Finance Policy - Tech Startups
Hi, Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? -- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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Hi Francis, It was hypothetical, I understand the need for taxes etc, I guess I should have better put out my thoughts... My point was more on what happens to cash you don't re-invest/pay out as dividends? Basically, what does one do with their cash reserves? Or is it that we don't have cash reserves? On Thu, Jul 7, 2011 at 12:24 PM, Francis Hook <francis.hook@gmail.com>wrote:
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits?
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go.
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- Francis Hook +254 733 504561
-- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
Phares You buy a hummer and some land ... Some in Nairobi, some in your shagz and some in coasto Then you build houses :) On 7/7/11, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi Francis,
It was hypothetical, I understand the need for taxes etc, I guess I should have better put out my thoughts... My point was more on what happens to cash you don't re-invest/pay out as dividends? Basically, what does one do with their cash reserves? Or is it that we don't have cash reserves?
On Thu, Jul 7, 2011 at 12:24 PM, Francis Hook <francis.hook@gmail.com>wrote:
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits?
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go.
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- Francis Hook +254 733 504561
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
-- Sent from my mobile device
Re-investing is the way to go for a start up or it remains a start up and shortly dies. Remember competitors are coming up and growing and if you buy the Hummer too soon, you will be out of business. Wamuyu Quoting Phares Kariuki <pkariuki@gmail.com>:
Hi Francis,
It was hypothetical, I understand the need for taxes etc, I guess I should have better put out my thoughts... My point was more on what happens to cash you don't re-invest/pay out as dividends? Basically, what does one do with their cash reserves? Or is it that we don't have cash reserves?
On Thu, Jul 7, 2011 at 12:24 PM, Francis Hook <francis.hook@gmail.com>wrote:
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits?
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go.
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- Francis Hook +254 733 504561
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. To add to what Francis has said - assuming that expansion of the tech company is not possible, then as a good corporate entity, you could participate in a worthy corporate social responsibility program Edwin On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote: Hi, Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? -- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ | _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/francis.hook%40gmail.co m The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development. KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications. -- Francis Hook +254 733 504561
The reason I ask this question is how do you shield the corporation from fluctuations in revenue? What happens if revenues slide for say 3 quarters continuously? If you did not have some form of financial cushion, you will miss financial obligations (salaries etc). What I was driving at is how do Kenyan tech companies shield themselves from revenue fluctuations? On Thu, Jul 7, 2011 at 12:44 PM, Edwin Onchari <eonchari@lynxbits.com>wrote:
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Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? ****
** **
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. ****
** **
To add to what Francis has said – assuming that expansion of the tech company is not possible, then as a good corporate entity, you could participate in a worthy corporate social responsibility program****
Edwin****
** **
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:****
Hi, ****
** **
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? ****
** **
** **
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |****
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KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.****
-- Francis Hook +254 733 504561
****
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
@Phares Its important to have your expense projections of the year, having your income upfront just means you are better prepared for the expenses. corporate tax payment schedules are well adviced by KRA and your auditors should be able to help you with such tax planning. investing in product development is very important, that should be fore-planned in your expense projections. the essence of being in business is to make enough profits to invest both in short term, mid-term and long term assets. several investment advisors and preference should sort you out with nice opportunities. i also presume the trechprenuer will be well versed with what they wish to invest in. [?] my 2cents On Thu, Jul 7, 2011 at 12:49 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
The reason I ask this question is how do you shield the corporation from fluctuations in revenue?
What happens if revenues slide for say 3 quarters continuously? If you did not have some form of financial cushion, you will miss financial obligations (salaries etc).
What I was driving at is how do Kenyan tech companies shield themselves from revenue fluctuations?
On Thu, Jul 7, 2011 at 12:44 PM, Edwin Onchari <eonchari@lynxbits.com>wrote:
** **
** **
** **
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? ****
** **
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. ****
** **
To add to what Francis has said – assuming that expansion of the tech company is not possible, then as a good corporate entity, you could participate in a worthy corporate social responsibility program****
Edwin****
** **
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:****
Hi, ****
** **
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? ****
** **
** **
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |****
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KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.****
-- Francis Hook +254 733 504561
****
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- Muthoni My Blog: http://rugongo.blogspot.com/ -------------------------------------------- Mahatma Gandhi once said:- First they ignore you, Then they laugh at you, Then they fight you, AND THEN YOU WIN!!!
