In this presentation, we will construct and analyze a contribution margin income statement. Last time, we took a look at a normal type of income statement. The type of income statement we would see in financial accounting, the types of groupings that we would see in financial accounting we broke. Support accounting instruction by clicking the link below, giving you a free membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Look it out and constructed it from a trial balance. We want to keep this in mind when we consider a contribution margin type of income statement because we want to compare and contrast against it. Remember that this income statement, the normal income statement is what we would consider in financial accounting, what we would consider in a normal generally accepted accounting type principles or normal type of accounting, a cruel accounting structure. However, we want to break that out into a different type of format, one we won't be used to if we've been working with financial accounting because this is a managerial accounting tool, which means it's not required for external users as is the normal type of income statement but can be useful and therefore we need to analyze whether or not the added information would be useful or benefit to us for decision making. And what we're going to do then is take this same information, we'll construct it from the same trial balance, we'll get to the same type of net income but instead of breaking this information out by category, what we're using this information for or what these expenses are for by grouping of their function to help us to get the goal of generation of revenue, we're going to be breaking them out by behavior. How they behave, that makes it a lot easier for us to do projections into the future. So keep in mind the grouping here by function cost a good soul, that's what it is inventory that we sold selling and administrative expenses selling that's what it's doing with the sales type of items, the administrative that is what it's doing. Now we're going to move to the contribution margin income statement and we'll talk about it broken out not by what we're doing but once again by the behavior. So we have the revenue, it's still going to be starting off at the top line, we have the revenue and then we're going to have the variable costs. This is not something that you'll see on a normal income statement, we don't have variable costs broken out on an income statement. It is a managerial accounting type of concept that we will be using for projections and it means of course that we're looking for those expenses, we're taking all of these expenses. We're going to break them out to variable or fixed and we're going to be very specific on that. We want to make it variable fixed any other costs that behave differently, we're going to try to break them out. We will break them out in one in some format into variable or fixed and that means that we're going to have to do some estimates to do that but for now we're going to make it a clean break. We're going to say everything fits into variable or fixed costs and the variable costs will change with the level of production in a standard format. So if I go up by fixed amount for each level of production down by fixed amount for each level or increase or decrease of production and so we're going to say that the direct materials then are going to be part of the variable costs. They will increase and decrease with proportion to the level of production that we have the direct materials here and then we're going to include the direct wages so the direct wages are also things that we're going to say here increasing and decreasing with an increase and decrease with the level of the production. Now don't get confused here because you might think well this looks a lot like the normal financial statement with these two items up top kind of towards the top in what we would call before cost of goods sold. This isn't cost of goods sold they happen to be in the same area because those are the things that are in production and therefore change with relation to changes in the amount of production. The next item then we're going to have here is the sales commission and the sales commission is not something that we're used to seeing up here on the top of an income statement because it has nothing to do with cost of goods sold it usually goes into selling and administrative but this time it's variable because it's sales commission it's commission meaning it's going to be changing as we increase or decrease the level of production and sales and therefore it's going to be up here in the variable costs section odd because it's not grouped by what it does for is grouped by what the function of the cost is going to be and again why would we do this we'll see this a lot more clearly when we start to do projections into the future but we'll see that by grouping these by behavior it will be beneficial to us for projection purposes that'll give us the total variable costs which is going to be the direct materials the direct wages and the sales commission in this case giving us the break out of the 730 thousand eight hundred seven thirty eight hundred then we're gonna have the contribution margin again this is this is something that will be familiar with once we start to look at this analysis not something we've seen in financial accounting it's not on normal financial accounting because typically around this area we would expect to see something called gross profit possibly not the same thing not even related totally different things because we're breaking this out in a different format does they both do start in the same area sales versus revenue here but in a normal income statement we would then have the cost of goods sold here we have the variable costs revenue minus the variable costs gives us the contribution margin and the next item we're gonna have then are the