Monday, October 23, 2006

Why not to take full payment before completing job

This weekend I finally rid myself of a headache I’ve been dragging around for the last one month. I learnt something (which I already knew but had chosen to de-learn), and that is to never accept full payment for a job before you begin. Here’s the story:

About one month ago I was giving free consultation to one of my GEC members. In the course of our consultation he inquired about SoftLaw’s data entry services. Apparently he had to populate a database daily with about three hundred records each with more than ten different columns. He was concerned about how much his part-time employee was costing him to do the job. Another problem was that he had a huge archive of data which he wanted entered into the database as well.

On further enquiry I discovered his problem had parallels to one I faced while doing some work for the Judiciary. My member was OCR scanning the property classifieds of the dailies and entering the information into an excel sheet with different columns for price, bedrooms, location, telephone contacts, description, agent etc. After formatting the scanned document he had each classified on a separate line of a text document. His employee was manually copying and pasting the data from the text document to the excel file.

Since he was a computer science graduate I asked him if he had considered automating the procedure. I found out that he even tried developing an application but each classified ad had a different format resulting in countless permutations. After programming the 14th rule for the first data type (price) he gave up on the automation angle. I asked him to send me a sample copy of one of the text file to see whether I could offer a better way of doing it.

I’m not a professional programmer, but I love the logic involved and have a particular fondness for pattern matching and string manipulation. Looking at the sample text and his requirements I figured it was a three-day job at most for me. The rules involved were complex, but I had plenty of source material to use from the previous application I developed called “Abstractor”.

Although the market price for the software should have been in the K.Shs. 50,000 – K.Shs. 100,000 (US$ 685 – 1,370) I decided to charge him a nominal K.Shs. 5,000 (US$ 68) for the job since he was a GEC member. The fee was high enough to make him appreciate the work but low enough not to be a strain to his young business. In a continent where software piracy hovers at 80%, $68 spent on software (even where it is customized) is a decent amount. I also asked him to pay in full and upfront as I did not want a situation where I’d have to chase him for the balance.

Now here is perhaps where the trouble began. What was supposed to be a three-day job took a whole month to complete, and I’ve narrowed down the reasons to:

1. Taking the full payment upfront;
As a businessman you appreciate the value of promptly paying customers. At GEC it’s slightly better since all payments are pre-payments. For software development and related types of supplies (where delivery of goods or services is required) most payments are made in parts. Usually customers will pay 50% on start and 50% on finish. Sometimes some customers will only make payment on full delivery. And even then rarely will customers pay on time; a supplier might undergo many frustrating delays before she receivers her pay.

This foreknowledge prompted me to require the full payment before I began. However coupled with reason number 2 the outcome was disastrous.

2. Charging less than the real value for a job;

What I had promised would take three days took a whole month to complete. On review of the development process though I actually realized that I had not spent more than 24 working hours on the software. With an 8-hour day this translates to 3 days. My greatest mistake though was underestimating how valuable those 24 hours were to me. Although I did not want to charge more than the nominal K.Shs. 5,000 for developing the software the opportunity cost was almost ten times what I was charging. Finding a compromise proved extraordinarily difficult as I had to prioritize my time. I also had very little motivation as the entire price had been paid. This had a much greater effect than I imagined. I was trying to find time to do something for which inadequate consideration had already been satisfied.

All in all though, it was not too bad of an experience. I learnt a lot, got insights for my future consultation with other clients, and enjoyed the programming.

Wednesday, October 18, 2006

Will the real entrepreneurs please stand up

Today, I am inspired. Watching the Barclays sponsored Enterprise Kenya on KTN last night showed me just how far I am from calling myself an entrepreneur. The source of inspiration: a woman called Joyce Wairimu and her amazing fortitude in starting and running her eatery business Babylon Kitchen. Every aspect of her story seemed so keeping with the entreprenuerial spirit that I was tempted to think it all scripted.

Joyce Wairimu was a victim of the Molo clashes in 1992 which displaced her and family. The clashes uphove her life and she found herself separated from her husband, penniless, and destitute, with five children to care for. A chance boarding of a Kayole bound matatu found her living off handouts in the streets of Kayole.

