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Step by Step Guide to Getting Your TPIN

Everyone who owns a bank account in Zambia, is required to present their Tax Payers Identification Number (TPIN) to their banks. This is a legal requirement. Zambia Revenue Authority (ZRA) has given 31 December 2017 as the registration deadline, after which bank accounts without TPINs are supposed to be frozen.

 

Here is a step by step guide in how to get your TPIN without leaving your chair. Before we start you will need a soft copy of your NRC (PDF preferably) and a sketch of where you stay (you can draw this on a plain paper and scan it). Once you have those items you are good to go.

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So, that is how you get a TPIN. You should receive the certificate within 48 hours. If you do not receive by then you can give ZRA a call on 0971-281111 or 0962-225111. They have great customer service and will help. 

If you found this post help, let me know in the comments.

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I'm Tired of Giving Out Quotations

I have asked for countless quotations in my life time. I am certain that I am going to ask for many more in the future. The businesses I have asked for quotations from are as wide and varied as the stars. Some of my requests have been genuine and others just to settle my curiosity. Occasionally, I have been frustrated by a business that either denied my request or the person writing it sulked when they did so. I never quite understood why anyone would not want to give me a quotation, why on earth do they have a quotation book then? Like I said, I never quite understood until now.

 

People use quotations for different reasons, but one of the most common is to make a final decision, whether to acquire a product or service based on price. On the other hand, a business hopes that the quotation would translate into future business. So with my start-up I have found myself at the other end of the table, giving out quotations either via email or phone. For the past three months, I have been dishing out quite a lot of quotations without reasonable translation into business. I do not know what research says about the conversion rate of quotations, but I am guessing whatever percentage it is; I am probably below it. Everything at this stage is ending at potential. Potential client, potential business or potential sale but potential does not pay the bills.

 

The other challenging thing about handing out quotations especially for a start-up is that they give that element of hope. Hope there is interest in the service, hope that someone will walk through the door with a cheque and hope that the first step to your million dollars is around the corner. But then when the days turn to weeks and weeks into months without a reply to your quote, that hope evaporates. As soon as it evaporates someone else calls you for a quotation, and the cycle begins.

 

Even though I have stated that I am tired of giving out quotations, I am grateful that at least it shows that there is a need for the services we provide. However, I have also been presented with a revelation this past week. I had to ask myself one critical question, why aren’t I converting? This brings about an assessment of what we do as a business and how we do what we do. Are our prices too high? Maybe they are too low? Should I sign off the quotation differently with the statement price negotiable? Are our services packaged right? Are we showing people value in what they are paying for? Should someone more persuasive be giving out the quotations? Are we missing a customer segment? Perhaps I am just lousy with following up on quotations. These are some of the numerous questions that have arisen that need answers and find the answers I will. I do not know whether they will be the answers I want.

 

They say that the best way to deal with a problem is to acknowledge its existence and not live in denial. In this vein, I am acknowledging that I’m tired of giving out quotations. Likewise, only when a problem has been acknowledged can we then seek the help we need. So now I am in surgery trying to mend this problem I have identified. The ultimate testimony to know whether the prescriptions I take are working is translating those quotations to money in the bank.

 

Do you have any tips for me?

 

 

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Cheers to the Year of Risk Taker

Every new year begins with many people making resolutions to achieve and accomplish set goals. There are targets set, milestones to be reached and promises to be kept. Like many others, when 1 January 2016 came around, I mentally had my resolutions. There was no need to write them down because they had featured on my list for the past four to three years that they were permanently chiseled into my mind. They were a constant reminder of how another year drifted by with none of the goals realised. For the past four years when 31 December came around I would be struck with disappointment at how miserably I had failed at achieving the goals I had set and promised to do better the following year. 2016 was different; however, I began it with one short statement, “What If….”

 

I sat on my laptop, typed a few sentences and posted it on Facebook under the banner ‘Cheers to the Year of the Risk Taker.” Even though it looked like an encouragement to my family and friends to dare and dream, it was more a call to convince myself to take the plunge into the unknown. It was a cry to take a journey knowing the destination but moving with a broken compass. The challenge was not in taking the step; I have done some risky stuff in my lifetime. It was the fear of what would happen if I did not take it. I could not bear the thought of regret. Regretting what my life would have turned out to be if I was bolder, braver, unafraid and reckless. I did not want to look back 10 years later and resent the younger me. I had reached my watershed and there was one thing I just had to know. Having spent a five-year working career most of which was in financial audit, I decided to find out one truth. If I spent the 8+ hours I gave to my employer on starting my own business and doing something that I loved, would I succeed?

