Fear of failure? Rather the effects of failure!

In today’s edition of the Nation newspaper, First Merchant Bank vice chairman Hitesh Anadkat has decried the poor risk-taking culture amongst Malawians. He noted that the country has a lack of entrepreneurs who are ready to risk it all for fear of failure. He also pointed out the need for people to sacrifice and save, and the need for the country to encourage entrepreneurs regardless of colour.

Oversimplification?

Mr Anadkat raised important issues worth contemplating in the paper he delivered to an accountant’s meeting. However, he seems to oversimplify the issues as well.

These are the steps I would take as an aspiring Malawian entrepreneur. I save a few thousands of Kwacha’s, say K300,000, and venture into a business. I have a near excellent business plan and have the technical know-how to get things going. Two months down the line the environment has changed and the market is not responding as anticipated. So I go to a bank, for argument’s sake, First Merchant Bank, to get an overdraft facility. I have been a personal account holder for a few years but my business account is just two months old. I have no business track record worth talking about. My application for an overdraft is rejected, this is despite having a near excellent business plan. The reason it’s not excellent is that I just didn’t factor in one or two external environmental factors that could affect my whole business plan. So with no overdraft, my business folds.

And it gets worse

I go to a string of banks with a revised business plan to get a loan but I am rejected. Why? I failed before, am bankrupt so to say, am likely to fail again. After all, I have no business track record worth writing home about. So am basically screwed. Tail between legs, I start applying for a job. No one wants to take me because am high risk. I could leave anytime to go and restart another business. Am condemned to the growing list of the unemployed!

Example to emulate

I know of a project under Absa Bank called the Incubator Fund where the bank will provide loans to people who intend to start a business but lack one skill necessary for business. Say a bartender, with many years experience, would get a loan. Absa would assign a person to help him with the finances for an agreed period of time. The business owner would handle procurement, marketing and customer service as he has the experience doing that. This way the business is definitely assured of at least short term survival while the bookkeeping skills are transferred to the owner or a partner/family member who will help run the bar. At the end of the day Absa Bank is happy it has empowered an entrepreneur who in the medium to long term will have full control over his business and make the necessary repayments back to them.

I think putting the blame squarely on fear of failure is not right. The domino effect of that failure is not a pleasant one. It’s torture!