So your business is up and running and you have decided to do some advertising – try not to bore your clients.

So you are happy and proud that your business is up and running and you think that it is now time to bring in the numbers and the Mucho monies… well whatever you do, think carefully about how you design those marketing materials.

Many business people decide to design their own marketing materials because it is cheaper and faster- by the way, I have actually done it and I though wasn’t too bad myself- that is until my web designer saw what I had done and freaked out!

I was surprised that she was so violently opposed to the beautiful colours I had chosen, not to mention the nice way in which I had put out all the services we would be providing. What does she know? I asked. Well as it turns out, she knows a whole lot more than this scribbler here. The perfectly beautiful colours I had chosen actually turned out to be quite off putting to many people who saw them- I quickly withdrew them and asked her to help me make a new marketing flier.

When you are doing advertising or marketing for your businesses you need to bear a very important thing in mind- that how you see your product or service might not be the way the world sees it and what is beautiful to you as the marketer and advertiser may not be beautiful to your market.

So how do you make sure that what you send out to represent your business? Simple – ask people. It is truly as simple as that. Whatever materials you prepare, test them on a couple of people and see the impact of the material on them. T

hey will not agree on everything, but they will definitely point out to you things that you would never have noticed.Secondly, you need to be very familiar with your market. If you are in a conservative country for example, you do not want to use advertising material that has any sexual connotations such as beautiful girls!

Don’t try something just because you have seen in done in another country, first check to see if the response to it will be the one you hope or completely opposite of what you expect.

Of course they always say good and bad publicity is still publicity. But make sure that even if there is controversy over your materials, it is not a controversy that reduces the credibility of the service or product you are offering.

Once you have dealt with that, then Use pictures and images in your marketing materials, but avoid cheesy photographs. Human beings are visual, a picture says a thousands words but if the picture is not clear the message is not clear so don’t use poor photographs- and for crying out loud don’t think we won’t notice that the photograph is poorly taken. If it has people or things in it, those people and things should take up at least 70% of the picture, don’t make us squint trying to see your product somewhere in the far background.

We know you want to tell us about your business but don’t get over excited, we are not reading a newspaper! Keep the written part to a minimum, let there be a lot of white space that has no ink in your advert. This helps the eyes to rest and to focus on your message- trying to cram everything into a small space doesn’t help, it just makes the material uninteresting.

As much as your logo is important, it’s not everything- Yes, your logo tells clients who you are and gives them something to remember next time, but people are interested in what product or service you are offering. Big logos distract from the main content of your message, also remember that the best-known logos in the world are the simplest, and don’t go designing something extravagant and exotic. Oh and don’t keep repeating the logo several times in your material. That’s just boring and egotistic.

Developing a brand requires consistency- Please make sure that your marketing material has a recognizable look to it. Its not advisable to keep changing things each time you have a new campaign – choose the same fonts, and place your logos in the same place so that you will have a consistent look that tells people you have a clear idea what it is you are about. Some designers need a lot of supervision, they are excited about all the software and fonts that they have available to them and will use as many fonts as possible in the marketing material. This is no good. Choose one to three fonts that your business will use and stick to them.

Colourful doesn’t mean chaotic. Having many colours on your material doesn’t make them more interesting to people, it just makes the page look like a confused chameleon. Some colours are very loud and bold, and adding them to other colours makes your materials look like a child has been playing with coloured crayons. Choose two colours for your material. And make sure that your text is only one colour preferably black. Beware that if you use non black colours for the text then they have to match very well with the rest of the materials.

Avoid repeating yourself. It is true that repetition makes people remember things but don’t be redundant. Emphasize the specific benefits and advantages you offer because what your clients are interested to know how your service and product helps them.

Don’t be a copy cat- This is a very common way of doing things in Africa. You look around, see an advertisement that has worked and copy it for your own business, it is cheap, it is dishonest, and it makes you look second rate. Be creative and set yourself apart, when you copy others all you communicate is that you are bereft of ideas and as soon clients find something similar to what you are offering from someone else who is unique, they will dump you.

