Entrepreneurship, Investments

Why are you not investing?

You have tried your hand in business twice or thrice and failed miserably, you have been conned, you have lost loads of money, and you are thinking; what the hell?  Relax; two investors starting at the same time with the same amount of capital will end up in two very different situations a few years down the road. Investing, like all games, has a chance of winning and losing.  It all boils down to the preparation, the intensity of execution and the ability to change when situation call for a change in direction. There are some fundamental realities that we must embrace if our investment journey is to lead to success.

Before you invest in anything, there is the period leading to the start of the investment. During this stage, you prepare mentally, physically and emotionally to ensure that you will endure through the process to the end. It could be a simple action like meeting a friend who excites you to an idea or it could be an elaborate dream that you have been working on for several years. This preparation may be intentional or subconscious.

It matters how you identify the investment opportunity. How much research or learning have you put into the idea? Have you identified potential pitfalls? Can you explain the investment to a six-year-old child? It is important to note that risk and loses arise from what we do not know; hence the process of understanding the investment is paramount.

Are you just a snoop who is prying on other people’s ideas and think you can quickly implement them? How original are you in identifying the need that you would like to serve with your investment? To be sure that you are not just copying and pasting someone else’s ideas, ask yourself where you heard this information from and if it was from other peoples’ conversation, ask yourself how much more information of your own have you added to the original ideas.

In Africa we suffer too much from duplicating other peoples’ businesses that once someone starts selling quails, all of us get into that space. This is utter ridicule to our mental capabilities.

Investing in things you are passionate about helps ensure that you will be able to keep to it to the end, instead of doing stuff just because you have the capital and you feel you can do it.

love passion fall

If you have ever fallen in love, you may be familiar with the level of endurance that you can go through just because of that passion, including finding yourself at the rendezvous, past midnight, four or five hours in the cold, and your partner has not shown up, yet your feet are reluctant to walk you home, you want to continue waiting forever. Other reasons of investing such as to fit into your peer group are a ridiculously bad idea because you will not have the wherewithal to continue when the tough times check in.

Most often guys come to me and say I want to start a business to sell perfumes for example. When you enquire how much he thinks he will make, he completely has no idea but is riding on the euphoria that someone else has done it and he thinks he will be successful too. Simple questions such as who your target customer is and how would you reach them becomes protracted discussions.

Once you have identified what you want to invest in, you must raise capital. Capital could be your own or borrowed.

Personal sources may not require you to pay a return to the owner of the capital. Borrowed funds must be returned with interest.

Capital from your own savings and or from family sources where you are not required to pay back or pay back with a margin, is important to remember that resources carry an opportunity cost which is the forgone return that this money would have earned elsewhere.  Therefore, your plan must be able to estimate to a level of accuracy what you expect to earn from the investment that you are undertaking. Once you know the level of return, compare it with the alternative uses, for example, if you want to start rabbit rearing that will earn your 6% per annum, and you have a Bond that can earn you 12%, consider other reasons why you want to keep the rabbits.  You may consider using financial advisors to help you calculate the level of return if finance is not your piece of cake.

Now, there are two diseases that we must cure in our society, the excuse that I have no capital to start any business and sitting around saying that I am not ready to do anything. Doing anything requires some level of skill, think about it, no one is born knowing anything, and as we progress through life, we learn so much at different paces. Therefore, sitting around doing nothing means you are not ready to learn and invest and therefore you are preparing to struggle financially throughout your life. Start small, learn as you grow, your knowledge and experience are part of the capital you are seeking to raise.  In this way you not only minimize your capital requirement, but also the cost of learning. Remember collaborations are a good way of pulling together to afford big investments while minimizing individual losses. The Chinese say “if you want to go fast, go alone, but if you want to go far, go together”.

Execution of the investment requires a level of operational planning and it helps a lot to have a written plan. At this stage, it’s better to over prepare so that when the plan kicks into motion, you succeed easy. Maybe Yego ( the Kenyan YouTube athlete) watched and practiced on you tube more than 1000 times than he has had to throw in real competitions.

On launch, your customers will identify your passion, your level of customer care and your level of knowledge and these traits will draw them to your business. I always feel it’s better to immerse into the business intensely than to be lukewarm and uninterested. Most people start a business and leave it to the workers and expect success. Remember your workers are borrowing from your vision, and the vision is always more intense to the dreamer, hence the more they see you, the more you communicate and infuse the vision, the more energized your staff will be.

More often than not, things change mid stream, competitors come in, government regulation changes and fads get out of fashion, how prepared are you to change with the tide. Think about banks, think telephone mobile money operators, think what can happen to a bank that does not embrace mobile money?  This is real; you may remember the telephone booths, and now mobile phones. This means you have to change with the times and you cannot afford to sit like a brooding duck once your business has kicked off.

Like a river flowing around and through barriers, you must continuously scan the horizons and deliver changes to the direction of your organization as the world around you evolve.

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