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Have you ever failed flat in business?
mwania
#141 Posted : Sunday, October 16, 2016 5:40:25 PM
Rank: Member


Joined: 10/29/2007
Posts: 55
Loan Repayment is not expense.. But the interest charged on the loan is an expense to the business (Not to an individual). However, interest charged for mortgage for individuals is deductible to the rate of a maximum of kshs. 200,000 (verify the exact amount) per annum.
mkeiy
#142 Posted : Sunday, October 16, 2016 8:39:39 PM
Rank: Member


Joined: 1/27/2012
Posts: 705
Location: Nairobi
FRM2011 wrote:
MaichBlack wrote:
FRM2011 wrote:
mkeiy wrote:
FRM2011 wrote:
@bigchick, ur friend's predicament isn't that bad actually. Her facility is cash covered and the approval authority rests with her branch manager.

Tell her to engage them. At the very worst, she will "clear" the loan by depositing the outstanding balance and within minutes a new loan will be disbursed with the same security.

She has learnt her lessons and she will make a killing in the second attempt.

My branch manager can authorise a loan of up yo 10m within minutes if it's cash covered.


@FRM2011, How does that work?




If you have 1m in your bank account, and you want to invest 1m in a business, the way I do it is open a fixed deposit in the bank and use it as security to borrow 1m.

It's so straightforward since the bank considers it a risk free lending.

With the new law, your 1m earns 59k after withholding tax. Your total interest expense will be 77k. Net int exp kes. 18k.

At my bank, I simply sign a form they call charge on deposit, and within 24hrs, they have
disbursed my loan.

Okay, here is a "funny" thought. How about you just use your 1 million?? Your total gross/net interest expense will be zero, zip, nothing!!!

And considering the former (future) interest regime, you must have been paying approx. 10% to borrow YOUR OWN MONEY!!! Why would one want to do that??

Kindly school me.


It's a Friday so I will keep it short. Am an accountant and this is how I look at it.

I can withdraw my 1m and go buy stocks. That way there will be one asset on my balance sheet. My option leaves me with two assets( my 1m in the bank and stocks of 1 m financed by a liability of 1m.
Note the Net worth remains the same.

Plus I have noted am able to push myself to the limit with a loan obligation hanging over my neck.

Now the above works for me. As one guy said in this forum, it doesn't have to be good, or right or popular, it just needs to work.

I was advising @bigchick's friend because we seem to share same opinion here.

@rfe_20354, pliz don't copy what I do. Stick to what works for you.


@FRM2011. Which 1mn are you withdrawing? Your FD is the loan security,you can't touch that.

The only million you have is the loan,which you will be paying more interest on than what your FD will be earning.
Interest expense is 14%
Interest income is 7.5%
Basically you'll be losing 6.5% of your 1mn per year.

When you say it works for you,please use numbers to expound.


MaichBlack
#143 Posted : Sunday, October 16, 2016 8:53:14 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,109
mkeiy wrote:
FRM2011 wrote:
MaichBlack wrote:
FRM2011 wrote:
mkeiy wrote:
FRM2011 wrote:
@bigchick, ur friend's predicament isn't that bad actually. Her facility is cash covered and the approval authority rests with her branch manager.

Tell her to engage them. At the very worst, she will "clear" the loan by depositing the outstanding balance and within minutes a new loan will be disbursed with the same security.

She has learnt her lessons and she will make a killing in the second attempt.

My branch manager can authorise a loan of up yo 10m within minutes if it's cash covered.


@FRM2011, How does that work?




If you have 1m in your bank account, and you want to invest 1m in a business, the way I do it is open a fixed deposit in the bank and use it as security to borrow 1m.

It's so straightforward since the bank considers it a risk free lending.

With the new law, your 1m earns 59k after withholding tax. Your total interest expense will be 77k. Net int exp kes. 18k.

At my bank, I simply sign a form they call charge on deposit, and within 24hrs, they have
disbursed my loan.