To Succeed in Business, be optimistic but also- be realistic!

Nobody sets out to fail in business. Everyone expects their business to bring in money, bring in the customers, and expand each year. Unfortunately, most people are not willing to put in the work and do the specific things that are necessary to make their businesses succeed.

Business people who succeed generally achieve success because they are focused on a goal. Being focused allows them to identify the things they need to do, put their energies into it and remain committed to the tasks until they are successfully completed. One cannot be a good businessperson without a lot of hard work.If you are running away from your job place and starting a business because you want to work less and work at your own time, most likely, you will not succeed because business requires a huge investment in time, energy and a willingness to do many small and sometimes boring tasks like filling in ledgers and balance sheets.

But more importantly, businesses people that succeed have an attitude that they are responsible for both their failures and successes. They do not blame the customers, they do not blame their competitors, and they do not blame the financial environment. They look at their choices and say, I failed or I succeeded because I made these types of choices, and these choices led to this result.

Of course, there are things that one cannot control. However, you can always can take negative things that happen to you and your environment, turn them around by making the right choices, and still manage to succeed while others are grumbling about how unfair life is to them. So, where does success in business begin? By having a clear plan and strategy, checking your assumptions, and then focusing on the things you need to do in order to achieve your goals.

Remember that what you are doing is a business. It might sound obvious but many people treat their businesses as hobbies. They do not take them seriously, waking up late, not showing up at their business premise, and not following up on work that is being done on their behalf, and taking days and money off from the business to engage in other pursuits.

Of all these mistakes, the worst is not following the money trail properly. Once you start taking money out of the business for other things, or fail to keep good financial records, you are well on the way of a business failure. Money management is critical for business success.

It is precisely on this issue of money management that most business people fail especially when starting out. Human beings are generally optimistic by nature and new business people often act out of instinct. They see something they consider an opportunity and pour money into it. Often they are so excited about their new idea that they don’t check it out comprehensively or refuse to listen to information that contradicts what they believe.

This instinctive and over optimistic behavior is often what causes new businesses to fail.Often such a businessperson will go into the new venture believing that it is what will make them rich. When things start going wrong the person will insist on thinking, “it will eventually work out.”

As he looses more and more money, he starts realizing that he should probably get out of the business but then there is the issue of pride, and the fact that human beings generally do not want to admit they are failing!Finally, optimism turns into fear, anxiety, despair, and finally desperation as the person tries selling the business for at least a reasonable price.

Having failed once, people tend to rush back into some other business, believing that this time their luck will be better, and trying to prove to themselves that they can succeed. Sometimes people get increasingly desperate to regain their money and will get into even more speculative business ventures, which promise faster, quicker returns with less effort. Inevitably, they get burned.

Successful business people operate on totally different premises. They enter into a business venture knowing they can be wrong and, because of that, they constantly try to get more information about their business area, the trends, as well as learn from other people’s experiences.

Most of all, successful business people know that businesses do not run on optimism, faith and hope, but on correct information and correct understanding of one’s business environment. Because no matter how optimistic you are, if people do not want to buy your product or it does not help them in any way, then they simply will not buy it, no matter how high your faith and optimism remains.

Successful business people understand it when their customers tell them their business is not working. Your customers are talking to you if you are losing money. Smart business people check to find out why they are losing money. If it is a problem with the way their business is structured, they change that. If what they are offering is no longer interesting to the customers, they find a way to turn that around.

Sometimes some businesses are no longer viable. For example, if you were selling typewriters, you may not find a huge market for them anymore because computers have replaced them and it is time to get out of that business. A dying business is like a dying animal. The longer you keep it with you, the worse it stinks.

Successful business people manage their money carefully, using their gains to add to the value of the business rather than on personal pursuits. Remember, businesses sometimes take years to become successful and if you are busy siphoning off money from them to please yourself; it is the same as siphoning fuel off a vehicle. A time comes when it will finally run out of fuel and stutter to a halt.

