Starting a Small Business in Malawi? Avoid these five mistakes.

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Starting a business in Malawi is both exciting and challenging. Having it grow is even harder for most people.

Research shows that 80% of small businesses fail within the first five years of operation. This is a common fact: the rate of failure in small businesses is very high. It is for this reason some people get scared to start any kind of business; they are afraid the business will fail and they will lose money.


However, some people out there are determined to do business and hope to succeed, anyway. As there are others still doing business and they do not regret starting the journey. Their success is a motivation for everybody to see.

It is clear people who excel in business poses street knowledge that others who fail may not have. 

Although it is difficult to guarantee success in business, there are some common mistakes to avoid when starting a small business. This blog discusses five mistakes to avoid when starting a business.

Avoid Starting a Business in Malawi with loans

It is easy to get loans in Malawi, but it is hard to repay them, at least for many people. Borrowing money to use as business capital is not always the best way.

It is even more challenging, especially when using money that attracts high-interest rates. Such being the case, it is safe to avoid using borrowed money to start a business.  

The truth of the matter is that, for many businesses, it takes longer to make profits than initially projected. Often during the early stages, some businesses may operate at minimal profitability. In such situations, it is difficult to repay loans.

The business may cannot make profits at the first start because of a lack of practical experience of doing the business or because of other reasons beyond control.

As a result, the financial pressure to repay the loan may choke the business and lead to stress for the owners.

This leads to the conclusion that, mostly, it is better to borrow money to expand a business than borrowing to start.

Find here are some ways of raising business capital without bank loans in Malawi     

Not Separating a Business from the Owner

One biggest challenge for small businesses is that they operate as sole proprietorship businesses. This makes it difficult for owners to act independently from the business. Record keeping is poor, and rarely do the owners balance the cash flow.

Rarely do the owners take stock or evaluate the business. Without proper records, it is hard to know if a business is making profits or losses.

It is even hard to identify weaknesses within the business. Chances are very high a business that is casually managed will collapse within a few years. It is better to register a formal business with proper structures with efficient systems of checks and balances.

One thing a business person should avoid is operating a business casually. Aim to operate a formally registered business in Malawi with proper business systems.

Reinvest the Proceeds into the Business

Entrepreneurs start businesses to make profits. After the successful supply of services or delivery of products, the business has to be sustainably profitable.

The best thing to do with the profits is to reinvest into the business. Reinvesting proceeds enable quick capital growth, thereafter, leads to more revenue for the business.

However, if business proceeds instantly spend profits outside the business, the business stagnates or collapses, eventually. It is good to avoid using up profits outside the business, especially during the infancy stages.

Avoid Expanding Too Quickly

The next thing to avoid is expanding too quickly. Most times, upon starting a business, there will be complementary business opportunities.

While tapping into new opportunities is good for the overall success of the business, it can at the same time be a trap. The new business opportunities will require income capital, which may lead to depletion of the working capital of the major business.

The new opportunities may also require extra attention, hence draining your capacity to concentrate on the major business. All this, if done too quickly, may lead to the downfall of the business.

Therefore, more prudence is required to know when it is the right time to expand into new territories

Lack of business partnerships

Last, the one thing to avoid in doing small business is to think you can make it without partners. In the world of business, no man is an island. Building networks and growing partnership base is critical to the success of any business.

Partnerships propel your marketing and sales results. They help easily get raw materials for production, and it also helps strengthen social proof.

It is also easy to get affordable technical support from partners.

In business, establishing partnerships is essential for growth

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