Isaiah Opiyo

31 August 2010

When peace returned after the post-election turmoil in Kenya in 2008, Mr Mike Otieno, a tailor, breathed a sigh of relief for he saw a fresh beginning.

He was among hundreds of unfortunate business owners whose premises were reduced to ashes in the violence. Before the chaos broke out over presidential poll results, he run a successful tailoring business near his home in Kayole , Nairobi. He lost five sewing machines as well as material he had stocked to make clothes for a top supermarket in the city when his business went up in smoke.

He had just delivered the first supply for Christmas festivities a week earlier and had received another order for 100 more outfits for the new year. Demand was high for his products. But the violence also disrupted the supermarket's business and they stopped the order indefinitely.

With all his sewing machines and other sundries burnt in a night mob attack, Mr Otieno had to start from scratch. He opened another business in Nairobi's central business district and secured payment for his supplies from the supermarket and a loan from a local micro-finance institution to revive his business.

The entrepreneur bought new sewing machines powered by electricity, new shelves, clothing materials and employed five temporary and part-time workers to assist his three full-time employees when the business grew. His clients currently include local TV anchors and companies, especially in the telecommunication industry where fashion and exclusive designs reign.

With the continued growth of his tailoring and fashion design business, Mr Otieno who has received many invitations to attend local women's conferences and trade exhibitions from his customers has his sights set on opening his own exhibition stall in town, besides venturing into the export business.

From the ordeal of the designer who is now eyeing the export market, we can see that when a crisis knocks, it brings with it two things; a challenge to adjust to the change and an opportunity for expansion. Usually in our daily operations, we face many crises ranging from job and business losses.

Sometimes we lose a lot of money and even all our investments. But because of the trauma, confusion and even disruption that come with it, many people are not able to recover or pick up the pieces to move on.

During the recent global recession, many entrepreneurs lost their capital as their businesses collapsed, others lost their jobs as they were retrenched while many businesspeople counted huge losses from their investments as the bearish condition marred the stock market.

But walking out of crises and moving on with life usually requires strength and determination that stretches beyond the agony of the initial loss. The first challenge is how to adjust to the change. This is where many people are grounded and lose the energy to move on with their operations.

For instance, in a case where one loses a job through retrenchment, adjusting to daily life without a source of income is daunting. Inability or unwillingness to adjust to the change often see many out-of-work people, especially retrenchees, blow away their savings as their expenditure remains the same.

They end up spending all their savings or "handshakes" without any source of income. Adjusting to the change would require you to cut your expenditure by moving to a house with affordable rent and doing away with unnecessary expenses.

To begin, you can stash away some money from your retrenchment package, an amount equivalent to an emergency fund; that is three to six times your monthly income from your daily operations while looking for another job or setting up a business venture.

Share devaluation

But this only applies when you have no such fund in place and your "handshake" or retirement package cannot enable you to stash away such money in an emergency fund and still be left with some cash for capital to start a business.

Even at the stock exchange, many investors who are unable to adjust to the bearish condition that leads to devaluation of the shares are often quick to cash their shares to avoid losses. This only attracts erosion of capital. The next challenge is how to change the crises into opportunity that is viable and sustainable.

Even if you are a retrenchee who only has a meagre handshake to survive on, there is still opportunity. You can start a business venture using the windfall as your capital and generate more than your previous income. The profits generated from the business can help to augment your daily expenses, afford you some savings and even earn you more returns to plough back to strengthen the business capital.

Exploit opportunity

Conversely, the low prices that characterise a bearish market still pose a good opportunity to undertake further investments due to enhanced affordability of the stocks in the market. This can also help in reducing the cost of investment per share.

To overcome a crisis, its advisable to first adjust to the change then exploit the opportunity that comes with the crisis as in the case of Mr Otieno whose reveals that the crisis, though uncalled for, brought with it an array of opportunity that led to his business recovery and growth.