Business tip for today: visit the free platform on tradelinkafrica.com for further free support and advice on tax, legal and marketing issues as well as other ways to improve your business.

A recipe for Failure- Lack of Discipline.

Business requires discipline. One of the most important things to be disciplined about is your business expectations. There is a big difference between ambitions, high expectations and greed.Now English is not our first language, so let the dictionary help me first make the distinction for you. Greed is different from ambition. Ambition is a focused commitment to achieve a certain goal.

For example, I can make it my ambition to make my business the most profitable business in Africa. I am focused and I am committed- I work hard, I toil day and night, I do research to find out what I can do to make my business better. I constantly look to find out what my competition is doing and work to be better, I find out what my clients want and try to serve them better- all in the effort to make my business profitable.

Greed is different. Greed is an overwhelming desire for something. It often lacks focus, for example, if I am greedy about money, I don’t care how I get it. Today I will be working at a job, tomorrow if someone tells me that I can make more money in business I will go into business. If that business doesn’t give me results quickly enough, my mind will start roaming because all I want is money, NOW! Actually no, what I want is money yesterday!

Greed lacks discipline. Greed is an “I can’t wait” syndrome. People who are greedy will try anything. They will sell fake drugs, they will cheat clients, they will forge documents, because all they want is MONEY. And that’s why they don’t succeed in business, because business is not about greed, business is about ambition and discipline.

In the couple of years I have spent advising people on what to do with their lives- careers, jobs- business I have met many people who set out in business thinking that they will make loads of money, and usually, if they succeed, that ends up being true. However, most of the times, businesses take long to actually succeed and many people give up in frustration or get bankrupt.

I am sure each one of you knows at least one person who started a small business and as soon as it started making just a little bit of money, they started drinking and buying drinks for everyone, the wife started buying expensive dresses and the children were taken to private schools- that is indiscipline. It is the “I just can’t wait” syndrome.

We all know what happens, soon the free cash in the business flows less and less, the business makes less and less, soon it closes and they start another one.

Let me give the example of my friend Jean. That’s his real name by the way. I had only just become an expatriate when he announced he was officially a millionaire- in local currency of course. I didn’t mind enjoying the free drinks he threw around, but I couldn’t help wonder how long it would last. As it turns out, I really didn’t wait very long.

You see Jean was one of those people with a good business instinct. He had gone into Rwanda in the immediate aftermath of the genocide and done quite good business in the construction industry. One or two contracts had landed him the equivalent of about 100,000 USD, pretty good for an African who had only a diploma certificate.

With that money he had been able to buy his family a bit of land, a residential house in the city, not to mention start a small cybercafé for his wife to run on the side.

Jean’s business was a partnership. He was good with people, and his partner had the right papers. You see, to do construction work you have to have certain certifications -especially if you do survey work, which is what Jean did.

Jean didn’t have the papers, but he knew how to get clients, his partner had the papers, but was poor at getting clients. For many years they had shared business costs fifty fifty and profits too. But Rwanda changed that. There was so much money! And Jean had gotten the clients all by himself!

Jean felt he was now ready to move out on his own. He would hire young guys with the papers, they would do the work, he would pay them, and keep the rest. So out of the door the partner went.

At first it seemed to work, but clients quickly realised that the expert in the group was no longer there and they were being referred to young, straight out of college youngsters. They didn’t like it. Jean’s partner (not being entirely stupid) began his own business, and soon managed to get all the old clients to join him. You should have heard Jean’s anger in the bar. How dare he steal my clients! He would fume.

Jean’s just didn’t have the papers to back up his work, and didn’t want to go back to college to get them – remember what I said about some Africans thinking that education after a certain age is demeaning- Jean is one of those. Inevitably, the number of clients was too low to sustain an office. He closed down.As luck would have it, Jean’s wife was still running a cyber cafe and- it was doing very well thank you. With one business closed, Jean felt it was time to expand his wife’s business, but he really didn’t have any ideas. But his brother was doing something very similar business and was about to cut a deal with a company which would provide cheap telephone services for clients to call abroad- a real money maker! Now Jean felt that he had more business experience and could offer the provider a better return for his investment, and so, without his brother’s knowledge, he went, spoke to the provider and got the deal himself!

