BANKS’ SUCCESS SECRET #2- CALCULUS; Small, But Consistent Incrementals.

For those who encountered business mathematics in college and university, the word Calculus
inspired fear for many and intrigue for a few. If you are an SME or aspire to be one, its time you made peace with Calculus!
Listen, you are in fact late! The banks have already made peace with calculus! In my layman terms, Calculus is the study of how
infinitely small phenomena, events, numbers increase consistently to create humongous effects over time. Big things are made
from infinitely small things and that, its easier to work upward from small things. Calculus is nature at her best. The mighty
Mukusi Tree starts from a tiny seed.
The banks charge you 2n for each ATM withdrawal. To the financially uninitiated, this is too small charge a to even bother
about. Yet over time and after millions of ATM withdrawals, the bank is a millionaire. Calculus!- Small mass quantums over a
long term view of business.
TAKE AWAYS FOR SMEs
1. Dont start BIG, Dont be a Tenderprenuer- So, whilst everyone looks to that big government contract which once given propels
you to fame, and most of the time to doom, the Post Newspaper is busy making small ZMW3.00 every sale for the last 23 years!
Zambeef is on full speed selling beef from the back of a Landrover 110 and not by a big Government Contract to supply meat to
the entire Defence Forces! Get such deals if you can. Except that such opportunities are not replicable and if a model cannot be
replicated you will not graduate from being SME. Don’t despise businesses of small beginnings.
2. Target the mass-market. Can you sell groceries? Can you run a Barber Shop like my good old friend and fellow entrepreneurial
pilgrim? Can you sell sweets and plastic bags in Kamwala? Selling tomatoes and chickens at Soweto in the darkness of dawn?
The Banks make their fortunes on mass-retail banking selling and charging small “invisible” fees to the masses.
3. A small cash business. Starting your SME business on credit sales terms is unwise. Real and hard core banking is not the
lending money. The banks collect their “small” cash fees upfront from your account as you transact. In this way, they have no
extra costs of chasing up collections. Make sure that your collections are all cash and because they are small, the client will feel
embarrassed not to pay you.
4. Take a long term view. Five years ago, new banks were in deep loss waters. Now they are in profit. I have argued that the
major ailment afflicting SMEs is NOT lack of capital. It is NOT lack of education or business opportunity. It is the love of quick,
short term and easy returns. If you want the law of calculus to serve you as it has served the banks, take a longer term view. In
business like Strive Masiyiwa counsels, the short term is not 3 years, it aint 5 years. Sometimes, it can be 10 years and in some
cases 15 years.
5. Focus on one Area and be Consistent. The law of the incremental few works well with focus in one direction. Listen, I know
the meaning of flexibility. But the banks don’t switch to road construction just because Link Zambia 8000 is the buzz word in
town. They don’t abandon keeping your cash to apply for a Grade 1 Certificate at National Council for Construction so they can
be eligible for Pave Zambia 2000. They are consistent and focussed. In the immortalised words of Dr Kwame Nkrumah, “you
must face neither East nor West, you must face forward.”

Let them that have ears, hear!