Sunday, March 26, 2023

Geoffrey Kiragu: I lost Sh. 5 million after starting supermarket business

Geoffrey Kiragu is the Managing Director at Lesedi Developers Ltd, a real estate company that deals with the sale of land and construction of houses.

Thousands of Kenyans have lost millions of money in real estate. But while some players in the sector set out to run scams, the buyer must take a portion of the blame. For example, if you acquire a plot with XYZ developer, you must endeavor to set up a small development such as a fence or a pit latrine. Failing to do this creates loopholes through which mischievous developers perpetrate illegalities such as double plot allocations.

Most people who lose their money in real estate never did their due diligence. This is why we have buyers complaining that they were scammed into buying land at far flung, deserted and valueless areas. Get the map, do an independent site visit, and perform a land search at the lands’ registry. This should help you know if the land sits on an area reserved for public use, wetland, and more importantly, the geographical condition of the location.

Vincent Kamau: What I learned after buying a plot using a loan

Covid-19 has been very challenging to my business. When the semi lockdown measures to curb its spread were announced in March, business almost came to a grinding stop. We were unable to sell projects that were outside the metropolitan areas due to cessation of movement. At the same time, clients sent in request for longer repayment periods. These difficulties were compounded by the reluctance by investors to spend on houses and plots. But despite the gloom, there is light at the end of the tunnel. There are people who are seeing this as the best opportunity to invest in land. The pandemic has come with its own money lessons, the most important being the need to own a place you can retire to when things grind to a halt without worrying about rent or your safety.

Sometime back, I invested in the supermarket business. It was a huge financial mistake. I ended up losing over Sh. 5 million. I changed tact and decided to start from scratch in a venture whose operations I understood better. I invested in real estate. Starting a fresh was not easy. I made some mistakes in my startup days. For example, when the business was at least one year old, I overstaffed and rented a big and expensive office space. I only scaled down after realizing that I was not getting value for the money I was paying out. Always strive to minimize recurrent expenditures.

Through entrepreneurship, I have read and received lots of financial advice. But the best piece of advice I ever got was to always follow the plan and to never mix businesses.  Running diverse businesses is a good thing. But having one business that you are good at and which is a wealth creator is even better. Do not start a business if you have no idea how it works, the challenges you’ll face along the way, or who your competition will be.

I never mix my business and personal budgets. This means that I also never mix business funds with my personal money. In fact, just like any other employee, I draw a salary at every end of the month. From this salary, I set aside funds for my personal use, savings, budget and emergency fund. I have learnt that it is very important to always save with a financial target in mind.

There is a tendency by people to seek power when they start getting the money. In most cases, when money comes in plenty, it pushes you towards politics. This is a dangerous gamble. Never bring politics into your personal business. Over the years, I have learned the virtue of spending within my limits. Staying within your lane financially is the smartest way to grow wealth.

This feature was first published in the Saturday Magazine. The Saturday Magazine is a publication of the Nation media Group.

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