For about a year the business made good returns- and the relationship with his brother soured. But Jean was okay with that. He was soon back in the bars, saying how well he was doing. But heavy spending and business also don’t go well together, and the service he was offering was soon offered by a dozen others at cut throat rates.

The returns on that business grew gradually lower. As I speak, Jean and his wife are not working. He has sold his car, and the last time I spoke to him he told me he is waiting for the “right kind of business” because nowadays there is no money to be made in “normal” businesses.

But there is no “right business” waiting for him. What he lacks is discipline and focus, he was callous and greedy, and those things simply don’t go well with business.

If this describes the way you operate your business, take it from me, the success won’t last. One thing you will make in plenty though- enemies. There will be no shortage of that.

Business tip for the day:

If you are wondering how you can make money in a cut throat environment without resorting to dirty tactics the response is simple- compete only with yourself. Find ways to improve your business, its efficiency, your client satisfaction and your financial discipline, compete with yourself on how to make each of these things better each financial year, you will be surprised to find yourself way ahead of the pack. The best way to win, is not to compete with others (because then you compete at the level they choose). Compete with yourself, so you are constantly getting better.

Why African Websites Don’t Work.

Okay so you thought it was a great idea to start a website, you paid a whole lot of money for it and nobody has come to visit your website yet. It is not bringing in the volumes of cash that you thought it would, and worst of all, your friends keep telling you that when they try to open the site, the link fails.Welcome to the world of Africans who started websites before knowing what it ws they were getting into.Believe me, I feel your pain. I have been there. I have consulted web designers in Africa who gave me estimates sometimes of up to 3,000 USD to build a website for me. I have also been promised a website for only 5 dollars a month, only it didn’t really do what I wanted it to.

I have learnt a few things since then, and here are some tips for anyone who wants to start a website.

1. Make sure that your service provider is reliable and pay your hosting bills on time. There is nothing as tedious as a website that is here today and gone tomorrow.

1. Please please please, DONT take a website from MSN, Geocities, AltaVista unless its just for fun and sharing with friend. Can you imagine if the url for this blog  www.geocities.speakingspace.com/businessafrica?
   just see the difference it makes to get a proper url, http://www.businessafrica.com/ doesn’t it sound more professional?2. Don’t accept a website package that does not give you your own email address. For example, if your website is http://www.africanbeauty.com/ and you give your client an email saying africanbeauty@hotmail.com it instantly makes one wonder if you are the real thing or a hoax. This is especially the case if what you are advertising on your website is something you want to sell abroad. Your web package should give you your own email service (good ones actually give you as many as 50 email addresses for your business) so that you can tell a client to reach you at manager@africanbeauty.com3. Picture and graphics mania- If you are targeting an audience in Africa, be realistic. The connection speeds in most countries are such that you could go to the bathroom, finish, come back and still find a page loading. If you want your clients to visit your website you do need to make it look interesting, but putting too many graphics and photographs means people will constantly get frustrated and leave before reading your message! The opposite is equally true. Some websites have too much writing and no images at all! Excessive writing is boring too. Internet is a visual medium as much as it is a print medium, balance both and create a pleasant experience for your visitors. And please spare us excessive pictures of yourself and your staff. Its important to see you, but frankly one picture is enough for the job.4. Please remember to put your physical address and contacts, it gives people an idea of where to find you if they need to talk to you ( or send you summons to court!) a website with only email addresses on it makes you look as if you are not interested in physical contact with your clients.

   5. Too many adverts: in this era where you can make money by just having banners on your website remember that your advertisers want to be sure people are actually visiting your site, and people will stop visiting your site if every time they come they are overwhelmed by ads, pop up windows, and flashes offering a multitude of things. Keep it simple.

