Tuesday, November 28, 2006
Monday, October 23, 2006
About one month ago I was giving free consultation to one of my GEC members. In the course of our consultation he inquired about SoftLaw’s data entry services. Apparently he had to populate a database daily with about three hundred records each with more than ten different columns. He was concerned about how much his part-time employee was costing him to do the job. Another problem was that he had a huge archive of data which he wanted entered into the database as well.
On further enquiry I discovered his problem had parallels to one I faced while doing some work for the Judiciary. My member was OCR scanning the property classifieds of the dailies and entering the information into an excel sheet with different columns for price, bedrooms, location, telephone contacts, description, agent etc. After formatting the scanned document he had each classified on a separate line of a text document. His employee was manually copying and pasting the data from the text document to the excel file.
Since he was a computer science graduate I asked him if he had considered automating the procedure. I found out that he even tried developing an application but each classified ad had a different format resulting in countless permutations. After programming the 14th rule for the first data type (price) he gave up on the automation angle. I asked him to send me a sample copy of one of the text file to see whether I could offer a better way of doing it.
I’m not a professional programmer, but I love the logic involved and have a particular fondness for pattern matching and string manipulation. Looking at the sample text and his requirements I figured it was a three-day job at most for me. The rules involved were complex, but I had plenty of source material to use from the previous application I developed called “Abstractor”.
Although the market price for the software should have been in the K.Shs. 50,000 – K.Shs. 100,000 (US$ 685 – 1,370) I decided to charge him a nominal K.Shs. 5,000 (US$ 68) for the job since he was a GEC member. The fee was high enough to make him appreciate the work but low enough not to be a strain to his young business. In a continent where software piracy hovers at 80%, $68 spent on software (even where it is customized) is a decent amount. I also asked him to pay in full and upfront as I did not want a situation where I’d have to chase him for the balance.
Now here is perhaps where the trouble began. What was supposed to be a three-day job took a whole month to complete, and I’ve narrowed down the reasons to:
1. Taking the full payment upfront;
As a businessman you appreciate the value of promptly paying customers. At GEC it’s slightly better since all payments are pre-payments. For software development and related types of supplies (where delivery of goods or services is required) most payments are made in parts. Usually customers will pay 50% on start and 50% on finish. Sometimes some customers will only make payment on full delivery. And even then rarely will customers pay on time; a supplier might undergo many frustrating delays before she receivers her pay.
This foreknowledge prompted me to require the full payment before I began. However coupled with reason number 2 the outcome was disastrous.
2. Charging less than the real value for a job;
What I had promised would take three days took a whole month to complete. On review of the development process though I actually realized that I had not spent more than 24 working hours on the software. With an 8-hour day this translates to 3 days. My greatest mistake though was underestimating how valuable those 24 hours were to me. Although I did not want to charge more than the nominal K.Shs. 5,000 for developing the software the opportunity cost was almost ten times what I was charging. Finding a compromise proved extraordinarily difficult as I had to prioritize my time. I also had very little motivation as the entire price had been paid. This had a much greater effect than I imagined. I was trying to find time to do something for which inadequate consideration had already been satisfied.
All in all though, it was not too bad of an experience. I learnt a lot, got insights for my future consultation with other clients, and enjoyed the programming.
Wednesday, October 18, 2006
Joyce Wairimu was a victim of the Molo clashes in 1992 which displaced her and family. The clashes uphove her life and she found herself separated from her husband, penniless, and destitute, with five children to care for. A chance boarding of a Kayole bound matatu found her living off handouts in the streets of Kayole.
But the woman's spirit was not broken and a good samaritan welcomed her and her children into her home and also introduced to her to work that could earn her an income. Joyce started making a little money by working in the City Council farms and washing clothes. It paid little but Joyce knew how to save and put away K.Shs. 900 (US $12) every week.
Joyce joined a welfare group Maisha Bora where she deposited her savings. She narrates how the welfare changed her life by allowing her borrow double what she had saved and invest it in business. With K.Shs. 7,000 (US $ 96) she began a tea kiosk in Kayole and gradually built it into a popular restaurant with outside catering. With financial discipline, prudent management, perseverance in the face of adversity, and always putting the customer first Joyce saw her business grow and flourish.
