To Save or To Invest: Which Way To Go?

There is a lot of talk of late about reviewing the year that was 2016 but then again, as most of us are, we have nothing to report about on the resolutions we made at the beginning. I know we will did repeat the same ritual all over again: Get down with a pen and paper and pretend to be serious and note down resolutions.

One such resolution is creating a financial bubble for future contingencies. I have been involved in a lot of online banter about money and its good to note most are warming up to the idea of creating a hedge fund.

But then again, we have to get back to the drawing board and ask ourselves: why do we save? Literally speaking, why do we deny ourselves the pleasure of enjoying our earnings?  To spend or to increase its value?

And this is where we all go wrong. A pal of mine recently boasted to me that he had joined a chama that was involved in savings and lending. He contributed religiously every month and at the end of the financial year, he received his dividend of Kes. 30,000. Quite a tidy sum if you asked me. But he went ahead and used all of it in the Christmas festivities, flying to the coast for holidays. And I asked myself: what if he took 50% of the dividends and re invested back into the chama or better still, invested in some other portfolio like the money markets that are risk free and flexible? Another case I encountered online was a fellow who was wondering why anyone would save for an entire year and go chasing plots of land to buy. He opined that chasing the plots has become the norm nowadays. But then again, doesnt land appreciate in value as opposed to the luxuries we go spend our cash on that bring in nil financial returns? Which still brings us back to the original issue: to save or to invest, which is the best way to go?

Saving involves putting cash away for a period of time completely safe and can be accessed after some time together with accrued interest. It is risk free. Investments are risk prone. The cash is put into some asset with the hope that you will get it back with some interest. However, the returns or compensation are higher than just saving. For instance, you can choose to put money under the mattress for some time, periodically topping up and get it back as it is in total. Or you can choose to buy into an investment vehicle and let professional managers manage it for you and earn interest and dividends. 

Apparently, and sad to be true, there is no right way to manage your money: it all depends on your circumstances and your needs. If you want to keep money over the long term, investing would be appropriate. But note that there is a risk to it. Hence this should be the most critical factor to consider when choosing an investment option. Whether it is starting a business, buying stock, buying property, it is all about putting money away in the hope that the price of the asset will appreciate and you can get back your cash including accrued compensation. If you cannot afford that risk, then outright saving would be appropriate either in a simple home bank or a savings account, whichever will deem fit.

Personally I recommend both savings and investments. Savings cater for short term needs and for collection of earnings and later, once the target is reached, invested to grow your net worth. At the end of the day, ensure your money is growing.

The biggest problem with holding cash is inflation. Money value deteriorates with time. Putting cash for mid to long term periods degrades its value and hence the importance of ensuring your money grows. It also would be beneficial in a way because the sum total value of your assets versus your debts (net worth) should always be increasing on the positive side. Financial freedom only comes when your sum assets can service your debts comfortably. Hence, to ring fence yourself, you have to ensure you are always growing your asset base as a safe landing in case any future eventuality. 

Some people opine that it is necessary to save and spend after denying yourself the entire year. Well, why would you go the length of denying yourself in the moment anyway? Just earn and spend. But remember, no one knows what the future holds. The wise plan for generations to come. The unwise look forward to Saturday nights (and end year) to spend! 

Life is short and you only live once. Ensure you live well even in your old age. And living well starts now by the choices you make. After you break that piggy bank or literally busted your savings account at the end of your saving period, apply wisdom. It will be worthwhile.

​The Story Behind The Story: How To Effectively Sell and Inspire

Whenever I am walking in the streets of Nairobi especially at night, I love going by those side walk hawkers who display an array of wares to the passersby. I came to notice that am impulse buyer to these hardworking Kenyans, at times, even purchasing stuff I did not need. I guess this is the reason why my little Princess has a lot of toys and usually celebrates whenever I travel back home from those trips!
But I came to realize that the buying is never out of a need to spend, nay. It is out of a conviction by these hawkers doing the selling. I read somewhere that we ought not bargain with these sellers since to them, the profit margins made is what makes them survive from day to day unlike supermarkets and other established retailers that have a fixed price and have economies of large scale supplies to run on.