   6. Old News: Some websites are rarely updated. Each time you visit them you find the same old information. This is very off putting. Don’t start a website until you are able to update it regularly. This especially relates to news sites; please don’t put up a news site if you are not able to provide news. The definition of news is new stuff. What happened a week or three days ago is hardly news.

   Finally, please don’t assume that just because you have a website people will come there in droves. NO. Advertise your website. Put the URL on your cards, if you have the money; create a sponsored search for it. And no, don’t believe it when your service provider tells you that this will cost hundreds of dollars.

   A good website in Africa should cost you between 500-2,000 dollars for a high end product. Be sure to check out the person building it for you though, many claim what they cannot deliver. If you have any questions, ask our web consultant at consultants@tradelinkafrica.com.

 This article was originally posted in the madbusinesswoman blog

Forget about the Jargon- stick to the things that make your business work.

Now if you are a small business person like me doubtless you have met with fat cats and intellectuals who want to shove some new fancy business stuff down your throat.

I have invested in a couple of different businesses, sometimes I have made money and sometimes I haven’t. Take it from me, forget the jargon, stick to the things that make your business work.Most of those guys who want to tell you a lot of fancy stuff haven’t ever tried to own a business. They have never sunk their money into a project and seen the whole thing fall apart on them, they just don’t know what the hell they are talking about, they are paid to sit and imagine the problems you are having and solve them for you without ever experiencing that… now can you imagine what kind of a mess they will put you in?Stick to what works. That might sound strange after I have just told you to try something new, but I said try something new not try someone’s new fancy ideas about how business should work!Good business advice is like a good employee, hard to find, everyone wants him, and you can’t afford him.

When it comes to listening to business advice, make sure you check the person out.

1. Have they ever actually been in business? And if they have, how well are they doing?
2. Do they have the necessary skills and academic background to understand your business? It’s no use asking a person who was trained in mechanical engineering to advise you on what to do with your restaurant, unless he is suggesting a new piece of equipment that would make your work easier!
3. Stay far away from someone who cannot speak plain language. As soon as someone starts throwing big words at you, run like hell. Big words are an expert’s way of saying “I don’t know what am talking about but if I say it in an exotic way, I might just convince you that I do know a lot.”
4. Does the person charge for their services… now this is a difficult one. All business advisers will want to take back home something for their family, so they do have to charge a fee for spending time with you and helping you work out the best things for your business, but watch out. If you start feeling that what you are paying for is not bringing results, well it’s time to get out of there.

Good business information is easy to find nowadays and even free, if you are good on the internet, dedicating a couple of hours a week to Google the things that you are unclear about always helps.

Unfortunately many of the times the suggestions given on websites are relevant only to specific countries. For example, most tax information you find on the web will be relevant only if you are operating in Europe or the US. For an African business person you may need to dig deeper, and then find someone to with whom to discuss what you find so make sure that you choose the right person.Even after you have found good advice, implement it cautiously. Start with a minor change and gradually advance to more and more changes when you see positive results.As my people say, the fool rushes headlong into that which he knows not, a mad man, never!

One of the things we have done is to try and put together a group of consultants willing to help small business people with the questions they have. If you feel you need such advice you can log on to our website at www.tradelinkafrica.com the registration is free and there are many free services including a chat room where you can meet other business people and share ideas with them free of charge.

Why not to start a business- to run away from your terrible boss.

I know it sounds like the perfect reason for starting a business, but really, you need a little more than just a place to go to get away from the devil.We have all had those nightmare bosses. They come in all shapes and sizes, there is the one who won’t pay you well but wants to work you to death, there is the one who is permanently suspicious and can’t wait to sack anyone who sounds remotely disloyal, and there is the one who is so archaic if they did some research they would find a relationship between him and Zinjanthropus (sorry if you missed secondary school history or if evolution is not taught in your school). Then there is always a boss like me, stark raving mad, you really don’t have the first flipping idea what it is they want from you and no matter how many words they use, you just don’t seem to get it because they are spaced out and operating in a different planet.My own nightmare boss was a white American who though Africans can’t write because English is not their first language. I have also encountered another one who thought that the best way to get people to work is hang around them and constantly check over their shoulder and their desk to make sure they are putting in the effort they should.Being caught in a job with a terrible boss can be a humiliating, frustrating, “I want to kill him! ” kind of experience, but before you think of quitting and starting a business consider a couple of things.