fixed costs so fixed costs remember are those costs that do not change with the level of production so the normal type of fixed costs we're gonna have the most common one I would say is the rent the rent is going to be fixed it is what it is we can produce a lot more we can produce a lot less we're gonna have the same amount of rent typically up to at least a certain level that we might have to increase or decrease the rent but for the most part same amount of rent so the fixed costs we're gonna say here are gonna be the taxes on the factories so the taxes on the factory we're gonna say are fixed we got the maintenance on the factory we're gonna say that that's fixed for our example here we're gonna say that depreciation on the factory it's gonna be a fixed type costs lease on the factory it's gonna be a fixed cost admin gonna be fixed costs and then rent on the administration and rent on the sales office and then the total fixed cost now you might be thinking here hey this looks kind of similar to like a normal income statement because a lot of the costs we saw up here in the normal income statement are matching over here not exactly but a lot of the costs down here kind of match up not exactly that we saw in the normal type of income statement why is that well it's because basically the variable costs tend to be things that change with the level of production and on a normal income statement what would be up top is gonna be the cost of goods sold the product the grouping of what we do for production but they're not the same categories the grouping on the normal income statement is cost of goods sold we're grouping by those things that we're using to put into the cost of good sold the things that would differ there like the things that have fixed costs often time would be like the overhead would be included in cost of goods sold and over here it wouldn't be because it would be down here so things like the rent on the factory and stuff like that are our fixed costs so note they're not going to be the same thing even though we saw these two items up top direct materials and direct wages in the variable costs on the contribution margin in a similar place that we would see under cost of goods sold on the normal kind of income statement here they're here for different reasons by behavior and down here we have a similar characteristic in that administrative salaries are administrative costs and sales costs that we see in a normal income statement are usually fixed and therefore we see them here as well on this bottom part not because they're their operating expenses types of grouping or selling and administrative grouping but because they happen to be fixed and therefore on the bottom part of this contribution margin income statement in the fixed costs area so they could you might in other words see some of these costs in similar areas just in location on the income statement start to think that that means something and it does it doesn't really accept for the fact that they happen to behave in a similar fashion that lands them on the same kind of location in terms of approximate location on an income statement okay so that's going to be the total fixed costs and then we're going to have the contribution margin where we left off in the hour column minus the total fixed costs gives us the income before the income taxes then the income taxes then we end up at the same bottom line number that 72,000 seven two hundred and seventy that we ended up on in the normal type of income statement so we end up in the same place why would we do this you might look at this and say this doesn't give me a lot of information that the other type of income statement gives me because I can't give a relationship between say the gross profit and the sales and and that kind of thing but what we can do is now start to think and project forward and say well what would happen if there's changes in production level and that's what we'll get into later that's really what we can do here when we're making stuff when we're going to have changes when we things are moving when we're trying to figure out well what if we do this what if we do that a structure like this allows us to make those projections much more easily we'll start to look at the calculations that will help us do that in the future


in the morning. This is the last interview in the last segment of the day and we're going to talk about matters entrepreneurship but specifically we're going to shine the light on financing SMEs or SME financing. How do they go about it when it comes to maybe seeking for funds, funding, literally conversation about money and that's what we're going to be discussing today and also financial literacy. How do you actually become empowered financially? Are there maybe lessons that you need to have about when it comes to handling money? And how's the cash flow? How does money flow from one source to another, especially now from a banker's perspective? And joining us live in studio we have Collins Wanyoni, he's the head of enterprise banking at Stanbeck Bank. He's also had an opportunity to work with traders or let's say business owners or SME owners at Dubois and Gikomba market and he'll definitely be telling us a brief history about himself, how he went from walking at the bank. He's still walking there by the way and the bank are now working with SMEs right here in Nairobi, Kenya, generally Kenya, right. Good morning to you Collins. Good morning and thanks for having me here. You're welcome, nice to meet you. Good. Yeah so just tell us a little bit of a short story about yourself like how do you got into the banking sector to a point behind the sense you mentioned you've been there for 16 years that's almost now two decades now and now the passion for you to work with the youth specifically now especially those in the SME sector? Genetic banking was interesting. So one of my friends, I went to school at Deste