[kictanet] Finance Policy - Tech Startups

[Phares Kariuki]

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 at 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 at 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 at gmail.com | Twitter: kaboro | Skype:
>> kariukiphares | B: http://www.kaboro.com/ |
>>
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>
>
>
> --
> Francis Hook
> +254 733 504561
>
>
>


-- 
With Regards,

Phares Kariuki

| T: +254 720 406 093 | E: pkariuki at gmail.com | Twitter: kaboro | Skype:
kariukiphares | B: http://www.kaboro.com/ |
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