 

I had pretty much made up my decision during the finalisation of my master’s degree in September 2015 that I would not look for a job when I returned to Zambia. I just did not know whether I would actually go through with my plans when I did return. Therefore, I did the most logical thing I knew, I did not apply for any single job and I haven’t done so for the past 15 months. I did not want the temptation of having to look at the salary figures that would be offered to me. I had stubbornly decided that I would finally put to bed the “What Ifs” in my life and I had the next 12 months to do so. The one question I get asked is how I managed to survive these 12 months without a job? The answer is simple, I saved up. Remember I had been planning to do this for the past four years. So I saved enough to survive for a year without a job.

 

I set out on a journey like I mentioned earlier with a broken compass, hope and a prayer that I would arrive at my destination. Every single day I woke up and braced myself for the hurdles, rejections, and successes ahead. If someone had told me in January that I would achieve half the things that I have done in 2016, I would have kindly asked them to look for a different person because not me. Even though I consider myself loaded with optimism, it does have its limits and I know where the boundaries are. Trust me a whole lot of what I did was seizing the opportunities that presented themselves and created opportunities where none existed. I had numerous board meetings with me, myself and I. Questioned every step but continued to move either way. Perhaps a little optimism is all we need, to borrow a phrase from Paulo Coelho’s book The Alchemist, “When you really want something, the world conspires to make a dream come true.” And so it did, and so it did.

 

It all began towards the end of January with the release of my book HIRED- Find the Job, Keep the Job & Quit the Job. This was followed by being awarded second prize for the Chinese Embassy/ZWWA National Short Story Competition in April. Then I got selected to be part of the Mandela Washington Fellowship and became one of 1,000 Africans selected out of over 42,000 who applied. I had the opportunity to spend seven weeks in the United States of America. During my time in the USA I was also participating in the Nyamuka Zambia Business Plan Competition. This culminated in me getting the third prize which came with a handsome cash prize of K175, 000 in October.  Then in November something that was on my resolution list for years was finally ticked off, a company which I co-own Butali House was born. I have read 24 books in 2016 more books than I have ever read in a single year. I have attended and participated in more activities which previously I would not have been able to because of work commitments. I was part of the TEDxLusaka organising team, blogged at the AfDB Annual General Meeting, organised events for the Chevening Alumni Association, I began the P.W. Nawa Jobs Report and perhaps most importantly I began to volunteer at church once again and joined a small group.

 

In 2016, I have met some incredible people who have inspired, motivated, blessed and changed my perspective on life. I began this year with a focus of starting a business so that I could be rich, and perhaps be on the cover of Forbes magazine. Through my interactions with amazing people, the feedback I have gotten from people who have read my book or deeper reflection on what really matters by focus is now shifting from the riches to the impact I can make in people’s lives. If I have the capacity within me to help someone, make a difference in someone’s life, then why shouldn’t I?

 

I have had both support and questions from family and friends throughout this year based on the decision I have made. Many have told me straight in my face, “You are wasting time, go and get a job.” But when I ask them why, the response is, “Just get a job.” Many people even gave me a timeline when this foray of mine would come to an end. Some said February, others said March, and some said when I got broke. Trust me each word was a dent in my armour of optimism. One thing that I have come to confirm, is that I do not care much about what people think of the decisions I make. I have learnt to take advice and discard most of it as soon as it is given. The precious gems of advice, I have kept. This advice has been from people who have not questioned why I am doing what I am doing but rather how can I go further with their help.

 

Other friends who are working have shared their desires to quit their jobs and some have asked how they can do it. I almost tell them all the same thing, “Do not quit.” There is no blue print for the best time to quit your job or when to try out something different and new. Your “What If” has to be strong enough that it cannot, and it refuses to be ignored. It hounds you every day and night that you get no rest. Then when you come to peace with the fact that you could possibly be making the biggest mistake of your life and you are ready to face everything that comes with that decision, maybe then you are ready to quit.