But the woman's spirit was not broken and a good samaritan welcomed her and her children into her home and also introduced to her to work that could earn her an income. Joyce started making a little money by working in the City Council farms and washing clothes. It paid little but Joyce knew how to save and put away K.Shs. 900 (US $12) every week.


Joyce joined a welfare group Maisha Bora where she deposited her savings. She narrates how the welfare changed her life by allowing her borrow double what she had saved and invest it in business. With K.Shs. 7,000 (US $ 96) she began a tea kiosk in Kayole and gradually built it into a popular restaurant with outside catering. With financial discipline, prudent management, perseverance in the face of adversity, and always putting the customer first Joyce saw her business grow and flourish.

Six years later her business and personal assets now include real estate, land and are valued at K.Shs. 2,500,000 (US $34,247). Joyce has also bought property for her children and given them capital to start their own businesses. She is now reunited with her husband, remains an active member of the welfare group which started her off, and is happy and content with her life. She is a truly wealthy entrepreneur by all standards.

The story behind Babylon Kitchen is one of knowing what you want in life and using business as a means of achieving it. It is the true entrepreneurs story, one that makes you realise there's more to it than just making money. Today I feel challenged to be an entrepreneur as Joyce Wairimu is an entrepreneur.

Tuesday, October 10, 2006

Entrepreneurs hate holidays

It's October 10th today, a holiday that used to be called Moi day or Remembrance day but I'm no longer sure if that is still its name these days. What I am sure about is that it is a holiday, and I hate it. I have a number of entrepreneurs here at GEC who hate it as well. But wait a minute, doesn't everyone love holidays, a chance to relax, take time off, enjoy the fruits of one's labour?

Not entrepreneurs. For an entrepreneur a holiday means: lost opportunities, lost income, absent employees, delayed cheque clearances, delayed deliveries et cetera. Holidays are the number one killers of entrepreneurs.

Don't get me wrong, holidays like Christmas and Easter are welcome, even feted by entrepreneurs. But what's with these irrelevant holidays, what are we celebrating today anyway? Earlier this year there was an even more irrelevant holiday called Prayer day. And let's not forget the dubious "celebration" holiday right after the last general elections.

Understand where I am coming from, with a workforce of 11.85 million, every holiday we lose 94.8 million man hours, or in money terms: 2.4 billion shillings!! (figures from www.cia.gov ) Enough said, ban the irrelevant holidays and lets get back to work.

Friday, October 06, 2006

'Jobpreneurs' earning money in a Kenyan way

I've invented my own portmanteau today to describe a way in which I think many jobless/retrenched Kenyans may find gainful employment. A jobpreneur is a person with a skillset suitable for an office job who outsources her skills to willing payers through the Internet. A jobpreneur is a worker and therefore will want a business model that almost approches an employer-employee relationship. But a jobpreneur is also a businessperson because she is ready to control the future of her income through her own hard work. A jobpreneurs skillsets are diverse but primarily use the computer: data entry, transcription, graphic design, software development, language editing, music composition, research, journalism etc. Genius Executive Center is helping jobpreneurs set-up their operations and start earning money using their skills by providing furnished offices, consultancy and financing. With K.Shs. a 10,000 investment, Genius can help you earn from K.Shs. 30,000 per month. Prospective jobpreneurs now have an opportunity to make a decent income using their skills.

Wednesday, October 04, 2006

Quality service non-existent in Kenya?

Is it impossible for Kenyan companies to give guarranteed quality service? I thought the problem afflicted only startups who are mainly product-oriented before they learn to be customer-oriented. I figured its a cost issue for startups, as much as they'd like to guarantee their products, they just can't afford it. But even large Kenyan companies, with entire CRM departments and support departments can't seem to deliver top-grade service. Just the other day I signed up with an ISP who guarantees 99.8% uptime. Roughly translated this means that in the span of a month they can only be down for one and a half hours. Two days after using the service they went down for two- and-a-half hours. On complaining they mumbled something like "...maintenance...sorry we didn't inform you.."