So how comes I always come to buy from these street sellers? It is because, whenever they have an opportunity to face anyone, the first few minutes they indulge with anyone is to convince you about why they are doing so. To most, they say it is about survival, that the sale is about feeding their families and such and out of it, you feel obliged to spend to help them meet their basic needs! 

This brings me to my pet subject – entrepreneurship and administration. Why is it that some products are too hard to sell? Why are some leaders so uninspiring? Where do some products and businesses sell more than others albeit effortlessly?

Most probably the reason is they do not connect with the potential buyer.  People are never curious about just a story, but the story behind the story. A television channel once rode on this as its value proposition and everyone trooped to it to watch the story behind the headlines since they felt more satisfied with behind the scenes happening away from the normal stuff in the name of news. The story behind the story is the why of what is happening. It is the motivation or the reason why something is happening.

The WHY is the reason behind the creation of a product to satisfy a specific need. When a consumer goes to buy a product, all he is looking for is that connection with the motivation for the production of the output. If the motivation resonates well with the need he has, he seals a deal and completes a sale!

This therefore means that the seller has to find a way of communicating to the potential buyer the motivation for his product. And this is best seen in the company values. What does your company stand for in terms of consumer satisfaction? Is it efficiency? Does it appreciate the fact that inflation is high and that is why it produces cheap products? Then find a way to communicate that to the customer FIRST before going into the details about what the product is and how you will produce it.

Selling they say is an art it therefore can be learnt as a skill. It is also human  it is emotional. The seller has to connect emotionally to the potential buyer and inspire him enough to facilitate the buy off of the product. Where we normally go wrong is we start by rapping about what the product is and its features and it ends there. That is not inspiring enough  and hence, most people find it hard to sell.

Proper selling must start with communicating to the customer the motivation behind the production of the product. What motivated you to develop the product or service? How does that product deliver value to the customer? And lastly, all presentations should end with what the product is, in that sequence.

If all people, leaders included would start with the story behind the story, sales and inspiring members of an organization would not be a hard nut to crack. For the street hawkers, they have perfected this art  they start by invoking your emotions about how the products they hold is their way to survive and from it, seeing as it the product is what you need, you buy into it and hence a sale! It all boils down to the WHY of an organization- define it, communicate it and you are good to go!

It therefore means that people do not buy what you offer, but WHY you do the things you do. The more the reason we should never be concerned about WHAT we do, but WHY!



The Power of Self Branding

If i ask you which country between Sudan and Egypt is known for pyramids, i know obviously you will shout back “Egypt”!. 

Or maybe between Sharks and deers which are most fatal and deadly, you’d scream “Sharks!”. 

But it is surprising that data on the ground proves otherwise. Sudan has the most number of pyramids whilst deers kill more people that Great White Sharks in any year! Surprising, yeah?

But then, that is the power of selling. Selling has an effect of making one sell ice to an eskimo, sand to an arab or even water to a fish in the ocean, when it is so obviously available in plenty. Selling has the power to even create things as if they are when they are not. It is all about branding! 

As a person, what have you done to make yourself known in a certain way? If you do a self analysis, do you realise any defect, maybe limitation that is working against your progress? What are you going to do differently to communicate the right message to your target audience? 

Creating an exquisite personal identity and brand requires a lot of effort and determination since it may demand a total change over. You will have to change your mannerisms and attitude. It will require you even change your social attributes. It is work!

They say what you see is what you get. What others see in you is what they get of you. The way you write, your body posture and outlook, your dressing, etc just work to define who you are. Have you ever wondered why some fellows will never be employed? Most peobably it is in the errors they commit as they pen their application letters. That cross in “t” or dot in “i” that you ignore to put is what might be costing them much. 

Brand yourself to be the person you want others to see you to be. Be consistent. Be YOU!


How To Build A Lasting Business


As is usual, this is the season everyone wants to start anew, turn a new page in life. And so we go about setting new directions for our lives, setting up a business being a popular option among many. A KTN online survey about new year resolutions showed the second most popular resolution for this new year was setting up a business.