 

My circumstances and good fortune will not fall the same way for everyone. I have learnt many lessons in this year, none is more important than to be ready for opportunities that present themselves. I should not deny myself an opportunity because I feel unqualified, inadequate or afraid; I should at least give others the opportunity to reject me. I did not embark on this journey to prove something to anyone; I wanted to answer one question in my life. “What if…?” If I choose to find a job today or tomorrow, I will not ever have to wonder what would happen if chose to take 12 months to do what I love. All I will have to do is look at 2016, and tell myself that is what can happen. When 2016, finally comes to an end, I will raise a glass and toast, “Cheers to the year of the risk taker, shall we do this again next year?”

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Why Does Scaling Up A Business Matter?

Sometime in June, I had the opportunity to visit the United States of America (USA) under the Mandela Washington Fellowship programme. I went under the Business and Entrepreneurship track and I was in Cambridge, Massachusetts. Throughout my interactions with business owners, professors and entrepreneurs each time I explained my publishing business to them, I would receive a similar response. How do you scale this up? I often mumbled through an unconvincing response.

                       

I began to gather the notion that in America, unless a business can be scaled up then it is not a business worth investing in. I got where they were coming from with the successes of AirBnB, Uber, Facebook and many other businesses. Scaling up meant can it go beyond the town or country in which the business exists? Can someone in India, Mexico or Burundi use the service or whatever product you have created? It also implies that can the expansion take place without the hurdle of having to build large scale infrastructure. This has often meant that can my business take advantage of technology to grow. For investors who want a return on their investment as soon as possible scalability of a business matters. An investor should be able to see the growth trajectory and in most cases an exit plan too. If any of the two are missing the less attractive the investment.

 

Since that trip I have been struggling with that one question, “How do I scale up my business?” I have gone to bed thinking about this question and it has crept up like an ugly nightmare every time I try to forget it. I have rattled my brain, had brainstorming sessions with me, myself and I, and gone to the internet for inspiration. But I have come out with close to nothing each time. This exhausting endeavour to somehow prove that my business can be beneficial for someone in Spain or Algeria has not borne any tangible fruits. And this past week someone reiterated my concerns when I explained my business to them. They said they did not see how it would grow beyond a certain ceiling. It was at that moment that I said, “To Hell with it,” (well I said it to myself actually). It was then that I had to face the hard cold truth.

 

It suddenly dawned on me that I did not start my current business with the goal of going global. I did not start Butali House to solve problems for writers in other countries; I came up with it to solve the problems Zambian writers faced. It was the foundation upon which the business was built; therefore, I was trying to build a skyscraper on a foundation meant for a one storey building. In this vein, it was absolutely fine to accept that my business in its current state was not scalable. This means that if I am to look for investors I would have to offer them more than the promise of scaling up the business. 

 

I have decided that rather than grappling with the question of whether the business is scalable or not, I should be concerned with whether it is profitable or not.  I should worry about how I can add other revenue streams to the current existing one. Not every business is meant to be a billion dollar company others are just meant to niche businesses that cater to a select group of customers. Perhaps in this business journey I will come up with that idea that I can call a scalable business opportunity until then having a non-scalable business is fine.

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So, How Is Business?

There was a time in my life whenever I met a friend or acquaintance at a mall or at some merry function like a wedding, we would exchange customary pleasantries, "How are you?" It would then be followed by the next question, "How is work?" I would go into this monologue of the stress, exhaustion and the typical desire for greener pastures. I haven't been in formal employment for two years now, yet it feels like ages ago. Today, when I meet a friend after our customary pleasantries the next question is not "How is work?" but "How is business?" For a few seconds I am stuck searching for the appropriate response.

 

Quite frankly, I do not know how to respond to this question because in those few seconds after the question, I ask myself half a dozen questions. What part do they want to know? The money part, the marketing part, the growth part, the part that I wonder if it will succeed, the part I want to give up, or admit I do not know what I am doing. But those are not the replies I give. I probably say, "It is FINE."

