Making Enough Money?

January 25, 2011 by Leave a Comment

I used to wake up every day and hate going to work. I had to wake up hours before I started work in order to get the kids ready for school, get myself groomed and breakfasted and ready for my lengthy commute – a commute that took me to a place that I didn’t want to be. I realize though that this is not only my reality, it is the way many people live their lives, and I’m so glad that I took the initiative to change mine.
Like most people, I keep a budget at home and for the first time I am able to stick with it comfortably. Now, as long as I make Ksh 50,000/-, I can do what I want without feeling like I’m skimping on anything. These are my monthly expenses that I am able to reach each month. In fact, when I have met this quota, I can rest easy and relax.

So, after I make the 50,000 goal that I set for myself for the month, then I know that everything I make after that is going to savings, a new toy, a vacation, or what have you. I can take it easy, knowing that I do not have to actually be anywhere for the next how ever many days area left in the month.

Sure, I don’t just sit back on my haunches counting my money after I have made my quota, or met my goal. I answer a few emails, I prepare for the next month. I think about the future of the business, and so on. But, I know that I don’t have to be anywhere, and that frees my time up to do the things that I actually want to be doing in my life; spending time with the kids, recreational activities, working on the house, gardening, and so on.

But you will find, as I do, that once you have met that quota, you actually want to keep working and making more and more money to save for that rainy day. The difference is that you don’t have to; it isn’t an obligation, it’s a choice, and that is the kind of freedom that few have, and most want. This freedom will inspire you to make changes in your business, make it better, more efficient, in short—more enjoyable. It is a very different experience altogether to be able to choose whether or not you want to invest more in your business, and yourself than simply waking up every day to go to a job each day that will make you just enough to meet your monthly expenses.

I find that most months, I keep working once I have met my goal. However, having that choice makes all the difference.

Filed Under: Make Money, Small Business

Banks and Bank Loans in Kenya

November 11, 2009 by 22 Comments

This article is written by Bonface Kamau, who is going to be writing on banking right here on Like Chapaa. Is there anything that you’d like to know about banking in Kenya? Bonface is the man, just contact us with your questions.

Money makes the world go round. Based on this principle, banks have seized the opportunity to bridge the gap between the financially surplus and the financially deficit through loans and overdrafts (bank credits). Since banks are actually businesses with a profit motive, they charge interest on the credit, calculated on a compound interest basis.

This interest that banks charge must cover their bad debts and non-performing loans – referred to as the interest exposure – which is calculated by professionals before banks come up with a standard interest rate.

Commercial banks’ having defied a directive to reduce their interest rates by the Central Bank of Kenya has led to customers being offered loans at very uncompetitive terms. The only banks offering competitive interest rates on their loans are K.C.B and Southern Credit Bank (which unfortunately operates in Nairobi only). However, the Central Bank of Kenya issues directive to banks to subsidise their interest rates on loans meant for nation building like loans to start a business and currently to farmers which is at about 15% p.a as compared to 17-21% offered on normal loan terms.

It is worth noting the tremendous growth in our non-banking financial institutions which offer loans at a much lower interest rate. However, any transaction entered into with these institutions such as a loan agreement, should be weighed heavily as this non-banking financial institutions are not regulated and/or scrutinised thoroughly as banks. This leads to questions being raised about their integrity and accountability. One may consider the youth and women’s fund if you want do not meet the requirements asked by the banks.

This should not discourage you, however. If you have a viable idea and a burning desire to transform that idea into a lucrative business, then go for financing. Business owners and entrepreneurs are known as risk takers – just bite the bullet and go for what you think works for you.

As we review the merits of bank loans, acquiring one should not lead one from a bad situation to a worse one. Ask your banker all the relevant questions not forgetting to inquire about any hidden charges. Let the banking hall be the birth place for success.

Filed Under: Small Business Tagged With: