SMEs are the biggest employers and taxpayers to governments. And yet, as studies have shown, many start-ups don’t celebrate their first birthday.

A record number of Small and Medium-sized Enterprises (SMEs) have been wiped out in Africa this year as the coronavirus lockdown hit many financial streams for these businesses.

According to the UN, one in every five small firms, which provide most jobs on the African continent, were expected to be bankrupt within the second quarter of 2020.

A $2.4 billion worth of exports, the UN warned, is expected to be lost this year in Africa.

But even before COVID-19 begun to spread in Africa, the continent was breeding its virus of business failures.

According to a University of the Western Cape study, in South Africa, for instance, 80 per cent of start-ups collapse annually.

And yet, the bright future -where Africans have jobs, homegrown services, and products, a better tax base, among others, in no small extent – lies in the continent’s entrepreneurial growth.

Do we have to witness more business failures, or are there some steps we can take to avert them on the continent?

If SMEs in South Africa and the rest of the continent were learning from failed businesses, it is highly probable local enterprises would transition into multinationals instead of collapsing at infancy.

It is unfortunate, however, that in Africa, entrepreneurs who fail in business are ridiculed. Their first-hand experience of what works and what doesn’t could provide the most authentic form of mentorship to future and current business people.

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At Human Capital International, we believe that hidden in every failure is the very clue to your success. Here are some reasons why consulting failed entrepreneurs may save your business.

Failure strengthens you for tough times.

No one starts a business hoping that it will fail. All businesses start out intending to grow and earn dividends. However, the outcome, most of the time, is different.

As an SME operator, learning from those who failed in business will enable you to manage well the sunny days in business and prepare for the stormy ones.

When you are aware of the possibility of failure, you will prepare for both entry and exit strategies.

You will avoid costly mistakes.

Every person who tried and failed has a story to tell. Many of such business owners have financial and emotional wounds that will take years to heal.

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You will learn from those with business scars valuable lessons on trust, how to deal with your staff, partners, customers, or government.

One of these groups could have been the cause of that business nosedive. Through their challenges, you may come to appreciate why you should, for example, invest in hiring experts in your business to perform specific roles.

As Ronald B, Singapore B., & Jana K have suggested, other peoples’ failures are a resource that should not be neglected. Ridiculing them could be costly for you too.

Not all ideas are worth pursuing. 

It is generally accepted that experience is the best teacher. That experience, especially the bitter ones, however, must not necessarily be yours.

One of the lessons these gallant mentors are likely to share with you is that not all “business” ideas are worth your investment.

This is a costly lesson, only those who have gone through can teach the next generation of African entrepreneurs if we don’t want them to fail as well.

You will never please or serve everyone.

While interacting with these seasoned entrepreneurs, they are likely to tell you that trying to please people was the cause of their failure.

As poet John Lydgate once said that, “you can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.”

As much as you want to satisfy your staff, customers, or partners, and even family, remember that no one business can please everyone.

The Entrepreneurs blog equally advises that if you want to succeed as an entrepreneur, focus on your niche only. You may think expanding so fast is essential, yet it will affect your business. You may only learn this through experience.

Here at Human Capital International, our counsel for African Entrepreneurs and SMEs is that we should not vilify those whose businesses are not able to stand the test of time.

Instead, let us embrace them as coaches and mentors for the next generation of entrepreneurs to help urge the growth and sustainability of SMEs on the continent.

After all failure, it is said, is not a person but part of the process for success.