Soon after I got my first job and in the heat of exciting times of joining the working class, we formed a Christian social grouping together with former campus mates (5 of them). We used to read the bible together as well as organize outings inviting our girlfriends (most of them became wives, others fell by the wayside). Soon we started feeling like we needed to nurture some investment ideas together; after all we needed to live well in this world and beyond. We were newly employed young men bubbling with lots of energy but lacking in finances. Simply put, we were at the same level of financial ability and no-one seemed bigger than the other. We also had a unity of purpose and we shared a lot in common. We could move in the same direction and obviously we respected each other’s view from the onset.
We held a series of meetings that culminated into a decision to be contributing some small cash (4k per month) towards investing. 4k for a guy earning 20k was 20% of my income, but the more I saved and invested, the happier I’d get. We then realized we did not have an account to put the money, neither did we know what exactly to do with the money. We also realized that we were not sure which form to take; company, welfare group or remain as an amorphous group. In a nutshell we needed proper structures in place to get going.
What is supposed to have guided the form we take? Akin to climbing a tree from the bottom, what we wanted to venture into was to guide our decision on this matter. My love for real estate started way back and it was easy to sell to the group the idea of venturing into some form of real estate investment(s). At least we agreed in that regard; though we felt this was more futuristic than anything else. Back then, the idea of owning plots seemed very distant of course with the kind of incomes we had. But wait, Rome was never built in a day; at least we dreamt big.
A decision was made that we register a limited liability company; after all plots and houses could only be registered in the name of the company whose shareholding we thought was prudent to be equal for all shareholders. The people to lead this young company to glory were the next big question. A chairman, treasurer and a secretary perhaps? A starting point it was. Would we then say that the initial structure was in place? By the way, I look at the minutes of our first meeting and we clearly came from very far.
Six young men armed with a registered company and contributions worth 60k and raring to go. Next big question was how to venture into real estate business with 60k? This is where it gets tricky, but as they say where there is a will, a way can be found. Ultimately, a decision was made that we do stocks for at least one year as we strategize on real estate investments. Stocks for novices and buying interesting counters with no real facts guiding the decisions. Stuff made of nightmares, running around like headless chicken was the order of the day. The learning curve was massive and wrong decisions made but nevertheless we were doing something. We went ahead and pumped in cash for 1 year buying several counters but making no headway in terms of making money. Swimming in the deep perhaps and expecting things to work.
The stock market went south and we soon we realized that we had contributed a lot more money than the market value of our stocks. Time to pack and try something else? Probably adopt a different strategy. At least we were sure something had to change. A strategy meeting was called and lots of brainstorming done. Hard decisions had to be made. These were the decisions.
1. Ship out of the stock market by way of selling all the counters; after all it was not working.
2. Look for a few more members to join the group to accelerate the growth and get more capital.
3. Move to real estate which was our initial idea; thus use the cash from stocks to pay for a plot somewhere and speculate.
After sale of the stocks, the very first plot was bought in Kitengela. Quite a milestone; after all we had started living the big dream; albeit in a small way.
Recruiting an additional 4 members was the next task. We decided that we could only recruit members who would buy into our vision. Members proposed their friends but a stern condition was set that they prepare a business proposal to be evaluated by the existing members. The potential members were subject to vetting just to make sure they have a clear vision for the group and will add value. With benefit of hindsight, it was a marvellous move because it separated wheat from chaff. We let down several guys by out-rightly rejecting their wish to join us. After all this is business and we never really wanted joy riders.
Something was telling me that this group is headed for greatness. Take note of very important points so far:
1. Strong urge to invest together by way of pooling resources was the starting point. Unity of purpose was also evident.
2. The members had a lot in common; were of the same age-set and financial ability, they could thus identify with each other’s challenges especially financial.
3. The members were focused; agreed in principle on what they wanted to pursue. The big deal was how to get going.
4. Structures (albeit simple ones) were put in place.
5. When things did not work, a change of direction (not dissolution) was proposed and pursued.
6. Recruitment of new members was not only based on financial ability but they were meant to add value to existing membership. One of the most important considerations was the characters of the individuals and how well they plan their finances at a personal level.
Sounds like ingredients for a successful chama. The work had begun in earnest and a lot of hope was in the air.
Most chamas fail due to a myriad of reasons but that happens way before the chama even gets going. There is nothing as frustrating as having members who are not progressive; those who argue for no reason and of course those who are not committed. Monetary contributions in most cases are considered the most important thing from members; but we get it all wrong. After all money cannot make itself; a lot of things must be right.
Next lesson will be on how this great chama mutated into a well-managed real estate firm that is doing wonders and will soon be a multi-billion investment.