Six years later her business and personal assets now include real estate, land and are valued at K.Shs. 2,500,000 (US $34,247). Joyce has also bought property for her children and given them capital to start their own businesses. She is now reunited with her husband, remains an active member of the welfare group which started her off, and is happy and content with her life. She is a truly wealthy entrepreneur by all standards.
The story behind Babylon Kitchen is one of knowing what you want in life and using business as a means of achieving it. It is the true entrepreneurs story, one that makes you realise there's more to it than just making money. Today I feel challenged to be an entrepreneur as Joyce Wairimu is an entrepreneur.
Tuesday, October 10, 2006
It's October 10th today, a holiday that used to be called Moi day or Remembrance day but I'm no longer sure if that is still its name these days. What I am sure about is that it is a holiday, and I hate it. I have a number of entrepreneurs here at GEC who hate it as well. But wait a minute, doesn't everyone love holidays, a chance to relax, take time off, enjoy the fruits of one's labour?
Not entrepreneurs. For an entrepreneur a holiday means: lost opportunities, lost income, absent employees, delayed cheque clearances, delayed deliveries et cetera. Holidays are the number one killers of entrepreneurs.
Don't get me wrong, holidays like Christmas and Easter are welcome, even feted by entrepreneurs. But what's with these irrelevant holidays, what are we celebrating today anyway? Earlier this year there was an even more irrelevant holiday called Prayer day. And let's not forget the dubious "celebration" holiday right after the last general elections.
Understand where I am coming from, with a workforce of 11.85 million, every holiday we lose 94.8 million man hours, or in money terms: 2.4 billion shillings!! (figures from www.cia.gov ) Enough said, ban the irrelevant holidays and lets get back to work.
Friday, October 06, 2006
Wednesday, October 04, 2006
Monday, September 25, 2006
So you’re a businessman, eh? You have a registered business, a proven product, and a growing client list. You’re passionate about your business and spend every waking moment at it. You’re confident that you know best how to deal with the problems of the business and you’re there to save the day in case anything goes wrong. You’re a specialist at what to do. No! You’re the best at what you do. Hiring someone else to do a client’s job would be short-changing your client, as you care deeply about your clients.
So you’re a darn good businessman, right?
While consulting for one my clients today I realized that many of us businessmen (term includes both male and female gender) are still victims of what Michael Gerber in his E-Myth series describes as technicians seized with an entrepreneurial spirit.
Angela my client is a dyed-in-the-wool believer in taking personal charge of one’s business. Back in 2000 she took a three-year IT course where she specialized in web development.
Two years into her course she was already bagging clients as the nascent web industry in
Her skills were soon noticed by the training institution she was studying in as they offered her a position as a web developer. Angela took on the job with her usual zeal but bureaucracy, low pay and the inflexibility of working hours soon got her entrepreneurial bug biting.
In 2004 Angela went solo; she whipped up a logo, drew up a portfolio and went into business as a free-lance web developer. Things started out well, referrals from her old clients got the ball rolling and she was making a decent living from her work.But as the clients streamed in and the money piled up things started going downhill. Angela found herself working 90-hour weeks. There seemed to be a new deadline to meet every day and she found herself carrying a blanket to work (for a few hours nap) on the nights before the deadlines. Feeling frustrated that she had become a slave to her work she started sub-contracting out work. This only made things worse. The subcontractors were not perfectionists like her and she found herself redoing almost 100% the work they submitted to her.
Have you ever been in this position? I know I was when I worked as a contractor.
 Name changed to protect identity
Thursday, September 21, 2006
Today fed up with my overpriced town mechanic and needing some specialized service on my car I decided to try out a “jua kali” garage. My friend gave me the instructions to get to the place and after a few wrong turns I pulled into a muddy ‘mabati’-fenced garage with a boldly drawn Mercedes-Benz three star on its gate. I was apprehensive but I had been assured the best mechanics this side of
Great customer care, consistent service, and a professional set-up attract me most to my town mechanic. The jua kali mechanic lacks all the above but sufficiently compensates with sublime technical skill and competitive pricing. What put me off though most was that the jua kali mechanic takes on the role of administrator, sales man, customer care rep, and mechanic at the same time. He ends up giving your car staccato attention as he shifts from tightening a bolt, to buying spare parts, to appeasing a delayed client, to negotiating for a job.
