MEET MARY

Mary is an Senior HR Officer at NAPSA and she gets a net salary of K15000. She is also a strong Business Lady with a boutique at the Manda hill mall in Lusaka and makes about K600 per day on average in sales that sums up to a gross of K18, 000 per month for the boutique.  On the side hustle front, Mary is also a part time car dealer and makes about an average of K3000 per month in total profits. Her total income is K36000. If she was 5 years older than me I would have married her .

 

MARY IS IN A PICKLE

Despite the high level of income Mary has, she is not happy, she doesn’t even have a peace mind and she can calculate that she generates 36 gz a month but she doesn’t feel like a lady with 36 pin in her purse. She is constantly following up customers, paying debtors, bills and sometimes she feels like business is not flowing. She reached out to me, to ask for business coaching advice and we undertook this is how we healed her money problems.

(As a coach , I use questions to highlight solutions to problems and see what a client understands)

 

IS YOUR MONEY TANGIBLE OR ITS JUST IN YOUR BOOKS?

Firstly , Mary needs to assess if her money is real . Her salary of 15000 is real , I saw it on her payslip . The income from her business is not real because about 80% of her sales are credit sales .  So from about K18000 per month , she only had K3600 in her business account which is at the mercy of her daily business expenses  . The rest was what people owed in her books . I asked her how easily her clients paid her and she confessed that it was a full time job following up on customers and arguing with them , she confessed that she didn’t like the person following up on debt was turning her into . she also confessed that she used debt to increase revenue because she was at a mall and was competing with JETS , MR PRICE and other big famous stores . The credit facility allowed them business. I took note and moved on

 

We then moved on to her car business , I asked how he came up with the 3000 per month and if she could show me the inflow ? She couldn’t show me the cash but she show me her bank account where the 9000 profit every 3 to 4 months came in , so she divided it by 3 to get a more clearer view of her money . I asked her how she financed the purchase of cars and she said it was mainly from her business , salary and some debt from loan sharks , chilimba and anyone willing to borrow her when the car arrives at customs .

 

EXPENSES

There is a saying , it doesn’t matter how much you make , its how much you keep . So your expenses determine how much you will keep . So we dived into her expenses .

 

 

 

 

 

RENTALS

I was particularly interested in her rentals at manda hill,  how much was that ? she told me it was 11,500 per month for a small place in a corner. She knew it was a little steep but she had confidence that in the future the shop would grow in popularity and help make more sales , she also said the shop help with clients for her car business too

 

Mary was shocked when I asked how much her home rentals were ? She thought she was getting business advice not , Home advise ,  I told her that because she involved her salary in her business , all her personal expenses became part of her business too  . So her rentals of K3500 , where a business expense , her food & groceries  of 2000 per month was a business expense , because she mixed her income from her salary to her business. In English she was subsidizing her business with her salary . I have learned that we are not taught to account for employees in business but if we did all her expenses if her salary is used in business become part of her business .  So in substance her rent was K15000.

 

EMPLOYEES

How about your employees, how many are they ? and how much do you pay them ?  . I have 3 employees , one is my cousin Barbra someone I can trust , the other one is my childhood friend then the other I just hired . I pay Barbra 2000 and the others I pay 1250.  In total its 4500 .

 

So you need 3 people to help you make just 18000 ?   and what incentives do you have to help them push your targets ? oh you don’t have targets ?

 

ADVISE FOR MARY

Mary I can make you a happy woman again in a very short space of time . You actually don’t even have an unfixable problem .

 

DO NOT SUBSIDIZE YOUR BUSINESS WITH YOUR SALARY

Many Employees feed their business with their salary on a monthly basis . Its crazy your business should give you money that is its purpose . Ofcourse its understandable when you are just starting out . Let your business grow by not giving it any money , don’t pay salaries with your salary . Let the business take care of its expenses by doing so , you will ask the critical questions like  “hey how come we haven’t made any many to even pay salaries or the rent ? what are we doing here ?”

