Starting and running a business to profitability is not as easy as many people who have never tried entrepreneurship perceive it.
While many small businesses in various sectors get to succeed in their first years, studies show that only 25 percent of small businesses make it to 15 years with about 49 percent failing after the 5th year.
According to the Kenya National Bureau of Statistics (KNBS), about 400,000 micro, small and medium enterprises (MSMEs) have been dying within the first year of inception, in the last five years, raising concern over the sustainability of this critical sector.
The most common reason why small businesses fail is a lack of funding or working capital. A business needs a certain amount of to keep operations running on a day-to-day basis.
This includes expenses such as stock, funding payroll, rent, utilities, and maintenance among others. When a business does not make enough sales to cater for such expenses, it can face funding shortfalls that can put it out of operation.
Sadly, most small businesses in Kenya are unable to access credit when short of finances, a situation that has forced many to shut down.
According to HF Group Chief Executive Officer Robert Kibaara, the SME credit denial rate in Kenya is at 60 percent highlighting the need for strategy to address the financing needs of these enterprises.
Consulting firm WYLDE International attributes the high financing gap to various issues including limited experience in running a business, lack of collateral, being listed on the Credit Reference Bureau, lack of consistency in the bank statements, and lack of business permit, among others.
Mr. Kibaara says for small businesses to easily access funding, they should adopt some strategies among them partnering with lenders and separating personal and business finances strategically.
Steps to become a Co-op Bank agent, commission and withdrawal charges
Businesses can partner with lenders in various ways including receiving payments through a bank account or Paybill number as well as opening savings accounts.
For instance, the Co-operative Bank of Kenya Haba na Haba Account offers transactional solutions to small businesses, allowing them to access loans as many times as required, turning their journey into success.
The product also provides business owners with the flexibility of transacting remotely with its convenient mobile banking and internet banking services.
Below are the features of Co-op bank Haba na Haba account:
- No minimum operating balance
- Access to funds as many times as required
- Account holder can access business loans
- Debit card available for withdrawals as well as for payments purposes at all VISA branded points
- Low monthly ledger fee
- Offers transactional solutions to account holders
- Convenient mobile banking and internet banking available
Requirements
- Copy of National ID Card
- Minimum opening balance of Sh550
- Copy of KRA PIN
