turn their full attention on pursuing large fee business transactions.

However, ignoring annuity income, however small the contribution may be, is what usually causes the rapid downfall of many an entrepreneur. The reason is owing to those large transaction prospects experiencing delays in conversion resulting in available “buffer” funds being used to fund regular expenses without regular income earned to limit the net outflows. Such prolonged imbalances in income flows against expenses could cause bankruptcy or high indebtedness. Left unresolved for an extended period, such problems could cause a vicious circle of income earned having to close the big financial hole left by prolonged sales cycles and hindering opportunities for annuity income creation.

Do not be deceived by the quantum of fee income that may be earned. The funds can easily disappear with no trace of tangible improvements to show for it. It explains the importance of investing such funds on assets that can create regular income, not only for rainy days, but to reduce regular expense overheads.

5. Certification

Nowadays, there are few fee income opportunities that do not require and emphasise some form of certification or accreditation. Find a way of keeping abreast of developments in your field of expertise and of obtaining some accreditation or associating with an accredited person. We easily lose opportunities owing to lack of some certification we could have easily obtained.

6. Professional Body Membership

The way of the world seems moving in favour of gatekeeping business. Few opportunities are available outside some influence or intervention of gatekeepers. By gatekeepers, I’m referring to a barrier of some sort that clients could use to “sift chaff from wheat” in their business interactions with potential clients/ suppliers. You do not want your business regarded a chaff and missing opportunities because you do not possess what the market requires as minimum entry to participation.

7. Conclusion

More can still be said on this article’s topic, however, the insights shared thus far are sufficient to help others avoid pitfalls that some of us fell into but are alive still to tell the tale to benefit others.

Lastly, it would be remiss of me not to tell you about the importance of maintaining a good professional profile and performance track record. When all else has failed, your track record is what will make a difference on whether you have a lifeline and light at the end of the tunnel or sink further into despair.

Life is brutal, so are many people out there! You ought to have or build on something that can spur you on when difficulties arise.

In all things, I believe in prayer, not as an avenue for abdicating on responsibilities, but a way of gaining peace and sanity during trying times so one could forge ahead, because the occurrence of those times is inevitable.