I wish I had that problem :) I think in the case of most start ups, this is a very unrealistic scenario as cash flow is one of the biggest problems. Usually you're chasing your clients for payments, but have to keep paying rent, staff, electricity etc. But my two shillings: If you reinvest, have a plan for it - and that will tell you how much money you need when. Ask your bank for their short and medium-term investment opportunities in government securities etc. Unless you're an investment expert, you want something conservative, and accessible when you need the money, so it might be important that you put at least part of the cash into short-term, liquid instruments. On 7 July 2011 12:44, Edwin Onchari <eonchari@lynxbits.com> wrote:
** **
** **
** **
Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? ****
** **
If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. ****
** **
To add to what Francis has said – assuming that expansion of the tech company is not possible, then as a good corporate entity, you could participate in a worthy corporate social responsibility program****
Edwin****
** **
On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote:****
Hi, ****
** **
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? ****
** **
** **
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |****
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.****
-- Francis Hook +254 733 504561
****
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- Andrea Bohnstedt <http://ke.linkedin.com/in/andreabohnstedt> Publisher +254 720 960 322 www.ratio-magazine.com Find/post East Africa careers<http://www.ratio-magazine.com/careers/index.php> Find/post conferences, workshops, trainings, other business events<http://www.ratio-magazine.com/businessevents/index.php>
Also, There are a number of methodologies employed in sales/rev forecasts and these take into account all variables. Using any/combination of these methods will give you an indication on how much you need to retain, invest, etc in any given season to cushion an organization from future uncertainties- even the uncertainties can be estimated to near accuracy levels Edwin From: kictanet-bounces+eonchari=lynxbits.com@lists.kictanet.or.ke [mailto:kictanet-bounces+eonchari=lynxbits.com@lists.kictanet.or.ke] On Behalf Of Andrea Bohnstedt Sent: Thursday, July 07, 2011 12:53 PM To: Edwin Cc: KICTAnet ICT Policy Discussions Subject: Re: [kictanet] Finance Policy - Tech Startups I wish I had that problem :) I think in the case of most start ups, this is a very unrealistic scenario as cash flow is one of the biggest problems. Usually you're chasing your clients for payments, but have to keep paying rent, staff, electricity etc. But my two shillings: If you reinvest, have a plan for it - and that will tell you how much money you need when. Ask your bank for their short and medium-term investment opportunities in government securities etc. Unless you're an investment expert, you want something conservative, and accessible when you need the money, so it might be important that you put at least part of the cash into short-term, liquid instruments. On 7 July 2011 12:44, Edwin Onchari <eonchari@lynxbits.com> wrote: Phares, I'd wager at least 30% needs to be paid in taxes for a start :-) unless you have included that in the expenses already (excluding PAYE for staff) in which case I have to ask why such high margins? If the value add is very good, and assuming its a service and not a product (and you indicate) then salaries too must be high? If a product, the question remains, what has been the value add such that after acquiring the product and adding value, you still have huge profits? If all above is taken into account...then I suppose re-investing in the business, in expansion and in diversifying the offerings would be the best way to go. To add to what Francis has said - assuming that expansion of the tech company is not possible, then as a good corporate entity, you could participate in a worthy corporate social responsibility program Edwin On 7 July 2011 12:15, Phares Kariuki <pkariuki@gmail.com> wrote: Hi, Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke? -- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ | _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/francis.hook%40gmail.co m The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development. KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications. -- Francis Hook +254 733 504561 _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/andrea.bohnstedt%40rati o-magazine.com The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development. KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications. -- <http://ke.linkedin.com/in/andreabohnstedt> Andrea Bohnstedt Publisher +254 720 960 322 www.ratio-magazine.com <http://www.ratio-magazine.com/careers/index.php> Find/post East Africa careers <http://www.ratio-magazine.com/businessevents/index.php> Find/post conferences, workshops, trainings, other business events
Hi Phares, You are in a luxury position that won't last long. Invest into the next "big" product/service/solution now. What's that Thomas Edision said? ...."I have not failed. I've just found 10,000 ways that won't work. Statistic for you: 46% of Huawei employees are in R&D Best SE On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
Firstly, thank you all for your feedback. Let me expound on why I was asking this question, I'm still developing the curriculum that's being used for startups during the mentorship program. One of the things my (very) unscientific research brought out was the fact that Kenyan Tech startups operated on a 'feast/famine' model, i.e. You have a huge deal one day, buy a series of company cars, brand them, go on a hiring spree, one year later, company is laying off people and selling the now Question is, if our tech firms had a solid asset base (including patents), wouldn't it be easier for them to list in the stock exchange? I realize that in the earlier years, you need to do R&D and expand, but, shouldn't you cushion yourself against fluctuations that *will* happen? Nokia did not plan for the iPhone, they needed to have enough money to survive and have a response to it. Otherwise, they might have ended up like Palm... @Suhayl Sadly I'm not in that situation :-(, but I do get your point on R&D. @Andrea That's actually what I was thinking, some can be in say 90 day T-Bills, some bank, and some in longer term securities. @Dorcas Hence my asking. We are yet to get a tech company listed (that is not in the telecommunication space), so I still have no idea what happens in the background. @Liko Sounds like real estate is more lucrative? :-) On Thu, Jul 7, 2011 at 6:18 PM, Suhayl Esmailjee <suhayl@esmailjee.com>wrote:
Hi Phares,
You are in a luxury position that won't last long. Invest into the next "big" product/service/solution now. What's that Thomas Edision said? ...."I have not failed. I've just found 10,000 ways that won't work.
