Quite often, people tend to wait for that big money before they start to invest. This is often due to the misplaced perception that one needs big sums of money to invest. Whereas it is true that a big sum of money is likely to deliver more significant/substantial/visible returns over a shorter period of time, we need not forget the popular saying haba haba hujaza kibaba. Besides, there are significant advantages that accrue to small investments. Below are just three of the many merits of starting small:
1. Learning curve: Taking baby steps and growing gradually enables you to learn as you move forward. As you take actions or engage in activities you gain experience and perfect your act. With time, you know what/who to avoid, who to network with and who to do business with. Once you succeed in managing a small investment involving small amounts of money, your chances of success in the management of medium-large investments involving millions of currency units significantly improve.
2. Low risk: Starting small means you are risking a relatively small amount of money such that in case you lose your investment, the event will not be disastrous to your existence. Some people say that one should not risk beyond that which he or she is ready to lose (please draw your own conclusion). However, the fear of failure should not hold us back from the pursuit of success. Some people say, “no effort, no rewards” or “no risk no fun”. If you talk to most honest successful business persons, they will tell you that they have failed a number of times but they did not give up. So even if you lose the small money, you shall have gain something known as EXPERIENCE.
3. Flexibility: Small investments or business come with the advantage of being more capable of responding to changing market conditions faster than big ones. To thoroughly understand a market, extensive market research is necessary and this can cost a lot of money. Even after that market research, the constantly changing market conditions mean that many of the results from the market research have limited validity. Small investments can be modified at minimal costs as and when market conditions dictate.
I am aware that depending on the type of investment one dreams of/plans for (big or small), there is likely to be a minimum threshold of capital necessary for the investment to deliver the expected results over the stipulated time period (treasury bills or shares are examples). However, there are numerous other investment options that one can engage in with very small amounts of money. I exhort you to start small (even the longest journey begins with a single step) and benefit from the above merits (among others) depending on your ability.
At the macro level, the origins of solutions to many of the pressing challenges especially in developing economies will have their roots in micro-investments (including micro, small and medium enterprises) and chamas (self help groups, savings groups, investment groups, table banking or SACCOs). The mainstream commercial banks play a critical role in financing growth but this often comes at a later stage (once the jua kalis grow and accumulate assets useable as collateral). Those who have approached mainstream commercial banks for seed capital are likely to concur on this.
Dr. Leonard Mwamba (MSME expert).
E-Mail: Leonard.mwamba@inter-currency.com
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