2.2 million closures: what the MSME survey says about survival
Most closed businesses were young, and most were in trade. Neither fact is about marketing, and both are made worse by marketing you cannot measure.
The 2016 KNBS survey found that about 2.2 million MSMEs had closed in the five years up to 2016. The detail behind that number matters more than the number itself.
- Shortage of operating funds was the most common reason given, cited by about 30 percent of closed businesses.
- Wholesale and retail trade, with motor vehicle and motorcycle repair, accounted for about 73 percent of closures.
- Businesses started or acquired in the previous two years made up about 61 percent of closures.
- About 80.6 percent of establishments were started with the owner’s own savings; only 5.6 percent with bank finance.
Young, self-funded and in trade
Put those together and a picture emerges: a new retail business, started on savings, with little room for a bad month. For that business, every shilling spent on marketing that brings nobody through the door is a shilling of runway gone.
When operating funds are what runs out, unaccountable marketing is not a small leak. It is the leak.
What a survival-minded marketing budget looks like
- Buy a fixed number of outcomes, not an open-ended amount of exposure.
- Know the cost per customer before spending more, not after.
- Start small enough that a bad result is survivable, and scale only what works.
None of this guarantees survival; the survey is clear that funding pressure has many causes. But a business that knows what a customer costs can make the one decision a young trader most needs to get right: whether to spend again.
Sources
Written by Teleeza Insights
