What do new entrepreneurs think about when they want to start a new business in Kenya? Capital, capital, capital.
Every entrepreneur thinks of that. There are numerous other things often considered by different entrepreneurs but startup money is always at the top of their list of priorities.
In one article, I remember highlighting that most businesses can be started with as little as Kenya shillings 5000.
Note: This post may contain affiliate links. When you click on something I recommend and purchase it, I will receive a commission for the sale – at no extra cost to you.
Of course, with such little money, one needs to invest a lot of time in their new venture before their business reaches a certain desired level of profitability.
When one realizes that the obstacle between them and implementing their business idea is money, one solution considered by many budding entrepreneurs, though with a tinge of fear, is borrowing money from banks, microfinance institutions, SACCOs, youth fund etc.
There are many people who think that their new idea cannot take root unless they get money from a lending institution or something of that sort.
Borrowing money to start a business is not bad – in most cases
Borrowing money is not bad. What is bad is thinking that one must get a loan in order to start a successful business – even when they know deep down that they can do without one.
That’s why I decided to write this post, to help those who feel (or think) they can do without a loan, especially when they are just starting out, to avoid running to lenders.
- Secrets of Self-Mastery ebook by Mitch Horowitz
- The Miracle Equation: You Are Only Two Decisions Away From Everything You Want by Hal Elrod
- 21 Irrefutable Laws of Leadership by John C. Maxwell
- There are some businesses that don’t need a lot of money. Instead, more time, true dedication and management during the early months can do your new venture more good than any loan money could.
- There are so many people out there who keep postponing starting their venture simply because they feel they need thousands upon thousands of shillings to get started. And so they keep running from one financial institution to the next in the hope that their business plan would attract a yes from the lending institutions they visit.
Many don’t succeed. Of course, it should be remembered that some do succeed. I am not trying to give Kenyan (or foreign) lending institutions a negative image.
It should be realized that the banks cannot simply lend to every person who shows up in their premises. That I know, and you know it too.
So if you are waiting for that day when you’ll finally get a loan, I think it is time you just started on your own, however, small your operations would be.
There is always room for growth, and I am sure banks would listen keenly to someone who has already taken some steps towards turning their superb idea into reality – it would be nice flashing a business plan that is already alive.
- 48 Laws of Power by Robert Greene
- How to Win Friends and Influence People by Dale Carnegie
- The Ultimate Sale Machine by Chet Holmes.
So, how can one actually avoid rushing to the lenders?
By simply asking this question: Do I really need the loan?
Now, when trying to answer this question, you have to take your time.
You have to ask yourself a few questions related to this one to come up with specific answers that will eventually help you in making the right decision.
Here are some examples:
- Can I raise the money from my own savings?
- Can I borrow from friends or family, and why would I do that in the first place?
- Are there a few things I can sell to raise the money?
- If I saved more, would I be able to raise the capital I need a few months from now?
- When do I expect my business to start making a profit?
- Am I going for a loan just because someone (could be an ad guy or lady, friend, member of your family) thinks it is a good idea?
- Is this all out of excitement?
- Can I do some freelance work on the side to raise the capital needed to start my business?
- So Good They Can't Ignore You by Cal Newport.
- Master Your Emotions: A Practical Guide to Overcome Negativity and Better Manage Your Feelings by Thibaut Meurisse, Kerry J Donovan
- The Recession-Proof Freelancer: A 12-Point Plan for Thriving in Hard Times by Carol Tice.
I mean the loans are somewhat attractive given the fact that we are bombarded with ads, left and right, promising easy, quick access and low-interest rates.
And there are many stories of entrepreneurs actually doing a pretty good job after getting a lending hand from financial institutions.
So, if you are genuinely in need of a loan, go for it.
If you are still wondering how do I know if I should go for a loan when just starting, consider scrolling up and answering the questions above.
Let me know how it goes in the comments. Share your thoughts on this in the comments.
Download this PDF guide: Ten Things to Look At if You Are Thinking of Starting a Business in Kenya. Click here to get it.