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Tweak your business plan to within your capital limits

"Start with what you have" is advice often given to intending entrepreneurs encouraging them to launch their businesses with whatever capital they have, however little. 

As a budding entrepreneur in 2018, I followed this advice and launched my business—MD Enterprises. Although my estimates had placed the amount of capital I needed for the business at Shs 18 million, there was little hope I could raise all that money.

Commercial banks, which seemed the best place to borrow from because of their low interest rates, would not lend me a shilling because I did not have valuable collateral security i.e. land or a car. So I turned to friends and family and sought their financial support.

Because friends and family are not financial institutions always with money at their disposal waiting for someone to borrow, many of those I contacted, despite their desire and willingness to help, were unable to. For those who managed to sacrifice and generously set aside some money for me to use in my business hardly availed it on time (when I needed it) and many times the amount of money that was given to me was less than what they had hoped to raise.

It took weeks before any financial help came through but eventually one of my friends provided me with Shs 5 million. Although the Shs 5 million was only 28 per cent of the total capital I needed, I went ahead with building my business using the little capital I had.

Soon, however, it became apparent to me that I had bitten more than I could chew. I had set in motion a business development process which I did not have enough financial capital to see through. At that point, I could neither proceed nor could I abandon the business because that would mean me losing everything I had invested in the business including my friend's Shs 5 million.

Afraid of losing my business at such infancy and being seen as a failure, I sought a way to access capital that was faster and more reliable than capital from friends and family. And that is how I started borrowing from individuals in the money lending business.

Accessing money from moneylenders was indeed quick and reliable as money was made available on the spot, but it came with very high interest rates (charged per month). At one point I was paying back over 1,200,000 in interest alone, per month, even before my business could return a profit. It was a huge financial strain on me and I soon found myself stuck in a vicious cycle of borrowing from elsewhere to pay back interest on the loans I had acquired from the moneylenders.

In retrospect, I am reminded of the words of Jesus Christ in the book of Luke. Jesus asked, "Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, 'This fellow began to build and was not able to finish.'"

Likewise, before you start building your business, it is prudent that you sit down and check if you have enough capital to build and make it operational. And if you realise you do not have enough capital, tweak your business plan and make it smaller or start a different business you are certain to build and operationalise using the little you have.

A communications expert and entrepreneur

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