1. How soon will you need money?

Businesses take money and unless you are one of the 10% lucky ones who strike it rich at the very first effort, most businesses will initially take more out of your pocket than they put into it.

2. What exactly are you running away from?

Many people run away from jobs to avoid a bad relationship, and then get shocked when they start a business and their supplier or banker or accountant ends up being the same.

Thinking through these things will let you know if what you really need to do is start a business or get a better job.

This article was originally posted in the madbusinesswoman blog

How not to start a business- using all your pension money…

There is a tendency to assume that all it takes to make a business work is open the doors and people will come in to spend their hard earned money. Wrong.

 

Many people who start a business using their pension money fail to take into consideration a few things that a good accountant would be able to tell them. (And since some of them don’t have access to the internet, I hope that as good sons and daughters, or cousins, uncles, aunts or whatever, you who have access and can read this blog, will try and explain it to them)Before you start a business using a source of money as sensitive as a pension it is important to bear certain things in mind.1. If you are not going to be getting any further money, how much do you need per month to support yourself and your family?

2. What are the regular costs you incur on a monthly basis that you will need to pay for?

3. What will happen if the money you put into this business is never recovered -that is, what you will do if the business fails?

Now I have come across some people who never want to believe that a business will fail. Some people tell me their faith doesn’t allow them to think in terms of failure because that is an attitude that comes from the devil. Some people say they have seen others do it and succeed, some people don’t even bother to consult anyone, some people say they know what they are doing and their business will not fail. All of them have one thing in common, they are being unrealistic.

Now I know a thing or two about being unrealistic. I have often had an extraordinarily good idea that sounds marvellous to me, and which I am convinced, beyond any reasonable and unreasonable doubts, to be the best idea that anyone has ever had. Then I try it out and the whole world stands in horror.

I will give you an example. Recently it occurred to me that one of my sweaters could be worn inside out. I tried it in front of the mirror and I was convinced that it was made to be worn both sides. I left the house feeling very smart and confident. But then I noticed that everyone seemed to be avoiding me or looking at me in that strange embarrassed way that people look at someone who is insane. I couldn’t get it… it looked so okay when I tried it in front of the mirror!!

People who refuse to acknowledge that their excellent business idea may not be so interesting to other people l are unrealistic. Statistically, 70% of all new businesses fail within the first 3 years and of the remaining 30% only 10% go beyond the first seven years. This is a fact that has been proven over and over again.

There are several reasons why businesses fail, but high on that list is poor planning.

Taking your pension and putting the whole of it into a business is not good planning. A pension is normally the only source of income an African person can hope for in their old age, our states do not have social security and other support mechanism given to people in Europe or the US. That money is very valuable and rushing to put it all in a business venture is not mad, it is reckless.

I don’t know if any of my readers remember the printing presses of the early 80’s- they were huge machines that had to be fed hand made plates of whatever you were trying to print and sometimes even had to be turned manually.

Well I have an uncle who worked on one of these machines for a reasonably sized company. He was one of those privileged people with a good job, good benefits This company gave its staff members gift vouchers for shopping during holidays, paid medical costs, gave staff members 30 days of leave per year… it was one of those jobs that was the envy of many. (In those days it was really unusual for a company to reward its staff by giving them anything other than just the salary).

Technology would soon change all that. First typewriters began to be replaced by computers, then the computers grew smaller and worked faster, then it became possible to design your print job on a computer. Soon the company was buying newer, more sophisticated machinery. They wanted staff members like my uncle to go back to school and learn how to use it, but my uncle, and his colleagues are in that category of Africans who believe that learning new things is something that anyone above 25 should be embarrassed to have to do.