 

"It is FINE," is such a vague response because sometimes I wonder does the other person really want to know how bad business is. If I tell them they will go on and remind me that I made a mistake to leave formal employment. I should consider going back and do this business thing on the side (making it sound like a hobby). They will tell me what business venture they are planning, plots they are buying, vacations they are taking and all this sustained from their job. I fear they will give me all the statistics of how bad the economic situation is with the high inflation, high interest rates, low purchasing power, loadshedding and every other business calamity. As if that is not enough they will attempt to explain the dynamics of the business I am in and arrive at the conclusion it is hard. Then they will move to suggest places where I could consider applying for a job with the academic qualifications and work experience I have. But perhaps what I fear most is that by saying how business really is I will convince myself that maybe just maybe I made a MISTAKE.  

 

I have read books and articles, watched documentaries and heard people speak about their business pitfalls and hurdles. The difference between them and I is I know that whatever book I read or documentary I watch,  I know it eventually leads to a happy ending. I do not know how my book will end;  the chapters are still being written. Yes, there are days when I wonder where the money will come from, or when a client will call. There are mornings I wake up overwhelmed by the bills to pay, a broken down car or no health insurance. Then you get that flicker of hope that maybe I did not make a bad decision when I win some prize, I receive a thank you email, or the sheer belief that it will all be fine.  

 

So, when someone asks me, "How is business?" I want to say do you have thirty minutes or an hour, I explain to you how business is. I have just sorted out our accounting and the business model but now I have to sort out the marketing and branding. The branding I am absolutely clueless about so I am going to research and read all about it for the next week. A client who promised to come have their book edited hasn't called me for two weeks. I constantly check the exchange rates fearing that they will go crazy once again. My car needs a new paint job and the brakes are squeaking.  Can I tell you about the times I go to bed past 1 am just finishing off the business plan? My friend does not have time to listen to all this. In then end, all I do is smile and respond, "Business is fine."

 

 

 

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Turning Talent into Employment Opportunities

One of the reasons parents pressure their children to go to school and concentrate on their studies is because of the perception that a good education will get them a job later. However, the dilemma is that with more people graduating from high and tertiary school it is presenting a problem for governments. There are not enough jobs available to assimilate the millions of graduates offloaded on Africa's labour market annually. According to the United Nations there are an estimated 200 million people aged between 15 and 24 in Africa. These are individuals who are energetic, creative and make up a significant labour force. Governments have recognised that they have limited capacity to create jobs for millions of unemployed youth. Many of the governments have begun to push and encourage entrepreneurship programmes by providing general skills training and access to finance.

 

Entrepreneurship has been seen as the panacea to the youth unemployment challenges the continent is facing. However, each country faces different challenges such as the cost of business, inadequate electricity, transport and distribution challenges, high interest rates and general technical skills. Very often when African governments speak of entrepreneurship the focus is on agriculture which in countries like Zambia over 70% of the labour force is the agricultural sector. Other focus areas have included tourism, mining and construction. Even though governments are attempting to solve some of the challenges mentioned by deliberate policy action, there is one aspect that is often ignored. Governments need to establish mechanisms for the identification and development of individual talent and how it can fit into the broader spectrum of employment creation. The plethora of talent on the continent is diverse, but its economic potential has been largely unexploited.  The talent in the scope of this piece is referencing sports and creative talent.

Unlike in developed countries where talent whether in sport or the creative space are seen as industries in Africa they are still largely considered as hobbies and recreational activities. For example, Select USA says that the U.S. film industry posted US$29 billion in revenue in 2015.  The lack of support for the development of talent is one that stems from the household level and it ultimately translates at government level. Anything that is seen to shift children's attention from academics is not viewed as investment. This results in a jobs funnel where you have hundreds of thousands of school graduates competing for the few formal jobs, instead of a situation where an individual's talent can be leveraged to create their own employment. African governments need to start harnessing their country's talent as a means of chipping away at the unemployment Goliath. This can be done in a number of ways:-

Talent Identification and Development

Talent identification can be done in collaboration with schools. According children an opportunity to participate in as many activities as they can while they are young can be used to identify talent. As a child grows older it can be expected that they will gravitate towards a talent that they connect the most with. Teachers and parents have a critical role to play in this process as they are the adults in most contact with the children during this formative period. When the talent is identified it is important to develop it. This is where deliberate measures can be taken to introduce talent development programmes. The development programmes should not just be about improving the skills of the individuals but also how they can generate income from them.

