As a small business owner, life may seem hectic enough whilst just doing the basics. Juggling a small budget, expenses, business growth and marketing is difficult when you’re just starting out. Risk, and risk analysis, often doesn’t enter the mind. However, big business analyze risks regularly, as exemplified by slowed funding into Kenyan energy infrastructure; the threat of political turmoil in East Africa has led to the Development Bank of South Africa slowing it’s $1.37bn East African investment fund. Big businesses plan for risk, and you should, too.
The Kenyan government is encouraging startup growth, offering rewards to the 15 of the most promising startups across the country – which is great news for entrepreneurs and sets the tone for increased growth. Take advantage of the support for your business and employ a cogent risk strategy.
Currency control risk
For every country across the world, currency control is a major aspect when considering business risk. This is best exemplified in the UK, where political turmoil has caused the pound sterling to keep dropping – to as much as -20 pence versus the Russian ruble, according to UK paper Telegraph Money. Whilst occurring thousands of miles away, Brexit is affecting Kenyan exports. According to the Kenyan Flower Association, a classic niche market, Brexit is exacerbating uncertainty created by the KSH 4bn EU trade deal. With those lower exports comes changes in the KSH. As you can see, currency change can have deep impacts, all the way down to small business. Accordingly, it’s wise to develop a currency control risk plan that insures against and anticipates fluctuations.
Employee retention and turnover
You may be aware that Kenyan business struggles to hold talent. Increased stability in the region and attractive employee packages means this has become less pronounced in recent years; however, it remains a challenge. For a small business, where workloads are typically heavier on employees, this can be a key element of business risk. Tackle the possibility of employee loss by spreading skills around your workforce and ensuring that every cog in your machine is able to take up the tools of another if required.
Political tension risk
Aside from the threat posed by Al Shabaab, Kenya is facing the prospect of a little political turmoil from the interactions of state and regional governments, with the Jubilee Alliance looking to build regulatory oversight and boost productivity. Dialogue is opening up and stability is the word on the lips of nationwide legislators. That being said, there is always the chance of friction between regional law and smaller, town based rules. Adapt by being flexible in your approach and staying up to date with political developments; look at your business processes, and what may be affected by changes, and plan contingency around those analyses.
Business risk is important for business, both big and small. At a low-end level, you can craft a strategy yourself; and really, when you get down to it, there’s little more to it than keeping your eyes on the news and adapting accordingly.