With the allure of returns, setting up a side business besides the usual 8 to 5 job is becoming more popular than ever. infact, last year’s KNBS survey opined that over 3000 businesses are started on a monthly basis in Kenya. The sad news is that slightly over 50 percent of these do not survive beyond the first year. The fate of the other half that do is not yet established but i am pretty sure most do not go beyond their third year of operation.
With a really probable business idea, motivated by huge returns (most probably read or seen elsewhere how it churns out cash), a business plan, some capital, one chooses to hit the ground literally running. Unknown to many however, is the fact that not all business environments are similar. Neither has it proven conclusively that business plans do work. The world of business has shifted from using business plans to business modelling. Business plans are rigid. Business models are flexible and fluid. They help the business structure adopt to the environment and hence, sustainable into the future. A business plan does not have to be elaborate. A simple vision, mission and marketing plan is sufficient. constant monitoring and evaluation is essential to check how the product (s) is being received and periodic consideration of customer feedback. Charles Darwin said that it is not the strong of species, neither is it the intelligent that survive, but the ones most adoptive to change. That is why cyanobacteria as a species have never died off, compared to earlier species of homos, we humans being the latest. They have survived over 2.8 billion years and still going.
 Lack of knowledge in business finance is also a big factor why many stumble and fall in this journey of entrepreneurship. Business nowadays more than any other time are sustained by taking care of financial risks and as such, budgeting and strict financial management skills are necessary. Business is no longer operated on the age old model of selling and buying to restock, but rather, margins and future contingencies, among other factors, have to be considered. Business records have to be maintained, and analysed for future decision making. The vision of the firm should be in consistency with prevailing market conditions, and if not, aligned accordingly and backed up with financial resources to finance such undertakings.

However the major reason why businesses fail is not in  execution. It is in the start point. Why do you choose to go into business? Is it cash returns? From common banter around here, most go into business to make cash. To them, it all starts and has to end with cash rewards. 
An interesting study done by a management strategy guru, Jim Collins brought out a factor we ignore in business and industry. In his book, “Good to Great” he said that firms in a sector that succeed play according to an age old natural secret: the hedgehog concept. He said that firms competing in a sector that are successful concentrate their core business activity on what converges in three spheres: what they are good at doing, what they love doing and what they do and brings in most returns. Great firms endeavour to study their environments and persist in operating in this zone and therefore, have a surety of existing in the ages to come in the business environment. All major brands that have outlast the ages, like Coca Cola, have learnt the secret this secret and employed it fully. They have learnt to do just one thing well and thrive in it since they apply their passion and comparative advantage on it. It is not in how many revenue streams you have that make the business succeed, it is in just one thing that you can do well and you are passionate about. 
It therefore means that going into business just because it will pay heftily is getting it wrong from the word go. You ought to ask yourself what you can do with the least of effort- that is your passion. Secondly, what can you do well – what you have capacity in. Money will always follow passion since executing your marketing plan will be effortless.
Finally, ensure whatever you want to do as a business fulfils a business need. A business that will not fill or serve any human need will not sustain itself. No man would fork out cash for something that cannot satisfy him in any way. Some businesses have gone a step ahead and went to the extent of creating artificial demand to push uptake of their products. It is a fact that whenever you see the Coke ad, you feel thirsty even when you are not thirsty. Why? They have known how to connect emotionally by creating this artificial demand and hence, sales. Cocoa cola started in the 1886 and sold only 9 glasses averagely per day. As we speak they do 1.9 billion bottles out of their huge interest in pushing for their product uptakes. Our own Safaricom uses the same strategy. The “Home is where the heart is” campaign comes to mind.

Alongside this, it is noteworthy that the famed icon, Michael Jordan receives more money than all the workers in their Malaysian plant combined. Mark you they work day and night when he has most probably never spent a few hours in the factory for tours.  How is this possible? He has product endorsements of Nike’s apparel and shows the products off to his millions of fans globally. Inasmuch as he has never stepped into the factory, by just using his passion, he is able to master his payroll, well into the future. A business that commands the demand for its products will always have an assured future. It will last even beyond the competition. This is what Apple, Coca Cola, Safaricom have learnt and employed in their business strategies. 

Cash rewards are a byproduct of what one offers. They should never be the main aim of going into business. Otherwise, three or so years into business, it would be a statistic as those that KNBS enumerated as mentioned above. Let your passion be the drive. Money will always follow ideas powered by passion. Align it to a human need and you will be good to roll! 

Happy passionpreneurship!

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