Rabbit or a Turtle?

We know that classic story of the rabbit (sungura mjanja) and the turtle (mzee Kobe). The two met and agreed to have a race. When they raced for the first round, the turtle was slow as usual but steady, the rabbit was fast, but got distracted, took some rest in between, and explored around the sceneries, and even took a nap in between. Upon his perseverance, the turtle won the race (round one).

The Rabbit

So many businesses jump in the race too quickly where they hurriedly do things and don’t always think things through before they launch a product, service etc. They don’t stick to what their business is all about or they rush through things to beat the others without making sure all the ducks are in a row. To these companies the most important thing is to be front and center.

The Turtle

Then you have the happy, go-lucky turtle company that starts their business off with what they believe is a great model and start to set sail. They think through what they want others to think about their brand, they listen, they adapt while keeping a steady course to the finish line and end goal. They make sure they cover everything and are thorough with their plan. To them they want to finish strong, never take their eye off the goal but keep a steady pace.

How many businesses have you seen that start up and take off in the beginning but quickly deflate because of some issues they have or they didn’t quite think through? And how many businesses have you seen that don’t necessarily stand out at first but as time goes by the word of mouth travels and they are all over the place with a great format and concept? So this leads me to ask: “is your business the rabbit or the turtle?”

Lesson 1:

•For “Turtles”: It is ok to be slow, as long you persevere, don’t give up

•For “Rabbits”: Distraction and arrogance is often times the biggest obstacle of your success.

The rabbit with its ujanja thought to himself, now I know what I have done wrong, if I change my attitude, I should have a chance to win. So, he asked the turtle for the 2nd round; this time, he did exactly what he planned to do: very focused and changed attitude, he won the 2nd round.

Lesson 2:

It is possible to win if we are willing to humble ourselves and learn from the past mistakes. Then Turtle got thinking, “There must be a way I can do this!”. After careful inspecting different routes, he found one route would benefit him greatly. He asked rabbit for the 3rd round race. On this particular route--> there was a river in between. As you can imagine, for the Turtle, it was such an easy race, he swam so fast, outperformed Rabbit quite a bit. Turtle had a triumph!!!

Lesson 3:

When we know our gifts and talents well, and know how to use it wisely; we are unstoppable! By now, Rabbit and Turtle actually started to realize both of them have different strength and weakness. They thought what if they could work together as a team, they might achieve to finish the race faster together. So they decided to give it a try. They chose the exactly the same route of their last race. In some part of the race, since it was all dry land, Rabbit carried Turtle and ran fast, when it came to the river, Turtle let Rabbit sat upon his shell, and he swam fairly quickly. The result, they finished the race together in a much shorter time. They were thrilled!!!

Lesson 4:

When we are able to leverage each other’s strength and unite as a team, the result can be astounding!!! Now as buddies, Turtle and Rabbit put their head together again. They dreamed about helping other animal friends in the woods. Many of their friends had hard time to go from A to B fast enough for food, or had trouble to cross the river when they needed to; what if we could build something to transport them....thus, they built an innovative vehicle and achieved their dream of helping their friends to cross the land and the river safely and quickly. Also, this vehicle could be used by everyone after Rabbit and Turtle showed them how. The whole animal world was full of joy, because their pain/problem is solved!!!

Lesson 5:

An innovative “vehicle” or a “system” which is able to solve the pain/problem oftentimes is from dreamers; those who dare to dream and dream big.

Now think hard and long and deduce whether you are a turtle or a rabbit…by the way both are OK as long as they know their strengths and weaknesses and complement each other.

Njuguna, aren’t you working too hard?: Part 2

Continued from part 1

Njuguna worked quite hard and he must have realized that by working harder he was doing better. He must have have gotten sucked into long working hours maybe without noticing. Most likely other areas of his life got neglected. He was most likely eating poorly and probably never exercising. If this continues unchecked the guy will run into health problems and he’ll wish that he found a better balance in his life.

The biggest error of omission or is it commission is failure to create a system that works for him. How do you create such a system? We can learn a great lesson from the business mogul, the late Njenga Karume (RIP). He planned the succession of his business empires to able to run without him. He needed to have gradually let go of his direct involvement in running the businesses:

1.            You need to spot talents and build a team that shares your dream. The team will get you to your goals faster. He ought to have a manager for the hardware who deals with operational issues. The manager would probably have some sales person, procurement person, a person in charge of delivery, person in charge of receiving cash, etc. Njuguna would maybe be getting some periodic briefings and he’d probably concentrate on looking for new ventures and generally strategizing on the business and where it moves.

2.            But how would Njuguna trust that these fellows won’t steal from him? He ought to create controls at different levels to assist tighten any loopholes in the system.

3.            How about his land business? I see no reason why Njuguna would be chasing clerks at Kajiado when he can get someone to do such errands for him. I am sure he can afford to a person or people to take clients to site, chase documentation at lands office, chase consents with DO, etc. Most of these operational tasks need to be delegated.