Create Opportunities

The frustrating part about most youth who partake in sports or are creative in nature are that there are not enough opportunities for them to showcase their talents. Both government and the private sector can play a part by creating opportunities for the youth with talent, by introducing policies to utilise local talent for its activities and programmes as much as possible. In the event that the expertise is not available efforts must be made to build the capacity among the youth. Once these opportunities are created the youth must be made aware of them and also trained on how to identify opportunities. A person cannot seize an opportunity that they are not aware of.

 

Domino Effect

The growth of one industry in the sports or creative sphere results in the development of other supporting industries. For example, music industry creates jobs for make-up artists, photographers, event organisers, advertisers, instrument players and the domino effect continues. This creates jobs in sectors that previously did not exist. It further results in fewer youth competing for the same pie but are seeking a totally different pie altogether. In terms of supporting creative and sports industries there needs to be diversity. In the initial stages it is fine to support limited industries through finances and policy measures but the overall plan should be to diversify. It is through this diversification that more job opportunities will be created.

 

Mindset Change

It will take society changing the notion that formal employment is the pinnacle of career achievement. Efforts towards the changing beliefs that people who do not find formal employment or voluntarily choose to take alternative career paths are failures need to be made. Societal pressure fostered by family and friends cannot be under estimated in youth recognising that they have alternatives to employment. This is important because as long as youth still see formal employment as the ultimate goal, they close themselves out to an endless world of possibility that can come from using their talents. This is where role models can play a pivotal role by providing youth in the same space an example, inspiration and also a road map of what can be achieved with an individual's talent.

 

There are already millions of unemployed youth and millions more expected to join the statistics in the coming years. African governments need to be more proactive in the quest to create jobs for their citizens. This means using both the conventional methods of civil service recruitment but also the push of the entrepreneurship agenda. Further, encouraging youth to view their talents not only has hobbies but also job creation opportunities will be fundamental. Like the growth of every other industry on the continent it will need investment and support from all stakeholders from the household level to government level for it to succeed.

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Ideas Grow Wings

Have you ever thought of something that would make a brilliant business idea? An idea that your gut feeling tells you that it can make you money and probably a lot of it. You get the rush of excitement and you cannot wait to get working on it. This rush lasts for a few minutes before you begin to hear the voices. The voices that tell you that it cannot succeed, it is too capital intensive, you do not have the time or what if you fail? Then you pack the idea and convince yourself that you will return to it when you are ready. Days, months or even years pass without getting back to the idea, then one day you see someone executing the very idea you had thought about.

Image courtesy of shutterstock

Image courtesy of shutterstock

 

Yes, you thought that the idea was unique and had been dropped from the heavens into your mind. Yet the discovery that someone else is doing what you had thought almost feels like you have been robbed. It is especially more painful if you kept it a secret and you wonder how they got into to mind to snatch it out. This is a familiar scene that has happened to me far to often. I would get business ideas in one of my Eureka moments and think what an amazing brain I have that churns out such ideas. For one reason or another, however, I would come up with 99 reasons why it would not succeed or why I should not follow through with the idea. Almost as if just to torture me, I always remember the business ideas vividly once I see someone doing what I had hoped I would do.

 

The reality is that most of the business ideas we come up with may have already crossed someone else's mind already. It is just a matter of who is bold and courageous enough to step out and pursue them. If there is one thing that I have learnt in my business adventures, there is rarely a perfect time to turn an idea into a business. The stars will not align, your heart will never be doubt free and a voice from heaven will not come. On the other hand, you may need to throw yourself and hope that the opportunity will hold you tight. Ideas get trapped and need to be released. How far they go and take us with them is something we cannot know in advance.

 

Since I have experienced a number of my ideas being fulfilled by another person. I have had to cry on lost opportunities and question myself, why I dared to doubt. I have now trained myself not to think too much on an idea. I should not waste so much time in writing the business proposal, getting the numbers airtight or until I have found the sufficient financial resources. These days my motto is, START. Someone once said something that has resonated with me. He said, "When starting a business, the goal is to fail fast. So that you can learn what works and what does not." This statement is so true because unless an idea is tested by it being birthed into existence, we shall never know its real potential.  

