Invest in learning to turn ideas into cash

In “Making your money work for you,” we introduced the baby steps to wealth creation.

Translation of the vision into goals, and eventually into physical equivalents, is a tough process that requires determination and inspiration.

One needs to invest in a steep learning process to turn ideas into working formulas and cash.

For example, investing in real estate, whether for profit through sales, rent or capital gain, requires deep insight into property value-drivers in order to make more money.

The starting point then is to build the requisite knowledge and convert it into a skill through practical application.

Knowledge on value-drivers such as soil type, land elevation and drainage, infrastructure availability, creative design aspects suitable for the location, and various markets, are personal level skills developed hands-on.

In the emerging areas around Nairobi, for instance, buy-and-subdivide schemes are popular, but do not necessarily make money for investors who are unable to link unique location aspects, value addition through infrastructure, and design to attract buyers that are willing to pay more.

On the other hand, viable businesses have arguably the largest source of cash flow and are the best to invest in.

They are the magic path out of poverty. Yet people who put money in businesses while pursuing “me-too” strategies only increase competition before collapsing or selling their investments to those who can see soft money hidden in their ideas.

Take a restaurant business. It is not unusual for restaurants to start on a high note in Nairobi only to run dry in under six months.

Owners of such businesses usually copy somebody else’s idea, with minor changes on the mistakes and adoption of what worked well in the prior prototype — something virtually everybody can do.

Those watching them, too, copy their successes, and improve on their mistakes in areas such as poor service.

They make a little hot money before the slumber. To make real money, risk your ego and, in exchange, acquire wealth-hidden knowledge and skills.

Patrick Wameyo, financial literacy educator and coach.