Njuki Moments

Sunday, March 20, 2011

Debt and the entrepreneur

I had reached an enviable step in my life as an entrepreneur and celebrated farmer. Enviable to mean that I now had a car (well it was a truck, but it counts, right?) and I had a revolving chair in my office, with an assistant. Enviable to mean that I had been quoted in a few business TV programmes about what I do and how I got there. I also had quite a list of clients and financial institutions on speed dial. That means that clients call you and make orders and money exchanges accounts without a meeting or even a visit to the office. Financial Institutions to mean banks and micro-finance institutions and loan sharks alike. Enviable to mean that I could now take a few holiday trips to Zanzibar, or Addis Ababa and Mombasa. It was a good time.

When you get to a point like that in your career as an entrepreneur, you are destined for great things and you seem to have made it and the only direction you are headed is upwards. That's what I thought too. Because this is the most precarious step in business and entrepreneurship. If you miss a step here and slip, you will go down down and quite fast. I know.I slipped. And your fall will be a long long one.

Like most people in that position (you will want to be here by the way, its good I tell you) the good things seem to follow you and you seem to lose the concentration of what matters and your decisions tend to be based on emotion and not on gut or calculation or any of that famous acumen at a all.

The roof doesn't fall in all at once but the signs are there and you will miss them because you are not prepared to observe them. You tend to call for more money (we call it business capitalisation, to give it a professional twang) every time you just feel like you need more money. Many times you don’t need that money and being where we are and our economy being Uganda's economy, credit it really expensive. But because everyone knows and probably envies you, when you call them for a few millions to be picked in the afternoon, they give. Soon you have to borrow some more to pay the old debt and much as sales come in to fill that gap often, miracles are not endless. So one time you will be short and your cash flow will be ugly and you are suddenly forced to acknowledge a really nasty situation for what it is. That is what happened.

You could still ask yourself, so what, after all you have your old business structures to fall back to, but they too get to a time and weaken and give way and you are left exposed in a really nasty way.
Interestingly as we grow up we hate debt, but if you choose business as your calling, you will have to unlearn and re-learn that credit is like oxygen on a death bed, you think you don’t need it and actually take it for granted while you are well only to realize its all that can save your life at that moment. They even charge you for it. So you need credit in business. But don’t over do it. Excesses have their own flipsides. A lot of times that you think you need to borrow, you actually don’t and I wish you don’t. Can you imagine how you ever survived while you had no job? And now that you have one you still are short of money even when you get paid bonuses and salary comes in promptly? You will not die, and some of those urgencies are really just illusions. Trust me, I know. Besides every time you borrow unnecessarily, it affects your focus. You now concentrate more on the debt and not on positive cash flow and if you ever meet with institutions that employ professional debt collectors as I did, you had better thank God if you get out of it with your health intact. You could easily die of stress or diabetes (yes, even in your early 20s) or any of those diseases which just tend to be in the woods waiting for a trigger opportunity.

The downside is, I lost my business and still remained with a mountain of debt to clear with a shovel. Your total existence is threatened when you lose a business especially if business is all you have done for a while. Options will not come to you that fast given that what ever you think of will have to sort out your huge debt that a healthy business was unable to before. Because by the time people trust you with their money, (bank or individual) they believe in your idea and what you have to show so far. New ideas don’t get the red carpet treatment like that, even if you are the same guy behind them. It’s harder. In fact, now they double check, always.

So, folks when you travel the entrepreneurial journey and make headway, be thankful. More still be careful especially about debt and credit, more so which has an expense to it. More importantly, treat debt like you would a loaded gun; very carefully. It can be the best security and it can also blow your brains out. In seconds.


  1. Emma, well spoken. As an entrepreneur for the last 11 years, I feel you big time. My motivation is that a man is not known by how many times he falls down but by his ability to stand up each time he falls down. You still got the guts in you. What you look at as failure is actually success reversed. It is a lesson that is preparing you for your biggest payday.

  2. We all face it from time to time, what I note is that the second and third time serve to polish the game - so make more attempts but make sure you have a hard head!