 

So when those ideas do drop into your mind. Seize them and discard those that you think cannot work. For the good ideas do not hold on to them for too long, because they are floating above someone else's head. They might just be courageous enough to quiet those voices of fear, doubt and anxiety and actually act on their ideas. It is a gamble, your idea may fail dismally or it soar you up to the mountains of success. Remember when you fail you become experienced to teach someone else.

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Why Don't Mines & SMEs Do More Business Together?

Zambia is a country whose economy is still heavily dependent on the copper mining industry. Between 2010-2014 on average the copper industry accounted for 66 percent of total exports, 11 percent contribution towards GDP, 16 percent revenue collected from the mines in terms of taxes and royalties and it also accounts for 21 percent formal private sector employment in the country. It is evident that the mines play a critical role in the economy of Zambia. The large mines in the country are operated by multinational corporations (MNCs). Due to the fact that most mines are owned by MNCs it adds another dimension and complexity to the interaction between the mines and the SMEs.

Image courtesy of Shutterstock

 

SMEs make-up the economic backbone of most developing countries and Zambia is no exception. They are a source of employment, revenue, contribute towards poverty reduction and economic development. Government has recognised that linkages between the mines and SMEs can yield benefits for the country. The question many people ask is that why aren't the perceived benefits coming to fruition?

 

Where is the Problem?

Governments usually strengthen and implement their development programmes through policies. Zambia uses policy in attempting to steer sectors in the direction that they should go in line with their objectives. This has been witnessed in the transport, agricultural, tourism and mining sectors. The number of policies in relation to SMEs and the mines include the Mining Resources Development Policy (MRDP), the Micro, Small and Medium Enterprise Development Policy (MSMEDP), National Policy on Science and Technology (NPST) and the Investment Policy.

 

The MRDP and MSMEDP do mention that linkage programmes should be promoted. It is the implementation of the set policies that are questionable. The country does not appear to have the capacity or the will to carry out the implementation of the policies. The Zambian government is perhaps limited in its policy influence, by prevailing copper prices. Higher copper prices give the government better bargaining power while low prices have the reverse effect. During the economic crisis of 2008, between July and December the copper price dropped from $4.00 per pound to approximately $1.00 per pound. This forced many of the copper mines in the country to trim down their operations. One of Zambia's oldest mine Mopani Copper Mine was put under 'care and maintenance'. This led to mining business opportunities disappearing and SME contracts being suspended.

 

It is estimated that in 2012 the largest four mining companies purchased goods and services worth US$3 billion. While it is considered that most services (transportation, security, catering, waste disposal, machinery and vehicle maintenance, and electrical installation) are procured from Zambia on the other hand manufactured products are not. About 95% of manufactured goods procured by the mining companies are not produced in Zambia. Unlike the service sector, SMEs in the manufacturing sector face greater constraints to supply the mines.

 

There are a number of challenges that prevent SMEs in the manufacturing sector from doing more business with mines. The manufacturing sector in Zambia is lacking in both soft and hard skills, which are critical success factors. The skills that are available within the SMEs are limited because they do not have the practical experience with the latest technology in the mining sector. Majority of SMEs in Zambia are still utilising old and outdated equipment because they do not have the financial resources to upgrade. The quality of products which encompasses performance, reliability, durability, conformity to agreed specification are key decision factors for procurement departments in mines. Unfortunately, not all SMEs in Zambia have the capacity to meet the set standards because it is costly and they may have to change their production operations. The capability to meet quality and other standards is essential as it can have fatal consequences if not met. The cost element for having a manufacturing presence for some products in Zambia is also not economically feasible.

 

Closely linked to capacity is the inability for the SMEs to be in a position to supply products in bulk rather than in small batches. Supplying in small batches has the potential to increase the cost for MNCs as it includes transaction costs (paper work, administration, monitoring) each time an order is placed.

 

SMEs require finance for both operational and expansion purposes. The lack of access to finance impedes local suppliers from purchasing suitable equipment, increase production; improve on the quality of manufactured products and to maintain sustainable growth. Finance for SMEs in Zambia is sourced from a number of places such as personal savings, friends and family, profits from the business, banks and microfinance institutions. Usually these some of the sources of funding come with high interest rates.

