A loan is another form of business cashflow. We have lost many small business and their founders through unhealthy loans.

Why should such high number of small businesses vanish due to working with unhealthy loans.

Ideally one of the most celebrated achievement is financial inclusions to the society by big brands like Safaricom, Equity bank and the rest.

Their main financial inclusivity bus is affordable loans they give to many micro business which would otherwise not qualified for financing from other mainstream systems.

In today world things are moving more towards working with other people resources – where you work with loaned tool  add value to your value chain then pass it over to next person.

This include – using other people money at a small fee, using shared resources like logistic at a small fee, using shared spaces and so on.

This is meant to relieve you from burden of setting up a whole system where you may only operate at maybe 30% and leave rest of resources idle.- do what you are good at and perfect it.

Huge number of business makers are very emotional with their businesses.

Their pride is when they feel they own land, tractor, tractor operator, shop of selling fertilizer, storage barn and so on.

You may ask – out of all that, how much of those resources are in use 360 days in a year. Noticeably, over 50% of such investment is always idle.

The gain is just for the pride of feeling self sufficient.

At what price – Huge price of running costly businesses that may never be sustainable.

What about Loaned money

Loaned money is one of those shared resources readily available for business maker to enable scale – It is meant you use and return after you have gotten your value.

Here are Seven perspectives to help you build financial freedom from loaned money and start building business wealth.

Other ways to reaffirm this is creating deep work routine of monitoring the coins.

When I met one of the micro business maker I was helping learn- I asked him how do you use the cash you get daily. We started some arbitrary count and realized every day he eats mandazis and uji of Kes 500. He has never been shocked like that.

His routine is off- every thing else cant hold.

#1 Become overly obsessed with cash flow

The number one reason why you started business and not stuck with employment is to create a bus that gives you ongoing cash over anything else.

Unless you have this view, then your business operations is more of employment where any cash that gets into the till you are always ready to wipe it out with other un related expenditures.

Accumulate the cashflow. Getting cash from the business for ploughing back is very powerful.

#2 Understand difference between Good debt Versus Bad debt

There is huge difference between bad and good debt

When you take loan and you are not going to direct it into area that is already tested and expected to bring more cashflow, then that is very bad loan.

Taking loans to finance liabilities – like vehicles, clothing, furnish houses and so on. That’s bad loan.

Many micro business makers are in merry go round for buying utensils- such will never be a good loan.

Other loans are usually very costly beyond ability to finance in the long run. Or the interest always higher than gain.

Good debt are available and one used to generate income like stock items.

#3 Leveraging debt wisely

Many advisors may keep recommending avoidance of debt while building the business.

However, when debt is used wisely it can be one of the best tool in building and growing your small enterprise.

Borrowing money and ensuring you invest in cash generating can enhance your financial position in a big way.

Debt can fuel wealth when balanced well.

#4 Budgeting like an expert

Traditional mindset has always been taking budget as a tool to cut costs. The advice is to focus on increasing your income.

Rather than cutting on cost, allocate cash to activities well tested to ensure they guarantee income

This will push your mind to look around and see which more areas can your business commit to bring more income. Whether through some passive investment with extra cash.

This unlocks ability of business to meet expenditures without struggle.

#5 Become a learner and strengthen your financial literacy

Becoming a learner is a personal choice.

How much information you have regarding managing your finances means a lot towards how you treat that one shilling in your till.

Financial literacy is the cornerstone of your philosophy in financial and wealth growth

Understanding how money works, how investments performs and how to manage risks is very essential to making informed decisions.

Educating yourself about finances will be the pillar to help spot opportunities, avoid pitfalls and manage wealth more effectively.

Today, financial literacy can give you the edge for huge success in financial management

#6 Mentality of being in control of your financial destiny

Wealth is about making conscious decisions that leads to financial independence.

Instead of overlying on daily cash, imagine of stable financial freedom in years to come.

Start the journey of understanding what is possible and what not but progressively.

Pursue more entrepreneurial venture. True financial freedom will come when you control your own money-making efforts rather than letting others dictate your income.

#7 Embrace risk

When you take loan for growing the business, your attitude towards risks very crucial. Fear of failure always hold many people back. However failure is part of the process.

Embracing risks, learning from mistakes and using those lessons to refine the strategy can help your growth great deal.

Wealth and money management freedom is for those people who come out from their comfort and take bold steps towards financial targets.

That is all for this one.

Thank you for your time.

Gachoka

 Ps

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I am Charles Gachoka - CPA-K , MBA- C.O.O & Business Development at Cygnus.co.ke. I am also the lead in Business Finance Operations consultancy portfolio. Cygnus prides working with over 50 owners and decision makers of mid-level businesses, helping bring out huge growth through Kaizen in Operation Excellence, Business Finance Operations, ESG & Strategy Deployment model (Hoshin Kanri).

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