[kictanet] Finance Policy - Tech Startups

[Phares Kariuki]

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 at 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.  ****
>
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>
> 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 at gmail.com> wrote:****
>
> Hi,
> ****
>
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>
> 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? ****
>
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>
> --
> 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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> 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 at gmail.com | Twitter: kaboro | Skype:
kariukiphares | B: http://www.kaboro.com/ |
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