 

There does not appear to be much of a challenge for SMEs in the provision of services from doing business with the mines. It is the SMEs in the manufacturing sphere who have greater challenges to face. The main obstacles in the manufacturing sector are within skills, capacity and capabilities and finance.  SMEs need to be assisted in the areas that are deficient and the mines can assist in meeting some of them. The Zambian government needs to consider various approaches to filling in the gaps and part of this can be done through the consideration of the policies and the strong implementation of these policies. 

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Who Wins & Loses in Network Marketing?

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Who Wins & Loses in Network Marketing?

It is a business that promises increased income, freedom and a happy life, a reality that many dream of but find it hard to attain. This business has caught on like a wave in Zambia, with companies opening their doors and inviting people to the prospects of this good life. The business is Multi-Level Marketing (MLM) or popularly known as network marketing. Despite its elaborate promises, there are some that believe that there is more beneath the business than is currently presented.

Image courtesy of Shutterstock

 

Most people are more familiar with the companies that are involved in network marketing than the term itself. Edmark, Forever Living, Amway, Avon and Angel Lifestyle are among the popular network companies that have entered the Zambian market. Network marketing can be described as the supposed income opportunity, in which persons are recruited and incentivised to buy products and to recruit others in endless chains of recruits, all of whom must buy products and/or recruit others in order to qualify for commissions and to advance upward through multiple levels.

 

For a country where over 60% of its population live in poverty, some people will always be looking for ways to escape the grip of poverty or find other sources of income to supplement the ones they get from their jobs. This is what makes network marketing very appealing to many people because it not only offers a source of income but it can be done according to an individual's schedule. In as much as network marketing has many supporters, there are many who have questioned its fundamentals.

 

The Pitch

Most network marketing companies present themselves as direct sales opportunities. Some scholars have said that network marketing is not your typical direct sales companies. Where traditional direct sales companies will give you their products to sell on their behalf network marketing companies require you to purchase the inventory. Therefore, whether or not you manage to the sell the products the company would have already profited from the purchase of their product. This has led to some people having inventory that they are unable to sell. One of the reasons for this is the business model which also is one identified flaw.

 

Business Model

The model survives on an endless stream of recruitment of new people to sell the products. Likewise the recruited individuals are empowered and incentivised to recruit other participants, without regard to market saturation. In typical business models there is the acknowledgement of the laws of supply and demand which network marketing seems to ignore. As the constant recruitment continues it would soon lead to saturation where there are no more people to recruit. Individuals who sign up with the companies have to recruit new sellers are a means advancing up the multiple levels and this also comes with commissions. The person who recruits an individual partakes of the commissions that will follow in the event that the individuals do their own recruitment too. The commissions are not continual but dependant on the recruit continuing to place orders and remain at an active status in the company. Hence, this is the reason why network marketing has often been regard as a pyramid scheme.

 

Products

The products that are typical of network marketing companies are generally pills, beverages, and lotions. The pills and beverages will purport to have some health benefits as a result of a special ingredient.  The consumables will be attesting to provide multiple benefits if they are consumed regularly. Since supplements are not considered as drugs, hence, they are not regulated by the pharmaceutical regulatory body. The products are designed in such a way that it would generate repeat business. The products are also supposed to be relatively easy to sell. The prices for these products are usually high priced and require to be purchased either from the company or the person who recruited them into the programme.

 

Success Rates

For all that network marketing promises to be there is very little show for it. There are very few people who have actually made something out of it. These are the individuals who make up the top 1% who have made it to the top. Unfortunately, for the majority who are at the bottom levels network marketing is still a struggle. There have been reports of people who have invested their savings in the network marketing companies' products which they are unable to sell. Network marketing will usually blame the lack of success of people in their programme due to poor marketing skills and will attempt to sell other programmes to improve this. 

 

Network marketing will have its praise-singers and its doomsayers. There those who support it and those that are against, this makes it difficult for people who are contemplating to join. Of course there are success stories to show for network marketing and there have been failures. The failures definitely far outweigh the success stories. This is not a business you jump into because of the promises made, but it requires sufficient market research and looking beyond the gold being dangled. 

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