4.            He should also take advantage of having people in his team who specialize in some areas. The jack of all trade mentality never works well. Isn't it better to know everything about something as opposed to knowing something small about everything?

5.            At that higher level, Njuguna should be able to organize his days in such a manner that he will cover all the facets of his businesses and spare some time for his family and he should rest more. Probably eat better and exercise. That way he’ll be a more complete person.

Let’s get deeper into what Njuguna ought to be doing?

1.             High Level Strategic planning : Setting realistic goals and tracking the attainment of the goals

2.             Looking for new ventures and investment options: How about going around the outskirts of Nairobi and looking for land…at the state he was in….he thought that the best land deals are only found in Kitengela… How about exploring other areas where timber is available? How about expansion into new areas…replicating the Kitengela success say in Rongai or Ruiru?

3.             Strengthening his team to help achieve his vision faster and spotting new talents. He can also build on the strengths of the existing staff and resolve some weaknesses.

4.             Creation of sales and marketing strategies…after all his business is sales driven.

If all this is in place, I think Friday afternoon he can join a member’s club and play golf. After all this life is short and he can afford the nice things in life.

I never got the chance to talk to him and I am sure this message may have never reached him before he collapses in a heap due to exhaustion and weariness. I hope someday I’ll bump into him and talk some sense into him. I hope he can listen to me...he sounded too arrogant to listen to some young man who may not be as successful as him…

That reminds me of some businessman I met who was so arrogant and was really blowinghis imaginary trumpet….Next post I’ll touch on that topic.

Pooling resources: Part 2

Continued from part 1.

Having already bought a plot and having collected some cash from new members; we were smiling from ear to ear. By the way, the new members’ share was calculated based on market value of the plot and available cash plus a premium. The essence of the premium was to cater for the work already done and structures already put in place. The capital injection they brought was used to acquire another plot in Kitengela. We seemed to be getting somewhere.

It was now time to do a 5 year business plan; after all targets must be set and well documented. Planning is extremely essential for any business. The business plan ordinarily will:

1.     Outline the vision and mission of the company. Vision creates that momentum of growing anticipation about the future, where change is embraced as a step closer to that very compelling picture of what’s coming next. The Mission defines the company's purpose and primary objectives. Its prime function is internal – to define the key measure or measures of the company's success – and its prime audience is the leadership team and stockholders.

2.     Set out values that the company must adhere to.

3.     Outline the products and services to be offered and the target market

4.  Carry out a serious SWOT and PEST analysis. It is crucial that an internal analysis of the strength and weaknesses of the membership as well as opportunities and threats be analysed. It is also important to analyse the external environment.

5.     Stipulate the strategies that take you to the vision and how to implement them

6.     Outline the management structures are also very key

7.     Give clear financial projections

This is just a paper and it can remain a paper if not well implemented and monitored. The same document is very crucial when you decide to approach financiers.

Our line of business mutated with time from speculation with plots to buying large tracks of land, subdividing and selling plots. With leveraging on credit, it was much easier and faster to expand and the turn-overs were testament of the expansion.

Management structures changed from owner managed to having a team of professionals manage the firm. The shareholders remained as the board members and exclusively deal with strategic decisions that are scaled down to the management team for implementation.

The company eventually pursued other lines of business including development of housing estates. What is nice about such business ventures is the fact that the company largely invests other people’s money. The OPM concept is the sweetest model of investment. Of course another brilliant idea developers utilize if well managed are joint-ventures with land owners. If well managed, you can imagine having a joint venture with the land owner whose land becomes the equity towards a project, then the company approaches a financier who provides the cash for development. Armed with a marketing strategy that works, it essentially means using other people’s cash to make money.

When I look at this chama cum company, the sky is the limit.

More Valuable lessons:

1.     Without a proper business plan, it is almost impossible to make it in business; you’ll end up running like a headless chicken.

2.     Having a business plan is an important thing, implementing it and monitoring the targets is far more important.

3.     Clear strategies on how to grow are important. This goes hand in hand with adapting to the ever changing environment.

4.     Management of a business is very crucial. Sometimes owners of business mix ownership and management to the detriment of the company. It is always wise to let a company be managed by professionals.

5.     There is need to have goal congruence in an investment group. This is very crucial because if this is not the case, you’ll always be embroiled in internal wrangles as opposed to spending time strategizing on how to grow.

6.     Variety of members in the group should be viewed as a strength because it brings in different views and professional outlooks.

7.     The number of group members should not be too low neither should it be too high. Too low means challenges of getting sufficient capital could arise. Too high means serious group dynamics could set in and managing a larger group is much tougher.

Our next lesson will be on making real estate part of your retirement nest egg.

Pooling resources: Part 1

Guest post by Samuel G. Njenga

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.