Last month the New Vision Staff Savings & Credit
Cooperative hit the billion shilling mark in net worth – the difference between
assets and liabilities.
This is also the year that the Coop turned ten. During the
last decade a lot of lessons have been learnt about business during the
building of the coop, which it is hoped has another millennia or so ahead of
itself.
1.
Start where you are
There had been attempts to start a savings scheme for staff
for years but it finally took off in 2005, with 26 (not 27 members). There was
nothing to start with apart from an idea, the integrity of the founding members
and the indulgence of the New Vision company. Clearly it was an idea whose time
had come because the record shows that by the end of that year more than 100
people had signed up.
2.
Be clear about your objectives
From day one the objectives of the Coop have been clear. In
decreasing order of importance, to help members save, to provide below market
rate credit and to provide an investment vehicle for them. Everything the Coop
did was with this in mind. This clarity of purpose has kept the Coop focussed and
growing by prodigious amounts annually.
3.
Keep your costs low. Make your money make money
US billionaire investor Warren Buffett says it is red flag
for him if he hears management announcing they are cost cutting. What have they
been doing before he asks, cost cutting is like breathing you shouldn’t think
about doing it you do it all the time.
The coop's major costs go towards interest payments to members and not to pampering an entitled administration or bad loans or losses from Hail Mary investments.
The Coop has invested mostly in government paper which
revenue stream is growing every year as the stock of these investments grow.
4.
Collect what is due to you
The Coop’s major revenue stream is interest on member loans, which accounts for eight in every ten shillings the Coop earns. Thankfully we
deduct at source so we collect most money due to us. However not everyone is
willing to pay, for some strange reason they think monies owed the Coop will be
forgotten. So with much discomfort debt collectors were contracted in the last
few years to chase down these members who have chosen to abuse our hospitality.
The results have been to the Coop’s satisfaction. They say profit is an opinion
but cash is fact. One can be posting impressive profits year in, year out, but
without cash even the most profitable company will sink.
5.
Don’t get excited
In the first year the Coop closed with sh33m in cash on its
account. At the start of the enterprise to imagine that such amounts will be
seating around earning anaemic returns from the banks was inconceivable. The temptation
to go into speculative endeavours may have arisen but a clarity of mission
helped to keep the Coop off the crooked path.
I remember a talk once where the speaker said that if even a million
shillings fell from the sky it would discombobulate most people to the point of
sweating.
6.
Take care of the customers and the money will
follow
It sounds like a cliché but by working to keep the processes
uncluttered with too much red tape and complexity the Coop has grown from
strength to strength. It is true what they say, if you want to get rich serve
more and more people. Thankfully the coop is member owned so returns accrue to
the members in terms of interest and capital appreciation so there are multiple
benefits for the Coop’s members. And you can achieve win-win when measured
against all the conventional business metrics of success. Last year the Coop
showed a net profit margin of 57 percent and return on equity of 40 percent.
Understandably the Coop has social objectives, which mean it
does not run with the sole intention of maximising profit otherwise they would
charging extortionist lending rates while paying out a pittance in interest on
savings.
But probably the final lesson will be that everything takes time. To get to a net of a billion shillings it has taken a decade of systematic and consistent practice, repeated with uncompromising diligence.
There are no short cuts you have to put in the time before
you can drive the monster truck or holiday in the Bahamas. If you have not put
in the time and are partying already rest assured doom is stalking your every
footstep.
