[kictanet] Finance Policy - Tech Startups

[Andrea Bohnstedt]

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 at 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 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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> 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

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