Sometimes business is luck of the draw. You will get an idea, put in the blood sweat and tears, and win.
Sometimes business is luck of the draw. You will get an idea, put in the blood sweat and tears, and win. Other times, the odds are so stacked against you that no matter how hard you work, it won't pan out. Some lost their money, while some were luckier and were yet to invest before the dams burst. Here are the experiences of ambitious entrepreneurs.
1. IF IT SOUNDS TOO GOOD TO BE TRUE…IT PROBABLY ISMoney Pit: ‘Public Likes’ pyramid scheme
Daniel Mbugua, a public relations and communications specialist, almost pumped a fortune into “Public Likes”, a 2017 pyramid scheme that blew up in the faces of many a youth.
A friend of his had come up with the idea of investing into the scheme following a wave of social media craze. Interested people were supposed to invest some money and invite friends (referrals) to sign up to boost earnings that were gotten through clicking on links that popped up on the Public Likes website.
“It seemed a quick way of making money. However, it was suspicious because I thought to myself that speed of making money was unreal. The scheme required one to upgrade their accounts with between Sh4,500 and Sh90,000 to earn more,” he says.
Those who had embarked on the ‘business’ immediately it started were able to rake in profits by the time the scheme collapsed. Latecomers, with their misguided enthusiasm, were the pawns. Mbugua was only lucky that he had signed up for a free account. He had not reached the required withdrawal threshold and was planning on upgrading his account by paying Sh4,500 the weeks matters went south.
He regrets the time he lost, and the disappointment that he was unable to make even a single withdrawal.
“I spent three weeks clicking on links to nowhere,” he says.
Avoid the pits
Mbugua says from the experience, he learnt to trust his instincts. He also learnt to do a thorough check to identify the PESTEL (Political, Economic, Social, Technological, Environmental and Legal) framework of any business, and carry out a SWOT (Strength, Weaknesses, Opportunities and Threats) analysis before investing.
2. ‘THE DOING WHAT EVERYONE ELSE IS DOING’ SYNDROMEMoney pit: Poultry farming
Noah Kipkemboi, a local news anchor, decided, in 2019, to try agriculture. Looking around, Noah realised that people who had invested in poultry farming were reaping big. With a capital of almost Sh40,000, Noah invested in about 40 birds.
“It was in the middle of the year and the younger birds cost around Sh400 each. I expected to cash in by the end of the year by selling each one of them at around Sh1,000. There was a six-month period of extensive feeding and the chicken were mature by end year,” he explains.
However, come December, there was oversupply of chicken in the market. Noah was left with two options - lower his prices or keep his chicken at home.
“I had to lower the prices. It was a loss.”
Noah says he will never go into poultry farming again. That was a lesson learnt the hard way. He should have done more research before investing.
Money Pit: Greenhouse farming
Leonida Kombo, Senior Associate Corporate Engagement and Learning at Ajua, says her dreams to invest in greenhouse farming were dashed by some of her friends’ experiences.
“My friends and I were discussing investment opportunities for our chama. I asked some friends who had invested in horticulture about their experiences with some of the premium advertised greenhouses. Most of these friends did not recommend them as they had not received any money yet. I later found several articles reporting similar experiences by other Kenyans and decided against investing in this venture,” she says, thanking her lucky stars that she had not invested in the venture that had always, to her, looked very lucrative.
The Goldenscape Greenhouse saga, which has seen multiple greenhouse-farming enthusiasts lose money to ruthless swindlers, further confirmed her fears.
Spinning away from the idea, Leonida settled in the corporate world and she cannot regret it, having learnt a thing or two that has kept her going.
Avoid the pits
“Traditional investment methods such as the capital markets still feel inaccessible to many Kenyan youth. In some cases, you may require a fund manager, which comes at an extra cost. Emerging professionals are looking for more flexible investment options that come with less paperwork and take a shorter time for the returns to mature. However, people need to be cautious of such investments and do their due diligence,” she says.
Money Pit: The gambler’s lair
The gambling craze that came into the country and took the gaming industry by storm almost drained pockets of many ambitious betters.
Lee Muritu, a recent graduate of University of Nairobi, was one of those thrilled by the fortunes football betting promised.
This looked like a worthwhile investment, now that he was well versed with football and understood the rules of the game. The quick profits that were promised turned out to be quick losses.
“I could lose up to Sh3,000 per day,” a sad Muritu confesses.
An addictive wave had swept through university and carefree students were “investing” heavily in companies such as Sportpesa, Betin, Betika, Betway and Elitebet. Most of them ended up regretting the decisions.
Muritu was in the business for shorter than most of his peers, quitting after a two-month stint that nearly bankrupted him. It is among the worst business ideas he has ever tried his hand in.
He also saw some of his friends enter Aim Global, which collapsed just before he could plunge in. Like Public Likes, it was a pyramid scheme that saw subscribers earn profits from referrals. Those who joined earliest were able to reap big until the centre could hold no more.
A friend of Muritu who had even purchased a car saw his automobile auctioned by an irate bank that had lent him money to top up on the Aim Global earnings.
In this crazy business world, experience is the best teacher. Many investors who have been bitten shy at a second attempt. It is a world of hits and misses, rolling of the die with any outcome possible. ?