Okay, here is a "funny" thought. How about you just use your 1 million?? Your total gross/net interest expense will be zero, zip, nothing!!!

And considering the former (future) interest regime, you must have been paying approx. 10% to borrow YOUR OWN MONEY!!! Why would one want to do that??

Kindly school me.


It's a Friday so I will keep it short. Am an accountant and this is how I look at it.

I can withdraw my 1m and go buy stocks. That way there will be one asset on my balance sheet. My option leaves me with two assets( my 1m in the bank and stocks of 1 m financed by a liability of 1m.
Note the Net worth remains the same.

Plus I have noted am able to push myself to the limit with a loan obligation hanging over my neck.

Now the above works for me. As one guy said in this forum, it doesn't have to be good, or right or popular, it just needs to work.

I was advising @bigchick's friend because we seem to share same opinion here.

@rfe_20354, pliz don't copy what I do. Stick to what works for you.


@FRM2011. Which 1mn are you withdrawing? Your FD is the loan security.

The only million you have is the loan,which you will be paying more interest on than what your FD will be earning.
Interest expense is 14%
Interest income is 7.5%
Basically you'll be losing 6.5% of your 1mn per year.

When you say it works for you,please use numbers to expound.



Huyu "accountant" amesema tuachane na yeye!

Kwanza hiyo 6.5% he is losing is after the interest rate caps. Imagine how much he was losing before the bill was signed.

And some people somewhere are busy saying "I was adviced by my accountant....".
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
sparkly
#144 Posted : Monday, October 17, 2016 12:29:39 AM
Rank: Elder


Joined: 9/23/2009
Posts: 5,302
Location: Enk are Nyirobi
mwania wrote:
Loan Repayment is not expense.. But the interest charged on the loan is an expense to the business (Not to an individual). However, interest charged for mortgage for individuals is deductible to the rate of a maximum of kshs. 200,000 (verify the exact amount) per annum.


Interest is deductible for individuals in business.

Owner occupied mortgage interest relief upped from 150k to 300k wef January 2017.
Life is short. Live passionately.
Swenani
#145 Posted : Monday, October 17, 2016 8:05:29 AM
Rank: User


Joined: 8/15/2013
Posts: 11,314
Location: Vacuum
smile smile smile smile
"If you're tired of arguing with strangers on internet, try talking to one of them in real life"-Barack Obama 10th January 2017
instinct
#146 Posted : Monday, October 17, 2016 9:12:58 AM
Rank: Member


Joined: 8/17/2007
Posts: 294

sparkly wrote:
Owner occupied mortgage interest relief upped from 150k to 300k wef January 2017.


Is this true? Your source?
sparkly
#147 Posted : Monday, October 17, 2016 8:34:51 PM
Rank: Elder


Joined: 9/23/2009
Posts: 5,302
Location: Enk are Nyirobi
instinct wrote:

sparkly wrote:
Owner occupied mortgage interest relief upped from 150k to 300k wef January 2017.


Is this true? Your source?


Finance Act 2016.
Life is short. Live passionately.
Xymalos
#148 Posted : Saturday, November 26, 2016 6:36:24 AM
Rank: New-farer


Joined: 2/14/2015
Posts: 56
Location: Kenya
Beautifully written story on a failed Digital Advertising business, and lessons learned. A summary of lessons learned: (1) do not assume that having social media and personal communications skills is the same as having knowledge on how to run a digital advertising business. And (2), its important to have mentorship on how to run a business.