Body repair work at the garage
As I waited, frustrated at how slowly the job was moving and consoling myself with the few thousands I had saved, the entrepreneurial spirit seized me. How many other similarly dissatisfied car owners like myself are out there: wary of the expensive town mechanic whose spare parts you can count on being genuine but whose skill in fixing them you can’t; or those willing to put up with technically superior jua kali technicians with great quotations for a job but who need to be baby sat and change prices on the fly?
The more I thought about it the more excited I became, I quickly got my laptop out of the backseat and started on a proposal for setting up a garage which would combine the best of both types of garages. There are hundreds of thousands of cars in
THE GARAGE PROPOSAL
The Garage (the “Garage”) is an automobile repair shop located in the outskirts of
The area where the Garage is located is home to several different automobile-based businesses including: petrol stations, used car dealerships, garages, and auto spares shops. There are at least four other garages in the immediate vicinity with an estimated combined workforce of fifty mechanics.
The Garage has the following organizational structure: a senior mechanic at the top, other mechanics who are employed on a permanent basis and semi-skilled handy-men who are recruited for one-off jobs as the need arises. The senior mechanic is also responsible for management of the garage which involves: sales and marketing, administrative issues e.g. receiving money, purchases, and customer care. As he is also the foremost mechanic this has led to a situation where he unproductively splits his time between his managerial and technical portfolios. From observation it appears that his managerial skills are also worse for the wear.
The Garage does not issue receipts for payments made to them and will ask the customer to meet any expenses incurred as the work is being done. This includes the likely suspects: petroleum, spares, oil; but also includes things such as: torch cells (to power a torch as work is done at night), paying a petrol station attendant for use of his pressurized air nozzle, sandpaper. It is not clear what the mechanics do when a customer is not available to pay for these impromptu costs. The end result is a feeling by the customer that he is being cheated, as he ends up paying more than he was initially quoted for.
During the author’s observations of the workings of the Garage it was noticed that the progress of work was very slow on the author’s and others’ jobs. The initial view was that the Garage was stretched thin and understaffed. However this view was hard to reconcile with the fact that on numerous occasions the mechanics were absent from the Garage. The more likely reason for the slow work and “overworked” nature of the mechanics may be hypothesized as thus:
- the mechanics are not punctual in reporting to work, and have a large number of AWOLs;
- where the mechanics meet an obstacle they will abandon the job and possibly transfer it to another mechanic;
- the mechanics will not work on a job unless there is pressure from the customer and possibly his presence;
- the mechanics in many instances do not know how to perform the job given, and spend more time diagnosing other problems than fixing the identified problem
The Garage was observed to have five to ten mechanics, who were working on two to three cars at any given time. The nature of the work being carried out included: gearbox repair, body work and spray painting, and engine repair. The Garage however had in its compound approximately 15-20 cars, some of which appeared to have been in the Garage for a very long time evidenced by their peeling paintwork and layers of dust. Most of these cars were not worked on by the mechanics during the author’s period of observation.
The owner of the Garage intimated that at its peak the Garage earned KShs. 300,000 per month. It is not known whether this figure was of sales, gross profits, or net profits. As the garage operates only on weekdays and Saturday this would translate to roughly K.Shs. 11,500 a day. I came to know of the Garage after a friend referred me to a mechanic there when I complained to him about a car problem that my town mechanic had been unable to fix. The Garage in the senior mechanic was touted as having the foremost specialist in the repair of the specific problems of the my automobile. It is not clear though whether the Garage has an established system of referrals. It is not known at this time whether the Garage has any sales and marketing strategy.
The Garage was observed to have the following assets:
- a quarter-acre property off a main road.
