Entrepreneurs
with great business ideas are often eager to venture out and actualise their
dreams. But research has shown that start-ups tend to fail within the first two
years due to challenging business environment and inadequate business support
services.
Beyond
the ideas that they have, most budding entrepreneurs don't have good business
managerial skills and make mistakes as they move on, some of which may not be
reversible.
Moreover
legal and regulatory requirements may seem burdensome and complex to achieve;
as such, start-up founders may have to seek the support of consultants to
execute them.
While
there may be some bootstrap at the beginning, entrepreneurs may reach a point
when they will need additional funds for expansion.
Some
of these challenges that start-ups face are being addressed by accelerators,
business incubators and venture capitals in Nigeria and globally.
In
Nigeria, for instance, incubators such as Co-Creation Hub, She Leads Africa,
iDEA Nigeria, among others, offer technical advisory support, funds and
co-working spaces for start-ups.
However,
interaction with other operators through online platforms can also help to
address technical issues.
A
report by the Intelligence Unit of The Economist, titled, 'Informal
innovation: Networks that power start-up cities,' shows that informal
professional networks and communities are more important for entrepreneurs than
formal structures such as incubators and accelerators.
The
report, sponsored by the Infocomm Development Authority of Singapore, reveals
that start-up founders value informal meet-ups and virtual communities more
than other factors in overcoming challenges such as identifying funding
sources, grappling with complicated tasks and dealing with the fear of failure.
Though
access to finance, talent and ideas is facilitated by incubators, accelerators
and co-working spaces, the report notes that entrepreneurs' connections with
their peers have been shown to be as important to start-up growth in some
cities as the role of institutions.
Networking online and offline
With
new discoveries in technology, particularly the Internet and mobile technology,
the report says new types of entrepreneur communities and energised grass-roots
networking activities have emerged.
According
to the report, many of such communities are available online and entrepreneurs
are active participants.
The
report notes that entrepreneurs are avid networkers as shown by over half of
the survey group (58 per cent) who are enthusiastic about entrepreneur-oriented
social networking groups.
They
identified these global platforms as LinkedIn, Facebook or WhatsApp.
Other
entrepreneurs making up about 36 per cent of the survey number, gain insights
from locally oriented social networks or meet-up groups where they connect with
other entrepreneurs.
The
report points out that half of the survey respondents are involved in six or
more global networks, and 44 per cent participate in six or more local online
groups.
It
adds, "Participation in physical networking activities is less frequent
than the online variety - which is logical given that the former requires a
larger time investment.
"Online
and physical networking activities do appear to be complementary, rather than
mutually exclusive."
Informal groups offer advisory support
The
report notes that informal communities have become important sources of support
to entrepreneurs when starting their businesses. It explains that globally, new
business founders rely heavily on banks as well as industry associations for
help during the start-up phase.
However,
the report finds that informal communities and their activities are as
important to the respondents as formal structures such as incubators and
accelerators, and are nearly as important as associations.
For
example, in Tel Aviv, where launching a start-up is comparatively difficult,
the report says meeting fellow entrepreneurs in informal settings is the single
most important source of support.
The
Chairwoman of New York Hearts Tech, a community set up to support online
businesses in the fashion, beauty and lifestyle industries, Sharon Klapka, says
this finding is true.
According
to her, formal structures such as incubators and accelerators are useful, but
to a limited number of entrepreneurs.