According to World Bank annual ratings Kenya is among 61 out of 190 economies in the ease of doing business recording an improvement from 80 in 2017. Report on the topical issue ‘Doing Business’ captures several important dimensions of the regulatory environment by providing quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
It presents data to compare business environments over time with an aim to create efficiency and present measurable benchmarks to drive change and encourage youth to start business.
However, despite all these efforts cost of credit continues to be a challenge among youth interested in start-ups and self-employment calling for alternatives methods of raising funds.
Crowdfunding and market place lending is disrupting the traditional methods in the financial services sector while delivering the flexibility and robustness needed.
Crowd funding is not easy as it takes deep and well thought out idea, commitment, high momentum, sourcing backers, and consistent reputation management. Young people should not imagine that they will step out and pitch an idea and immediately attract investors. Research has shown that eighty per cent of crowd funders are second-degree friends or friends of friends.
In order to succeed in crowdfunding campaign for start-ups, young people should ensure they first set out clear objectives they want to achieve from the campaign, do their homework on what it takes to successfully source funds through crowdfunding i.e rules, regulations and etiquettes, identify most appropriate structures and platforms, determine target audience, develop communication and marketing content, articulate clear feedback mechanisms and form a team to follow through all campaign promises to potential investors.
Some of the failures of crowdfunding campaign are associated with poor planning. It takes a lot of meticulous arrangement and effort especially at early stages to ensure traction especially because 30 percent of crowdfunding success happens the first three days after launch.
Mismanaging backers is another source of failure. Backers are in it for the envisioned rewards hence the need to provide incentives and rewards program that can excite them to actively participate.
It is extremely critical to have a well-managed communication desk to promptly respond to high volume of questions, emails, and comments about the campaign, rewards, and the expected services and products. Finally, having a team of trusted confidents whose role is to watch and proactively point out what is not working in your campaign and propose a quick corrective action.
The writer is senior lecturer and social scientist at Karatina University.