 

When you subsidise your business with your salary automatically all your personal expenses become part of your business . If you are withdrawing money from business to buy food then your personal expense is part of your business so keep it separate .

At the very borrow your business money from your salary  . Aslong as your salary is parenting your business , it will never grow

 

UNDERSTAND YOUR MONEY FOR REAL

In my 30 years on this planet called earth , I have come to realize that many people do not understand how much they make . They say they make 500 per day and the other 5 minutes are asking for a k20 for the bus home .  I no longer get scared when someone says they make k3000 per day , my only concern is how much I make because how much they make is their business and probably a lie .  Anyway .. Mary is also one of those people , she doesn’t really understand how much she makes .

 

CREDIT SALES -  Credit sales are not revenue as far as DJCVD is concerned , I don’t care what the accounting books say , I count money in my hand not money in my book . Credit sales are not for small business owners , they are for large corporations that can afford to stay months upon months without the money but for us we need the money ASAP

 

Credit Sales means Mary cannot reorder stock and it also means the risk of losing capital as well as the profit in the instance that the customer defaults on payment . To me if a customer doesn’t pay me within a month then it’s the same as I have lost on capital too because time is a factor in profitability too .  K1 per second profit is better than K10,000 every quarter .

 

Always remember that the  credit sales book cannot pay salaries , rent and other expenses . So if your expenses are not on credit , why sale on credit . ?

 

So here mary is actually not making K18000 but k3600 from her sales in the boutique because the rest is credit .

She also projected a 3000 for her car deals , this is also wrong because averages don’t pay bills . She has to count money as it comes not projections .

 

The danger about not understanding your income makes you do silly things like get a loan which you cannot pay for because you think you make money . It also makes you make uninformed decisions because you think you are rich .

 

FIXED COSTS

There is nothing I hate more than fixed costs , I hate them . I never want to be obligated to paying for something despite the outcome , so things like Rent , Salaries and Transport are things you really need to thing over before committing to them

 

SHOP RENTALS

Mary needs to get out of that shop at manda hill immediately , Despite what she said about the car marketing and hope that the shop will grow . 11500 is more than 50% of her monthly revenue OF k18000 . I recommend she finds a shop that is atleast 30% of her monthly revenue and this revenue should not be credit sales but cash sales . So in this case mary is fit to be in a place that costs K1080 per month ( K3600 X 30%) . In business we don’t HOPE , we prepare for the worst and pray for the best . Hoping that the business will grow doesn’t justify its tremendous cost .

 

Leaving the shop will help Mary get out of her Debt more quickly and find her footing as she adjusts herself to her new more knowledgeable self . she will make 11500  more by just leaving manda hill . that is a plus for me

One thing you need to ask yourself about fixed costs like rent is , would I be happy just getting the rent money in my business ? and in this case the answer is yes for most people !! K11500 is a lot of money . That is good revenue in itself for a business , Mary has to first make that 11500 for rent before she can even talk about profits .

 

EMPLOYEES

Mary has 3 employees helping her make K3600 per month . This number is too high for a small shop . She just probably needs one of them to run it . Secondly she has employed her friends and cousin to operate the business . Friends and Family are not to be used in business , how will she fire them now that he needs only one employee who is not family or relative . Friends and Fam in business dilute your boss presence and probably discuss you with the other workers . Relationships are broken when business and friendship are introduced

 

She needs to get rid of all her stuff and employee people that can drive sales , she can just start with one in the meantime at her new shop them introduce more gradually so that employees present  are first used at full capacity .

Employees can make you or break you , make sure you hire the right talents and people who can do the work , not cousins !

In summation Mary has a good thing going but her financial management skills are inadequate and so put her in a state of trouble . when your body is not peaceful it means your body is noticing something your mind cannot discern . The body also understands you , and relies on the mind to sort it out .

 

DO YOU LIKE WHAT YOU READ ON MARY                             

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