“The
best time to plant a tree was 20 years ago. The second-best time is now.”
— Proverb
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Before 2020 I was a happy go lucky girl, my main goal
was to be the life of the party (well I still am), I only had that one major ambition,
dance the night out binge drinking with my friends. 2020 rolled around and in
came the famous corona virus, my boss literally went awol, calls and messages
went unanswered. At the time I worked at a private school, I tried my best to
understand the fact that the students no longer paid school fees thus the
sudden silence. My luck was that I had not spent my January salary as I was
anticipating travelling to Thailand. I had made an assumption that as a Kenyan
it would be visa free for me on arrival, shock on me when I got to the airport.
My salary at the time was about 14000 yuan (about 2000 dollars) Guess what
folks? I survived on that money for a good five months. Never ever had tap
water tasted so good, I had to learn how not to overindulge.
The onset of summer that year, came with some good
news. We could finally go back to work. That jumpstarted the most important
chapter in my life, savings. Party days drastically reduced, I took more part
time jobs and learned how to find the best bargains. Fast forward to late 2022 and the after effects of covid could still be felt across China. It’s important to note that China still maintained
strict testing and quarantine controls long after the rest of the world moved
on. At the start of 2023 the Government also introduced stricter measures
towards English language training centers, I watched in panic as one training
center closed after the other. I knew my time in China was limited and that
came into fruition when I packed my bags and finally left the city, I loved to
relocate back to Kenya early July 2023.
Coming back home wasn’t easy, jobs didn’t pay that
well, however as a fluent Chinese speaker I was able to find a job in a Chinese
secondhand clothes company, am sure some of you are wondering “now hold on,
what on earth is happening here?” well at first it felt like a joke, however that’s
where my savings came to life, I was able to rent and renovate with a friend 2
branches of second hand clothes supermarkets in populated section of downtown
Nairobi. The shops were sudden hits as we could get bales at discounted prices, open them and sell them at affordable prices. The fact that the customers had
to pick what they liked with prices clearly labelled drove the sales. This
would not have been possible if I had not made that decision on the hardest
year for most of us 2020.
Am well aware that there are so many business models
some of which don’t even require capital to start such as affiliate marketing
and drop shipping. This blog on saving funds is particularly important for those
who want to start physical address businesses. Savings could end up being your superhero, literally. Forget about batman and superman. One of the most effective ways
of starting this journey is understanding your money personality. On our next
blog we will cover in depth the different money personalities that exist. One of the greatest quotes that ever exists
states that one’s level of poverty is directly associated with the free things
they receive. My savings turned out to be one of the most important decisions I
ever made, lets delve into more reasons why that piggybank is worth the sweat.
Location Expenses: Renting or buying a
physical space often requires a substantial initial outlay. This includes a
security deposit, first and last month’s rent, or down payments if purchasing
property. Its always advisable to have at least 3 months of rent ready
beforehand as some of the startups may not immediately make money and require
some time.
Renovations and Setup: You might need to
renovate or customize the space to fit your business needs. Customized spaces
further enhance your brand and bring out its uniqueness. I have a feeling that
customized spaces also give an expensive look to your product thus as an
entrepreneur you are able to command better prices for your goods. Savings come
in hand as this can involve significant expenses for construction, interior
design, or equipment installation.
2. Operational Costs
Utilities and Maintenance: Regular expenses
like electricity, water, heating, and cooling need to be covered. There might
also be ongoing maintenance costs for keeping the premises in good condition.
No worries though once the business is self-sustaining it will be able to
naturally pay for these kinds of costs.
Insurance: You'll need various
types of insurance, such as property insurance, liability insurance, and
possibly workers’ compensation, depending on the nature of your business.
3.
Inventory and Equipment
- Purchasing
Inventory: If your business involves selling physical products or services,
you’ll need to invest in initial inventory. This can be a significant
expense, depending on the nature of the products and the volume required.
- Equipment: Depending on
your business type, you might need specialized equipment, technology, or
furnishings. These purchases can add up quickly. Its good to consider that
some of the inventory may be imported and may require some time.
