nternal Factors Affecting the Performance of Businesses of Retirees in Kakamega Municipality

Abstract Venturing into business is thought to play an important role in ones life since it is an alternative form of self employment. Retirees venture into business as a source of extrain come and also for keeping themselves busy in retirement. As a result of the on-going restructuring of public corporations in Kenya and normal retirement, retirees from these institutions have ventured into business. However, in spite of efforts from various stakeholders to enhance success of the retirees businesses, most of them have been performing poorly. According to the Retirement Benefits Authority (RBA) most businesses started by retirees fail within the first three years. The main objective of the study was to determine internal factors affecting the performance of business projects of retirees. The population of this study comprised of the retirees from the finance and communication sector of the larger public corporations operating in Kakamega municipality for a five year period ranging from 2007 to 2011.The study used a sample size of 52 retirees, who were picked from a population of 130 through stratified sampling technique. The study used a descriptive survey of the retirees and used both primary and secondary data. The data collected was analyzed using descriptive statistics and presented in form of tables and frequency distributions. This study revealed that the major factors affecting performance of retirees businesses include financial stability, physical and mental strength, entrepreneurial skills and family base which accounted for significant failure of businesses of retirees of finance and communication sector of the larger public corporations in Kakamega municipality. It was also revealed that many retirees lacked proper human relations skills to motivate and retain internal customers as well as maintain consistently satisfied customers.Thestudy recommended that retirees in business should endeavour to attend trainings/seminars to improve their business and financial management skills. Further, the study recommended the enactment of a compulsory pre-retirement training on financial and business management for employees with at least five years to retirement. The researcher suggested that a similar study be done focusing on external factors affecting business performance and also focus on retirees in the private sector.Key Words:Internal variablesand External variables

1.1 Background to the StudyEmployees leave their formal employment through various ways, the main one being normal retirement. Retirement is a condition of disengagement from a formal employment due to attainment of the statutory retirement age or attainment of a specific objective (Kibera, 1996). The on-going economic reforms in most developing economies have resulted in many employees opting for early retirement (John & Claudio, 1998).

In Kenya, many employees have left formal employment through attaining their normal retirement age and also due to the economic reforms (Nzomo, 1995). Being a condition of disengagement, retirement leads to the stoppage of regular income in terms of wages and salaries; which makes some of the retirees to be more financially vulnerable, and significantly needy (Ondiege, 1996). It is out of the need for sustained income flow that many retirees get new engagements in personal businesses so as to continue to generate some regular incomes.According to available data from the Retirement Benefits Authority, which also carries out pre-retirement trainings for members of Retirement Benefits Schemes in Kenya, most of these retirees go into business (RBA, 2006). As the retirees go out of the employment into self-initiated business projects, it is hoped that the business returns will continue to flow and sustain them for a longer period. However, studies done by (Koontz, 2005; Karingiti, 1999; Ondiege, 1996; Kibera, 1996) on this show that, majority of retirees who venture into new business projects, a greater percentage of these business projects fail in the first few years. Generally, only a small percentage of such new business projects survive in the long run (Ondiege, 1996). This backdrop raises significant questions which may be viewed in general and also investigated specifically, as may be relevant to each business. Whereas success of every business is identified in line with the unique operational elements of each business; the extentof their contribution to performance is determined and their impact singled out individually and collectively (Odundo, 2003). However, it is important to note that starting ones own business is not all the time an avoidable monster. In fact it grants the owners the authority to be their own bosses; which they were denied when they were still serving their employment terms and this is psychologically satisfying (Karingiti, 1999). However, key entrepreneurial tenets are necessary if these business projectsstarted by retirees are to survive to sustainable levels (Nzomo, 1995). Starting a business and its success requires some innate qualities that would create a sustainable blend between the entrepreneur and the internal and external variables (Benjamin, 2004). Physical and emotional stamina to run a business, planning and research motivation and family link and support cannot be overemphasized as significant contributors to business success (Kibera, 1996). Public corporations have had unique characteristics that define their operations until the introduction of structural adjustments programmes in 1996; where service quality, cost controls and improved employability became the overriding factors of privatization (Karingiti, 1999). It is notable that many of the public corporations employees did not have pre-employment specialization or professional selection, as most of them were direct school leavers (Karingiti, 1999). The performance of public corporationshas not been keenly monitored and the issue of performance contracting is a new phenomenon whereby most of public corporation employees find it difficult to cope (Ondiege 1996). Generally, public corporations have been characterized by failure and most oftheir employees associated with the same (Kibera, 1996). It would be interesting to find out if the tenets of failing management of public corporations would by implication be transferred to the businesses of their retirees, would there be a correlation between their foundational upbringing and their investments in retirement? Furthermore, the public corporations have in the past paid their employees better than other public sector workers in the civil service; and as such were not exposed to the rigorous financial stress. The innovative ability was therefore not well developed to diversify their ability to cope with job search (Karingiti, 1999)Retirement of public corporations workers often comes without ample preparation on investment entry skills that would be essential after their retirement (Damaris, 2008; Nzomo 1995). Many retirees therefore have least entrepreneurial talents and skills; but must strive to invest their retirement benefits in further income generating projects, for continued financial survival (Kibera, 1996). It is also estimated that 60% of the retirees venture into small and medium scale businesses of diverse products; common ones being service and small scale oriented retailing (Oketch, 1995). The study was dedicated to retireesfrom finance and communication sector of the public corporations operating business projects in Kakamega municipality.Kakamega municipality is the administrative and commercial capital of Kakamega County. It is located within Lurambi Division of Kakamega Central District. As a commercial center, Kakamega municipality has attracted a steady influx of people from all over East Africa most of whom are engaged in big and small businesses.

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