This archive report was first published on 8 January 2020.
When taking a business loan, entrepreneurs must think long-term and consider whether their business is sustainable enough to repay the loan and grow from it.
According to Suzie Wokabi, founder of SuzieBeauty, 'Always think long term. Do not just take loans for immediate needs with little impact on future needs.'
Wokabi emphasizes the importance of ensuring that a business can stand on its own two feet after securing a loan, rather than relying solely on borrowed funds.
Another crucial factor to consider is ownership and decision-making. Wandia Gichuru, CEO of Vivo Woman, notes that 'if you are not the sole owner and/or you are not the main decision maker, the risk burden is multiplied many more times.'
Gichuru advocates for shared burden, shared commitment, and shared benefit, highlighting the importance of having a clear understanding of ownership and decision-making structures within a business.
Manyara Kirago, founder of Financial Counseling, stresses the need to carefully evaluate the return on investment (ROI) on borrowed funds. 'If you are, for instance, paying 20 percent interest on the loan, the return on investment must be higher than that, otherwise you will lose.'
Kirago advises entrepreneurs to put in significant work in their business and shop for the lowest interest loans to maximize their chances of success.
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