My business made Sh10m, and then it all went wrong

dmjj7bs6etcpo59003049a4596 My business made Sh10m, and then it all went wrong

Kyalo Munyao, 30, has entrepreneurship blood running through his veins. He didn’t enjoy school much, but he still graduated university. Kyalo had always felt that the 9am-5pm grind was not for him. In campus, he sold fish, T-shirts and DVDs to earn an income. After graduation, the most obvious move was go into business. He seemed to have a knack for branding, designs and innovation, so that’s what he focused on.

At the age of 23, Kyalo started a brand marketing company, Silver Star Agencies. He was young and had loads of energy to dedicate to his business and in under three years, it had an annual turnover of more than Sh10 million. But that’s when things started to go south. Kyalo walks us through his dark years.

Where did the name Silver Star come from?

Star represents the vision – like stars in the sky. The vision may shift in season, but it is there all the same. Silver is to remind me that there is always room to go for gold. I believe businesses stagnate when we stop reaching for more.

Is that what happened in your business when things went wrong?

Actually, no. For me it was the opposite. I was young, I was making money and it seemed so easy that I never really stopped to put systems in place to sustain this growth. My challenge was growing too fast.

In terms of clients, staff or branches?

I would say clients. We took on far more than we could handle. The old clients didn’t feel like they had our complete attention so they started taking their business elsewhere. The new clients didn’t get the quality they expected so they didn’t come back.

How long did it take you to realise your company was in trouble?

I think about six months. It hit me when I consistently failed to break even. I needed to make approximately Sh270,000 a month and I was struggling to do that. This had never happened before. Not in a long time.

Let’s talk numbers. Was the Sh270,000 operational expenses?

The biggest chunk was going towards servicing two loans that I had taken out; one for a company delivery pick-up truck and the other for a printing machine. I realise now that I jumped the gun. When I took the loans, I had money sitting in the bank that wasn’t doing anything. I guess I got the wrong advice from my peers or by trying to be like other bigger brand marketing companies, so I over-extended myself.

How did you handle company finances in general?

That was another huge mistake. I didn’t have an accountant or a finance department. I mixed my personal money with my business income, so I never knew precisely how much we were making in profit or how much I had spent on personal needs. Everything was up in the air.

What would you say was your rock bottom?

The first time was when the bank sent auctioneers. I was on my way to supply banners for a job I had completed. I had stopped for fuel when this car swung in front of me, blocking my way. Four men casually came out of the car. I had no idea what was going on until they handed me a letter. The bank had sent them for my pick-up. I didn’t want a fight, so I took out my banners, took the other stuff out of the car and gave them the keys. I had to call a friend to come and rescue me.

How did you handle things with the bank after that?

I managed to resume payments for the car and for the printer. But a few months later, I defaulted again. The second time I defaulted, I drove my pick-up to the auctioneers myself. By the time the bank called to tell me they would send auctioneers, I cheekily told them to check their car lot; my pick-up was already there. Now I can laugh about it.

That was brazen …

You learn to roll with the punches. After I defaulted a few more times, I sold the pick-up. I sold the printing machine too because it had broken down and I needed about Sh450,000 to fix it, which I didn’t have.

How long did this tough period last?

I’d say two years – two very dark years. I don’t think I’ve ever been more lonely. I lost most of my friends. Some because I owed them money I couldn’t repay, others because I couldn’t maintain the lifestyle they were living anymore – eating out, drinking, clubbing, road trips – so we drifted.

How did you turn things around?

I think from the moment I accepted that my status had changed and my company was in trouble, I took stock of the damage and I started to rebuild. I talked to the suppliers I owed money and made deals with them. I went out and got back some of the clients we had lost. I was very honest and told them what had gone wrong. Many of them decided to come back.

Are you out of the red?

Yes. I mean, we don’t have old debts. I paid those off. The debts we have are the normal operating debts for any company.

What’s your projected turnover this year?

About Sh10 million – right where I was before things went south, except this time round, I am more mature and clearer on what I am doing. I believe Silver Star Agencies is on the right path.

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