- an approximately 1000 sq. ft building complete with roof, walls, and windows and partitioned into approximately three rooms;
- a three-walled building with a two-story high roof with approximately 1000 sq. ft. of floor space;
- office furniture (heavily worn);
- spray paint machine;
- car batteries;
- hand-held tools including: spanners and pliers;
The question I pose to you is: From these observations, what strategy can be employed to convert the Garage into a leading automotive repair shop?
Wednesday, September 20, 2006
“Genius Executive Centre although begun as a subsidized business centre, now operates with the social responsibility of a business incubator” according to Ms. Christine Matogo, acting centre manager. Begun in mid 2005 by SoftLaw, the Centre initially provided fully furnished office workstations with shared lounge, reception and meeting rooms facilities for an affordable monthly fee.
“Over time we realized that the average start-up business requires more than a furnished office at a fancy location,” continues Ms. Matogo. “We turned round the Centre on its heels and began emphasizing on giving our members solid business advice, consultancy services, access to knowledge repositories like LawsofKenya.com, access to investors, and collateral-free loan financing. Our sister business division, Genius Capital & Consulting was initially set up to serve the Centre incubatees with these services at no additional cost. Capital & Consulting now also provides these same services to non-incubatees who have shown great enthusiasm in the products.” Ms. Matogo explains that the Centre acts mostly as a showcase of the services provided by Capital & Consulting which she calls the real cash cow.
The business model for the Centre is a unique one. Although a for-profit organization, the heavily subsidized monthly fee and the free business support services would make one think it is an NGO. Ms. Matogo explains how the Centre achieves this. “When we begun the Centre, we could have chosen to go the way of the existing alternatives at the time and charge exorbitant fees in order to make high margins. Instead we chose to keep the costs low and work on volumes. This ensured the Centre was able to serve its intended clientele. Our targeted clients are business start-ups whose main asset is the skills and knowledge of their owners or staff. Such businesses are service-oriented and use the Centre as a communication and marketing point for their business. Collectively they can be grouped as consultants who specialize in one area or another. To become an incubatee one simply needs to attend an interview and if their business is assessed to have growth potential they are offered a space. The incubatee thereafter needs to pay only K.Shs. 10,000 every 30 days to enjoy the Centre services”
Genius seems to have struck a resonant cord with its targeted clientele, with 75% occupancy in its first month. The Centre is now fully occupied and new members are added to a waiting list. How the Centre ensures that all deserving start-ups get a chance at incubation is by encouraging the growth of its existing incubatees businesses. “Part of being an incubator involves nurturing the growth of the incubatee’s business. We call this graduation and we work with our incubatees to have them graduate within three to six months of joining the Centre. When an incubatee graduates, it means her business has: a strong business and marketing plan, a growing client list, sustainable revenues, a good understanding of cash flow and tight control of its finances as well as a marketable product. Since the Centre begun participating directly in the growth of its incubatees businesses we have had over thirty graduates.”
The concept of business incubators is not new, but unlike most incubators that rely on donor support or government backed funding, Genius is a self-sustaining business albeit with low margins. Ms. Matogo explains that the Centre is more of corporate social responsibility effort than a money making venture. “The founders of the Centre decided to set up an incubator based on their own hardships and frustrations when starting their business. It was an effort at giving back to the community, but the Centre has been stringently managed to ensure that it can sustain itself financially. The Centre serves a social function as well as to advertise Capital & Consulting’s products to non-incubatees. When non-incubatees see the success of our incubatees they seek out Capital & Consulting to benefit from the same services.”
The future of Genius is bright. With a strong understanding of nurturing and developing small businesses SoftLaw’s plan for the future is to concentrate fully on the financing and consulting arm, Genius Capital & Consulting. “A plan is already in motion to remove the monthly fee for incubatees altogether, explains Ms. Matogo . We intend to provide offices at no cost to deserving start-ups who will undergo an interview to determine the viability of their business. We will also share in their risk by becoming equity partners through buying of shares in their companies. Our belief is that simply providing offices is not a sustainable business. The motto at Genius is ‘our business is your business’. We intend to put all our resources, skills, human capital and finances in facilitating the establishment and growth of innovative Kenyan companies.”