Here is the <<link>>
Ebenyo
#149 Posted : Friday, December 02, 2016 6:30:36 AM
Rank: Member


Joined: 4/4/2016
Posts: 740
Location: Kitale
You dont fail in business.Its an experience learnt.
The difference between poverty and wealth is in mentality.
Cornelius Vanderbilt
#150 Posted : Friday, December 02, 2016 8:25:46 AM
Rank: Member


Joined: 8/15/2015
Posts: 723
it becomes a failed business when you donot learn from your mistake
bird_man
#151 Posted : Friday, December 02, 2016 9:00:07 AM
Rank: Veteran


Joined: 11/2/2006
Posts: 1,177
Location: Nairobi
MaichBlack wrote:
mkeiy wrote:
FRM2011 wrote:
MaichBlack wrote:
FRM2011 wrote:
mkeiy wrote:
FRM2011 wrote:
@bigchick, ur friend's predicament isn't that bad actually. Her facility is cash covered and the approval authority rests with her branch manager.

Tell her to engage them. At the very worst, she will "clear" the loan by depositing the outstanding balance and within minutes a new loan will be disbursed with the same security.

She has learnt her lessons and she will make a killing in the second attempt.

My branch manager can authorise a loan of up yo 10m within minutes if it's cash covered.


@FRM2011, How does that work?




If you have 1m in your bank account, and you want to invest 1m in a business, the way I do it is open a fixed deposit in the bank and use it as security to borrow 1m.

It's so straightforward since the bank considers it a risk free lending.

With the new law, your 1m earns 59k after withholding tax. Your total interest expense will be 77k. Net int exp kes. 18k.

At my bank, I simply sign a form they call charge on deposit, and within 24hrs, they have
disbursed my loan.

Okay, here is a "funny" thought. How about you just use your 1 million?? Your total gross/net interest expense will be zero, zip, nothing!!!

And considering the former (future) interest regime, you must have been paying approx. 10% to borrow YOUR OWN MONEY!!! Why would one want to do that??

Kindly school me.


It's a Friday so I will keep it short. Am an accountant and this is how I look at it.

I can withdraw my 1m and go buy stocks. That way there will be one asset on my balance sheet. My option leaves me with two assets( my 1m in the bank and stocks of 1 m financed by a liability of 1m.
Note the Net worth remains the same.

Plus I have noted am able to push myself to the limit with a loan obligation hanging over my neck.

Now the above works for me. As one guy said in this forum, it doesn't have to be good, or right or popular, it just needs to work.

I was advising @bigchick's friend because we seem to share same opinion here.

@rfe_20354, pliz don't copy what I do. Stick to what works for you.


@FRM2011. Which 1mn are you withdrawing? Your FD is the loan security.

The only million you have is the loan,which you will be paying more interest on than what your FD will be earning.
Interest expense is 14%
Interest income is 7.5%
Basically you'll be losing 6.5% of your 1mn per year.

When you say it works for you,please use numbers to expound.



Huyu "accountant" amesema tuachane na yeye!

Kwanza hiyo 6.5% he is losing is after the interest rate caps. Imagine how much he was losing before the bill was signed.

And some people somewhere are busy saying "I was adviced by my accountant....".

Haha!This is one funny story.
Formally employed people often live their employers' dream & forget about their own.
tony stark
#152 Posted : Thursday, December 15, 2016 1:42:31 PM
Rank: Veteran


Joined: 7/8/2008
Posts: 704
Are there any successful remote managers in Wazuan. I know there are many horror stories and they usually relate to
1. Money was stolen
2. The employee was a bongo lala
3. Employee was selling their good and products and your stock was just sitting there
4. Frivolous charges eg. Extra spares za matatu and lorry, ama extra cement for mjengo etc.
5. Claimining nothing is happening when he is not there doing the work you are paying him to do.
etc.

The horror stories are many but I wonder is there a successful remote manager on Wazua and what would you describe worked. Was it the systems? Hiring right etc etc.
tony stark
#153 Posted : Thursday, December 15, 2016 1:47:20 PM
Rank: Veteran


Joined: 7/8/2008
Posts: 704
Are there any successful remote managers in Wazuan. I know there are many horror stories and they usually relate to
1. Money was stolen
2. The employee was a bongo lala
3. Employee was selling their good and products and your stock was just sitting there
4. Frivolous charges eg. Extra spares za matatu and lorry, ama extra cement for mjengo etc.
5. Claimining nothing is happening when he is not there doing the work you are paying him to do.
etc.

