Incubation centres are turning start -ups into thriving enterprises
A number of Kenyan fledgling start ups (mainly micro, small and medium enterprises) become successful after being nurtured by incubators, according to a research done by two African universities.
The research carried out by the Catholic University of Eastern Africa (CUEA) and Nelson Mandela Metropolitan University (NMMU) indicates that incubators help entrepreneurs to overcome obstacles that are ordinarily associated with start-ups.
In Kenya, the informal sector contributes widely to the growth of the economy. These small enterprises are currently filling the unemployment gap by coming up with innovative ideas to solve common challenges experienced by Kenyans.
Business incubators provide experience accumulated over the years to encourage growth of such small businesses. Through their mentorship programmes, beginners are motivated and guided through a monitored procedure which seeks to propel the business idea into further growth.
This has seen the number of incubators in the country rise to accommodate the ideas and new inventions presented by the youth. To that end, colleges and corporate organizations are coming up with incubation centres or partnering with existing ones in a bid to encourage the young minds to explore extra avenues of wealth creation.
The founder of the Chandaria Business and Innovation Centre, Dr. Manu Chandaria, says that the youth have the potential to start their own business initiatives and create employment in the process. He adds that the rising unemployment rates can only be curbed by innovation and effective use of natural resources.
“Kenya’s biggest strength is her manpower but unfortunately, there are many graduates without anything to put their hands on to create business and wealth for themselves and the country,” observes Dr. Chandaria.
Dr. Chandaria is among the top Kenyan industrialists. He commands a multimillion shilling enterprise that has a presence in over forty countries. He has won several awards in East Africa and internationally because of his entrepreneurial prowess.
An example of a successful incubated start up in the country is the AfricarTrack International, a vehicle tracking control management system founded by two innovative brothers Jacob Maina and Douglas Mwangi. The duo had their idea incubated at the Chandaria Business, Innovation and Incubation Centre where they received mentorship and funding from the top industrialist among other business magnates.
Their innovation, which has been used to solve rampant car theft cases in the country, earned them the first prize in the COMESA Innovation awards 2014/2015 in Addis Ababa, besides other accolades in the country. The innovation centre seeks to nurture promising students to develop their passion early in life.
What business Incubators provide
Industrialists claim that starting a business without mentors to monitor its growth and development process comes with unprecedented challenges. Copyright infringement for example, is a major challenge facing startups.
Maina and Mwangi have received a lot of assistance from the Kenyatta University Intellectual Property Rights office to protect their innovation from copyright infringement. The office was instrumental in identifying, protecting and managing their research and creativity. It had secured their creativity from other imitations in the market.
Other troubles like unforeseen expenses in labour, rentals and unstable cost of raw materials are matters easily solved by business incubators.
Incubators offer services that include training, business advice, marketing assistance, technology transfer, mentoring and information to help small and micro-entrepreneurs improve the performance of their businesses.
Why a business might fail long after being incubated
Ideally, a business incubator nurtures a developed idea to provide resources needed for it to become fully operational, but sadly not all start ups survive after this period.
An incubator mostly provides physical infrastructure that enables businesses to develop within a controlled environment.
Dr. Bitange Ndemo,a university lecturer says that most start ups fail to pick up successfully because the co founders are often not well versed with leadership skills.
He says apart from the innovation, the management of the business dictates its success or its ultimate failure.
“African startups fail miserably on leadership. There is often difficulty in transitioning from a startup to a growing company,” he laments.
He adds that most firms take time to professionalize startups and end up hurting growth prospects of the firm by failing to appoint a board of directors to provide diverse leadership capabilities.
The founders of these startups are usually so young and inexperienced that they need constant counsel to move through the ladder of organizational leadership with ease, Dr. Ndemo says.
Douglas Mwangi faced that challenge while guiding AfricarTrack as a startup.
“Being co owners of the business, we did not have anyone to answer to, hence we lacked accountability. All the decisions we made, including the wrong ones, affected the business, “he says.
According to Mwangi, it is important to have people to help in making informed decisions to avoid severe mistakes that could lead to the collapse of a business venture.
Besides, it is worth noting that success of an incubated business relies on the extent to which incubation-programme staff understand and cater for the customers’ needs, especially in the handling of the development process.
In a country where more than 30 per cent of the youth population is unemployed, successful entrepreneurs are addressing this disparity by mentoring the youth. The young population is rewriting the narrative of waiting for the government and corporate organizations to avail job opportunities.
Mwangi, a former incubate says that incubators inspire young people to create solutions to every day challenges. “Innovation can challenge a soul or two to think outside the box,” says the innovator.
The COMESA Innovation Awards launched in 2013, celebrates and recognizes innovations by individuals and institutions to advance the regional integration agenda.
Dr. Ndemo agrees that in order for more startups to sustain their ventures and still remain competitive, institutions have to invest more in research. This research should build an ecosystem that brings together the government, research community and the private sector as well as develop incubators to nurture successful start-ups.
More importantly, he adds, these institutions should develop new policies that create a good environment to inspire innovation.
Currently, technology, fashion and farming are the most focused –on areas in business nurseries, with other sectors yet to be fully exploited. Most successful ventures identify the social gap to find solutions to challenges affecting a wider demographic of people.