!Article VNc#18.201025: Practical Insights
By Victor PM Nyasulu
INTRODUCTION
The 10-part series on the Law of MSME Success Foundations-LMSF was focused on setting up. Set-up is just the beginning. It is ground zero! Having examined the “internet blessing” last week, today we look at some key practical insights.
- Clarity of Vision and Purpose
There is need to define the “why” of anything but especially the why of a business. It is said that understanding a problem is half the solution! It must therefore, follow that clearly knowing exactly why your business exists, what problem it aims to solve, and for whom? is crucial!
- Keep it simple
A focused mission keeps you from chasing every opportunity and losing direction. While it is true that there is wisdom in diversification, a lack of focus per idea per season is foolish! One thing must be more important at a time in a particular season than all other things! Once one idea is nurtured and working well as a result of project like focus, one can move to the next idea. When many ideas are finally working well, a conglomerate is then in sight! Focus is absolutely necessary.Focus is not anti-diversification. Each season is most suitable only for one thing before the next season idea is implemented!
- Separate Business & Personal Cash
MSME owners must be wary of mixing business and personal monies. They must avoid the practice like the plague! Always open two bank accounts: one personal and another for the business itself. The two accounts must be separate. Also cultivate the practice of taking the money to the bank first before it is drawn out of the business for whatever purpose. Even if the business does not have a bank account yet, the money must be recorded into the business journal before it is formally removed even for business purposes.
- Pay yourself a set amount (drawings or salary) Connected to the point no. 3 above, you must pay yourself a salary or drawings in fixed amount but instead of dipping into the cash sales daily, the payment must be at fixed intervals. This requires discipline but there is no other way of growing a business for legacy outside of discipline. This makes financial reporting, tax compliance, and growth planning much easier.
- Book-Keeping is KEY!
The lack of respect for book keeping by Zambian MSMEs owners is unbelievable! Part of the reason we have very few formal Zambian businesses that have stood the test of time is simply the lack of book-keeping. You must track sales, expenses, cash flows, inventory, debtors/creditors and other assets regularly. Even a simple spreadsheet or accounting app (like Zoho Books, QuickBooks, or Excel) works if used consistently. You can’t manage what you don’t measure.
- Know your key business Numbers
Have you been doing your business for five years and still you do not understand or know your profit margins, break-even point, and cash flow cycles? Again, here I repeat, you cannot manage what you cannot measure. If you don’t know your key business metrics, whatever else you think you are doing, you are not managing a business!In addition to knowing and keeping tabs on your key business numbers, invest in learning to read a basic statement of income and financial position. That is why in the Law on MSMEs Success Foundations-LMSF, I talked about the need for continuous learning!
🙏7. Faith and Integrity
As a practicing Christian, let me comment on the place of Faith and Integrity in business. However irreligious you think you are; faith and integrity ultimately deliver even in business. In the bible, a lot of insightful business tips are covered.
For example, God in the Christian bible hates dishonest scales. To fear to cheat your customers is integrity 101! If you think there is no place for faith and integrity in your business, try running it on fear of God and integrity and then we can have a conversation in the long run!
You ask, how does running a business on faith and integrity look like? I say try running your business with integrity, fairness, and stewardship!
God blesses diligence, faithfulness, and honesty (Proverbs 10:4, Colossians 3:23).
Doing business ethically builds a reputation that money can’t buy.
Naenda ine mafumu!
Victor PM Nyasulu of VNc is a Partner at NS-CGMA. vpmn69@gmail.com