4. Employee Costs
- Salaries and
Wages: If you plan to hire staff, you need to account for their salaries,
benefits, and any additional costs such as uniforms or training.
- Recruitment: Expenses
related to hiring staff, including recruitment advertising and possibly
relocation costs, should also be considered. In the beginning some of the
costs may be co-shared. Let the third party be aware beforehand.
- Initial
Marketing: To attract customers to your new location, you'll need to invest in
marketing and advertising. This might include local advertising, signage,
promotional events, and digital marketing efforts.
6. Legal and Licensing Fees
- Permits and
Licenses: Starting a business often requires various permits and licenses,
which come with associated costs. These might include business licenses,
health permits, zoning permits, and more.
- Legal Fees: If you require
legal assistance for business formation, lease negotiations, or contracts,
these costs can add up.
7. Cash Flow Management
- Buffer for
Unexpected Costs: Having savings provides a
financial cushion for unexpected expenses that may arise during the early
stages of your business. This could include emergency repairs, sudden
increases in costs, or unanticipated challenges.
- Operational
Cash Flow: It’s essential to have enough savings to cover ongoing expenses
until your business starts generating a steady revenue stream. This
ensures that you can manage day-to-day operations smoothly without
financial strain.
8. Building Creditworthiness
- Strong
Financial Foundation: Having savings not only helps
cover initial costs but also strengthens your business’s financial
profile. This can be beneficial if you need to apply for loans or lines of
credit in the future.
9. Strategic Flexibility
- Opportunities
for Growth: With a financial cushion, you have more flexibility to seize growth
opportunities or make strategic decisions without immediate pressure on
your finances.
10. Peace of Mind
- Reduced Stress: Knowing you
have savings to fall back on can reduce stress and allow you to focus more
on growing your business rather than constantly worrying about financial
stability.
As much as we have highlighted the technical aspects of savings, lets now
highlight the emotional benefits of savings. In the digital world that we live
in its important to note that some of these financial decisions we make affect us emotionally too.
Saving money can have several emotional benefits, often contributing to a
sense of well-being and stability. Here are some of the key emotional
advantages:
1. Reduced Stress and
Anxiety: Having savings provides a financial cushion, which can alleviate
worries about unexpected expenses or emergencies. This sense of security can
lead to lower levels of stress and anxiety.
2. Increased Confidence: Knowing you have
money set aside for future needs or goals can boost your self-confidence. It
reinforces the feeling that you're in control of your financial future.
3. Peace of Mind: A savings buffer
can offer peace of mind, knowing that you're prepared for unforeseen
circumstances. This can lead to a more relaxed and less anxious mindset.
4. Sense of
Accomplishment: Reaching savings goals or milestones can be incredibly satisfying. It
gives you a sense of achievement and progress, which can be motivating and
uplifting.
5. Greater Freedom and
Flexibility: With savings, you may feel more freedom to make choices that align with
your values and desires, whether that's taking a vacation, pursuing a hobby, or
making a career change. This flexibility can enhance overall happiness and life
satisfaction.
6. Improved
Relationships: Financial stability can reduce tension in relationships, particularly
in situations where money is a source of conflict. When you're secure in your
finances, you're less likely to experience stress or arguments related to money
matters.
7. Enhanced Resilience: Knowing you have
savings to fall back on can make you feel more resilient in facing challenges.
It can boost your ability to handle setbacks without feeling overwhelmed.
8. Long-Term Happiness: Having a savings
plan and achieving financial goals can contribute to long-term happiness. It
helps build a sense of purpose and direction, which can positively impact
overall life satisfaction
In essence, savings provide a foundation for covering initial and ongoing
costs associated with starting and running a business with a physical address.
They ensure that you have the resources needed for setup, operations, and
growth, while also giving you a buffer for unforeseen expenses. Proper
financial planning and having a robust savings plan are key to building a
stable and successful business.
Savings not only provide financial security but also contribute
significantly to emotional well-being, helping you feel more secure, confident,
and content.
“Save money, and money will save you.”
— Japanese Proverb
