Expert analyzes why 50% of entrepreneurs leave the market in the first year


Saudi Gazette

RIYADH — The Kingdom has a very attractive atmosphere for business and investment for small and medium business startups. However, one of the observations that was noticed with small and medium businesses is that more than 50% of them shut down in the first year, and almost 80% leave the market after 5 years.

To analyze the factors behind this, Saudi Gazette met with Mohammed Al-Ohali, CEO of Guide Marketing, after his participation in “Lunch Your Business” Forum which was held here in partnership with different strategic government organization such as: Badir and Monsha’at (Small and Medium Enterprises General Authority).

“Firstly, let me say that as a nation, we used to have everything readymade from the government, and that created an attitude of irresponsibility in the youth. Thankfully, this has been changing over the recent few years. We are shaping a totally new culture that leads the youth in general to be responsible. That is a good sign. Because part of responsibility is to make your living by being either an employee or an entrepreneur,” Al-Ohali said.

He stated that our education is academics based and not based on practice. “Most entrepreneurs read books in English and then they apply the strategies without tailoring them to the Saudi market. That could lead to failure.”

The problem extended to copying the same strategies of bigger companies is another factor as “they have a different budget than you, and they have a totally different atmosphere. Their strategies are not tailored to you.”

“Many entrepreneurs copy the same strategies of other entrepreneurs without understanding the entire atmosphere such as: timing, location, the needs of the market at the time, etc. There is an existing gap in analyzing the market. You can simplify things by studying the market and look for useful information. Research does not cost money. By doing so, you will find problems, shortcomings or gaps in the field you want to enter, here comes your opportunity to prove yourself by providing something more special,” he stressed.

“Things are different now. When we were in a different economic stage, there was a great buying power, which meant that everyone could easily start a business and win. People’s culture were different, they used to buy products they did not even need. Since, our culture is changing; consumers are getting wiser and pickier about what to buy and what not to buy. Most people search the products before buying it. It is a good sign in the long term, because there will room for those who have excellent materials and well developed products,” he emphasized.

Al- Ohali believes that most of entrepreneurs’ issues are small but those issues are not well handled. “That is why they lead to bigger problems that can cause the business to shut down.”

“Work smarter, not harder, while also trying to understand what fits you and what not. Do not waste your time copying other entrepreneurs or big companies, because each has their own story. Understand why they succeeded in their fields,” he said.

When asked how new entrepreneurs can stand out among the huge number of other entrepreneurs in all fields, he responded, “The market has enough space for that has never been an issue. Because, even with enough there will always be room for outstanding products and services to solve issues or add values and advantages to your project. Uber succeeded in New York, which has the best transportation system in the world. Always provide your customers and clients with genuine experience that can stick in their minds and let them come back to you,” he concluded.