The horror stories are many but I wonder is there a successful remote manager on Wazua and what would you describe worked. Was it the systems? Hiring right etc etc.

Mr Successful remote manager saidia Wazuans.
the deal
#154 Posted : Tuesday, December 20, 2016 1:02:57 PM
Rank: Elder


Joined: 9/25/2009
Posts: 4,261
Location: Windhoek/Nairobbery
Just a thought...A business model with recurring monthly revenue in form premiums or monthly subscription fee is the best...just like DSTV...they make a profit on the hardware & charge you per month for the content...that's the business model I decided to follow in my new start up...profit on monthly premiums has already eclipsed profits on hardware...some months are very slow...so one has to rely on subscription revenues to pay workers & operating costs...
sparkly
#155 Posted : Tuesday, December 20, 2016 7:30:16 PM
Rank: Elder


Joined: 9/23/2009
Posts: 5,302
Location: Enk are Nyirobi
tony stark wrote:
Are there any successful remote managers in Wazuan. I know there are many horror stories and they usually relate to
1. Money was stolen
2. The employee was a bongo lala
3. Employee was selling their good and products and your stock was just sitting there
4. Frivolous charges eg. Extra spares za matatu and lorry, ama extra cement for mjengo etc.
5. Claimining nothing is happening when he is not there doing the work you are paying him to do.
etc.

The horror stories are many but I wonder is there a successful remote manager on Wazua and what would you describe worked. Was it the systems? Hiring right etc etc.


All management control involves budgeting (planning), financial controls, procedural controls, physical controls, reconciliations etc you have to stay on top at all times or hire excellent managers. Excellent managers means selfless managers
Life is short. Live passionately.
Mike Ock
#156 Posted : Tuesday, December 20, 2016 10:41:58 PM
Rank: Member


Joined: 1/22/2015
Posts: 446
the deal wrote:
Just a thought...A business model with recurring monthly revenue in form premiums or monthly subscription fee is the best...just like DSTV...they make a profit on the hardware & charge you per month for the content...that's the business model I decided to follow in my new start up...profit on monthly premiums has already eclipsed profits on hardware...some months are very slow...so one has to rely on subscription revenues to pay workers & operating costs...


Those are usually the hardest businesses to build. You need to be ready for years of losses as you build up that subscriber base.

If I'm brutally honest with you, the best business in Kenya is supplies business once you have connections in place. If you look at rich Kenyans, more than 50% got their breakthrough through some big supplies deal. Even if you look at Top 100 SMEs East Africa, majority are supplies companies. Kenya is a tenderpreneur's paradise.
Yowel
#157 Posted : Wednesday, December 21, 2016 8:13:51 AM
Rank: New-farer


Joined: 10/14/2016
Posts: 23
Location: Nairobi
Mike Ock wrote:
the deal wrote:
Just a thought...A business model with recurring monthly revenue in form premiums or monthly subscription fee is the best...just like DSTV...they make a profit on the hardware & charge you per month for the content...that's the business model I decided to follow in my new start up...profit on monthly premiums has already eclipsed profits on hardware...some months are very slow...so one has to rely on subscription revenues to pay workers & operating costs...


Those are usually the hardest businesses to build. You need to be ready for years of losses as you build up that subscriber base.

If I'm brutally honest with you, the best business in Kenya is supplies business once you have connections in place. If you look at rich Kenyans, more than 50% got their breakthrough through some big supplies deal. Even if you look at Top 100 SMEs East Africa, majority are supplies companies. Kenya is a tenderpreneur's paradise.

@ Mike Ock, thats the sad part of it. We do not strive to create value. We need tons of businesses with a multiplier effect for the greater good of the economy.
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