Statistic for you: 46% of Huawei employees are in R&D
Best
SE
On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki@gmail.com>wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
Hi, The last thing that a technology start-up needs to be doubling in is finance issues they must make sure that they have a seasoned finance person or organisation by their side to make those decisions for them while they concentrate on the core business. Out sourcing is about more than just transcription, let them out source the finance function if they cannot bring it on-board as an equity partner, director or mentor. The niche that the venture capital firms have filled with start-ups is the financial strategy and making sure that the organisation goes public or is sold off when the pre-agreed milestones are reached. In addition I would recommend that you make it clear to them that if an opportunity arises such as a buy out that they had not factored into their business plan that they should take it, products or innovations are not offspring. Back to the question, they should re-invest the money into the businesses growth either internally or by acquisition as a means of fattening then buy the big cars, plots, government bonds with the money they will get after listing just like Thakaar of Scangroup, the Somen Brothers of AccessKenya did and Transcentury is about to do. Which is called eating your cake and having it. Regards Robert Yawe KAY System Technologies Ltd Phoenix House, 6th Floor P O Box 55806 Nairobi, 00200 Kenya Tel: +254722511225, +254202010696 ________________________________ From: Phares Kariuki <pkariuki@gmail.com> To: robertyawe@yahoo.co.uk Cc: KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke> Sent: Thu, 7 July, 2011 18:45:06 Subject: Re: [kictanet] Finance Policy - Tech Startups Firstly, thank you all for your feedback. Let me expound on why I was asking this question, I'm still developing the curriculum that's being used for startups during the mentorship program. One of the things my (very) unscientific research brought out was the fact that Kenyan Tech startups operated on a 'feast/famine' model, i.e. You have a huge deal one day, buy a series of company cars, brand them, go on a hiring spree, one year later, company is laying off people and selling the now Question is, if our tech firms had a solid asset base (including patents), wouldn't it be easier for them to list in the stock exchange? I realize that in the earlier years, you need to do R&D and expand, but, shouldn't you cushion yourself against fluctuations that *will* happen? Nokia did not plan for the iPhone, they needed to have enough money to survive and have a response to it. Otherwise, they might have ended up like Palm... @Suhayl Sadly I'm not in that situation :-(, but I do get your point on R&D. @Andrea That's actually what I was thinking, some can be in say 90 day T-Bills, some bank, and some in longer term securities. @Dorcas Hence my asking. We are yet to get a tech company listed (that is not in the telecommunication space), so I still have no idea what happens in the background. @Liko Sounds like real estate is more lucrative? :-) On Thu, Jul 7, 2011 at 6:18 PM, Suhayl Esmailjee <suhayl@esmailjee.com> wrote: Hi Phares,
You are in a luxury position that won't last long. Invest into the next "big" product/service/solution now. What's that Thomas Edision said? ...."I have not failed. I've just found 10,000 ways that won't work.
Statistic for you: 46% of Huawei employees are in R&D
Best
SE
On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
Hi,
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
-- With Regards,
Phares Kariuki
| T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
_______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.
KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-- With Regards, Phares Kariuki | T: +254 720 406 093 | E: pkariuki@gmail.com | Twitter: kaboro | Skype: kariukiphares | B: http://www.kaboro.com/ |
On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
Question, for those who have run tech startups, how do you deal with excessive revenue? Given that tech firms many times operate on high margins, let's, for the sake of example, say you have a product that, with an expense book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES. What do you do with the remaining 7M? Some say invest in product development but even then, you will still have quite an amount of change. What happens to that change? Invested in a bank? Or in some form of Fixed Income Securities (Bonds, T-Bills etc). What's the general practice in .ke?
what you need is ultra-short term debt funds (some people call them liquid funds ) these invest in commercial paper , money market instruments, t-bills , certificate of deposits etc .. either on a overnight basis, weekly, 10 days or 30 days ....etc. you also need a regime where when you liquidise these funds the settlement happens in a reasonable amount of time (e.g. a bank fixed deposit can be liquidised in the same day ...such a fund should also be liquised in the same amount of time ) ... i dont think these kind of funds exist in kenya ?
participants (10)
-
Agosta Liko -
Andrea Bohnstedt -
Ashok Hariharan -
Dorcas Muthoni -
Edwin Onchari -
Francis Hook -
Phares Kariuki -
robert yawe -
Suhayl Esmailjee -
Wamuyu Gatheru