So he and other members of staff went on strike, refused to learn how to operate the new machines and insisted on retaining their jobs. Its interesting how often we try to turn back the hands of time…

In this instance, they were successful, their union was able to negotiate new jobs for them within the same institution and given that most of them were about to retire, they felt it was a good arrangement.

When my uncle finally retired in 2000 he got the equivalent of 20,000 US dollars. Now someone abroad may say- what little money! But in my country, that made him a millionaire.

Now there is something very deceptive about that word millionaire. It sounds as if you have a pot of cash so large you cannot exhaust it.

And in my uncle’s case, he probably did feel that he couldn’t ever exhaust this pot of cash. Consider that this is a man who had never earned more than 120 dollars in a month. He must have felt like (and I know did) he had just struck gold.

The first thing he did was to move his family into a bigger rental house (note I said rental). Then he bought a new sofa set, big screen television (31 inches if am not wrong), and mega boom box, all of which cost him a cool 2000 dollars.

Then he decided it is time for me to go into business.

And what does an African do when he/she decides to go into business? He asks his friends and colleagues what they think works, what they think sells… typically; they end up starting the same business that every Tom, Jane and their uncle is running.

But my uncle felt he was much wiser than that. He would travel. Start a business outside the city. Despite the efforts of relatives such as myself to get a word in edgeways about how the pension money should be spent (please buy some land, get a permanent home and then use the rest for business) he felt he knew better than everyone else and we had no business telling him what to do… it was an all male testosterone experience, not that I have seen women behave any better.

And so it was to the border! A cousin had told him that radio sets sell like cold drinks in the equatorial sun. He went to a border town- and set himself up to sell radio sets.

Back to my uncle. First he hired himself someone to sell the radio sets. And having been paid so badly during his long working experience he vowed to treat his employee (and cousin) better. A salary of 300 dollars it would be (what with over 18,000 dollars to spend). Then he rented himself a place to stay (another 100 USD), but kept his family in their new big house in the city (another 200 dollars).Then he bought his merchandise (another 1,000 dollars) and set about selling radio sets to Ugandans, Rwandans and all other nationals crossing the border.

Now if there are any good mathematians among you, am sure you have already made the calculations. Total rent at 300 dollars per month, salaries at 300 per month, comes to 7,200 per year.

Now you now that people don’t replace radios every week, or every month, or even every year for that matter. In two and a half years ( do the math) 18,000 dollars was gone. He had sold some radio sets for sure, but they could not bring back the kind of money he had invested.

Now this story does have a very sad ending… as I speak, he has been kicked out of both houses, has no other source of income, and his youngest kids are now out of school.

He might sound like a stupid guy. You might be asking what on earth he was thinking paying that much money for rent or paying that much money to a staff member.( For any straying non African readers, 300 dollars is considered a lot of money in many African countries) The truth is that his mistake is not unique.

Many people put their pensions into business without making proper calculations. They fail to calculate how much money they need to survive, how much they need in order to pay anyone who they might hire, but most of all they overestimate just how much money business will bring in.

It is this overestimation of how much money the business will bring that makes people spend money recklessly thinking they are going to get it all back. It rarely works and what happens in the end is that whatever little money they had to support themselves is lost and they become dependent on others.

Business tip for today: If you are going to use your pension money to start a business, first calculate how much you will need in order to survive for at least a year while the business takes off.

Avoid huge costs such as hiring staff if you can do the work yourself. Get assistance from a son, daughter, or any other person in calculating exactly what each thing you need will cost.

Add up the costs to see how much money you need to keep the business running for at least a year.

Finally estimate how much you will get from the business. Remember: always use the least amount you expect to get rather than the most amounts you expect to get, this will help you avoid over estimating your profits.

Finally, if you have huge outstanding costs such as school fees and housing, try and clear those first and use whatever it is you are left with to start the business.

It is not wise to invest everything you have with the expectation that the money you get back will help you clear huge recurring bills like rent or school fees.

And always remember, many businesses fail within the first few years, don’t go into business before you have though through how you are going to maintain your family until your business takes off and what you will do if it fails.

This post was originally published in the madbusinesswoman blog