Losing Sh500K Taught Me That Credit is not a Friend to Business

September 27, 2021

Kami Mbaabu is the co-founder and Creatives Director at Interiors by Tifi Ltd, a company that offers all-rounded, interior design solutions to homes and commercial spaces.

She shares some valuable takeaways from her entrepreneurial journey.

It has taken a lot of work to have this business grow from a small interior décor startup to a recognisable medium-sized brand. The business has so far served both local and international clients. Our products and services vary from as low as Sh1,500 to over Sh1 million depending on what the client is looking for. For instance, décor accessories such as curtains are determined by the size of the window, the number of gathers and folds, and the preferred fabric. To be successful, you must give tailor-made solutions to customers. You must also be innovative.

I used to handle my money without a proper accounting system. My business and personal money were all mixed up. I couldn’t tell what my margins were, or if the business was making profit or loss. This also had me spending on impulse just because there was money. Inevitably, this led to cash flow and operating capital problems. To get out of this hole, I hired a professional accountant and independent auditor who helped me sort out and set up proper business and personal finance systems.

In business, giving credit has been our biggest cause of losses. We have lost an estimated half a million shillings from credit alone. Sometimes we have over-trusted clients who requested that we work on their projects with a promise to pay us after completion. In some instances, we have sent cargo to our clients with the promise that they will pay once the package is delivered, only for them to disappear without paying. This has taught me that credit is not a friend to business. It’s one of the quickest ways for a business to collapse. Credit compromises cash flow and tilts the business towards collapse.

I have four methods of saving. I save through MShwari, Chama, Insurance policies, and through the Sacco. I have found Saccos not only to be a good place to access affordable loans that I can guarantee with my savings but also a place where I can earn passive income in the form of dividends. The Chama is an investment platform where we pool funds together for investments. Before Covid, we were also practicing table banking. Members could take loans from our collective contributions and repay with interest. But since Covid affected some of our members, we decided to shelf table banking until our businesses recover fully.

Partnerships and business collaborations with the right people and organisations will keep you ahead of the pack. My partners and I have an amazing team spirit, group synergy, passion and commitment to our cause. This strengthens our operations and fuels our dedication. We have someone who specialises in projects engineering, a creative director, a finance director, and a quality assurance director.

It’s literally taken us tears, sweat and blood to get here.  Even when it gets really hard, one must keep going. Hard work, trustworthiness, authenticity, smart thinking and quick decision making, keeping abreast with your audience and consistency will put you on top of the ladder if you are patient enough.

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