It is said that if you wish to travel far and fast, travel light. Check and recheck your baggage to ensure you carry only essential things.
It is good to appreciate that we are on an entrepreneurial journey whether you own a business or not. Your life is your enterprise.
Like any other journey, your speed, comfort and in fact, whether you reach your destination or not depends on your physical and psychological preparation.
If you are psychologically set to go, what will determine your success is your baggage. If you pack so many non-essential things, it will slow you done and wear you out too soon.
Today we look at how to lighten financial baggage as you navigate across the current economic desert, which no one knows how far or wide it is.
First, look at your sources of income or your current savings vis a vis the expected income for an appreciable duration such the next six months or one year. You don’t know how long the market will be in recession, but it's better to have short plans of six months, one year, two years and so on and adjust as time goes.
In planning for income and expenditure, experts advise that to be on the safe side, work with a case scenario where your income falls by two-thirds and expenditure increases three times.
For instance, if you are expecting to get Sh300,000, provide for a case scenario where you get only one hundred. Equally if you are projecting to spendSh300,000, provide for a case where expenses shoots to Sh900,000.
This is largely because we tend to overestimate income and underestimate expenditure. Naturally we get more unforeseen expenses than income on our way.
Having this in mind, we must always plan in advance. It is prudent to plan before you need it. It is pretty easier when you do not look for things to cut or sources of funds under duress.
In uncertain situations, such as the one we are in, it is advisable to work with what experts call zero-based budget. This is the sort of budget where you scrutinise every expense and question its essentiality.
Do not spend a coin if there is a way you can avoid it. Be prepared to go extra mile to sacrifice even essentials that can be sacrificed without hurting the business hard.
Traveling light means you only pick what is essential and leave the rest out until your reach your destination. Be a bean counter. Only put in things if you feel you cannot live without them.
Employ a do-it-yourself policy. If something can be done by yourself or your lean staff, do not outsource it. Postpone what can be done later to save cash. A coin saved is a coin earned. Where possible align your expenses to match income to avoid going into unnecessary debts that will make your recovery difficulty when things improve.
Many people feel that planning or budgeting is impossible in a situation where nothing is predicable. This is a fallacy. Budgeting is essential all the time. It shows you where your money comes from, gives you the freedom to spend and makes your money go further.
Mr Kiunga is a business trainer and the author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’