University and when we graduated after studying Bachelor of Commerce, Business Administration and Accounting we visited one of my friends and the dad used to work for a bank and he'd mentioned that one of the things they used to do then is they used to be invited by banks before they graduate. So the talk was those days tamaking was literally printing your many CVs and walk door to door and pass your CVs to banks. Apparently it's time because one of the banks I passed my CV to and I got a regret letter the same day of delivering the letter. But I started off in a local bank, one of the tier one banks. I served there for four and a half years before joining Stanbick. So I'll focus on my life at Stanbick. I started off as a corporate relationship manager serving corporate customers. I then switched to business banking and business banking have won a number of hearts. So I took care of what we call international development groups which are technically not for profit organizations including diplomatic missions, churches and schools. Then shifted to SME banking. I served SME banking for four years then moved to public sector banking. Public sector is mostly working with government on the banking side and now this is my second stint running enterprise banking which is typically SME banking for Stanbick. This is my second year again. So it's like cumulatively as you call it 16. I'll probably run it off to almost 18 years in banking. That's two decades. Now still on that note having all those years of experience maybe are there things that maybe you've been pointed especially when it comes to now money because when you work at a bank now also there's so many misconceptions that anyone who works at a bank they have money 24-7. But you will tell us that later on. Now are there things that you noticed especially when it comes to now SMEs. It comes also creating opportunities for the young people especially in our country and even right now when the economy is like on a nose dive but there may be things you point you notice and you said you know I need to actually get fully masked in this sector so that we see how we can help young people. So SME runs the country. So they say about 80 percent of employment in Kenya is provided by SMEs. So basically then the SMEs the engine that drives the country. So when you're supporting SMEs you're literally supporting the country. And if you also look at the youth population which happens to be the highest population then most of them will fit into SMEs. So for me the passion around serving SME is to then see how do we grow this country. So if you look at Stambick our mantra is Kenya is our home we drive her growth and for us to drive this growth we must support SMEs adequately. When it talks about money I think there are two ways of looking at money. One is what facilitates our daily life because even in business it's the exchange of money that keeps the business going. So how you look at that money becomes the critical piece of your success. Are there characteristics of money as we get deeper into it that you know from a business perspective that we need to know like yes if you have to handle money well not just even handle keep it multiply it use it because of course we've mentioned about cash flow so it's like a chain it goes from one source to another a user a withdrawal depositor and the rest. Are there characteristics that are fixed? I think characteristics of money I'll go back to my business education days. Exactly. They say money is a store of wealth is a measure of value and is a bill of exchange. So I think those will be the three main characteristics of money that I'll think along to put across. Right and you need it like whether you like it or not you must need money. Yes. And you must have it. Is it a must? Is it a must you must have money for you to live and survive? I'll say no because they are they're still but exchange. So that you don't have to have cash exchange for every good and service. So it's not a must for you to have money. Money. You can trade off services. Like a tangible good with another tangible good. Yes. But of course that has value exchange. Right. Of course a good that has value see to Kijikona you know something else. That's true. Right. Now let's get deeper into now the SME sector for a person who doesn't know means a small and medium it could even now medium micro small medium enterprises for person who doesn't understand what they are briefly you can describe it to them so that they get a glimpse of what we are talking about before we get now to the financing part. I'll use the government structure of defining an SME. So the government classifies SMEs into three micro small and medium and it's based on two characteristics. One is turnover and two the number of employees. Right. So this micro is has about one to five employees. That's a micro and then pushing turnover and turnover here talking about sales of about below 10 million and then from 10 million to about 50 million and up to about 100 employees that will be treated as a medium and then above 100 million and above a thousand employees then that's taken as a medium enterprise here. Right. And so it again goes back to the number of people in their in each category. Yes number of employees and and their turnover and their situations where it overlaps. So for example if you look at a cleaning company. Right. A cleaning company it might be having a very low turnover but it's having a large number of employees so that is the times when it becomes a little bit confusing. Right. Because a little clean company if you're coming to clean the premises here you won't clean with one people. It might be 10, 20 people. Right. So automatically you move from being a small to a micro to a small. Right. Because of the number of employees you're pushing. Which ones are the common in our country? I'll say medium. Medium is common. Yeah. But then if you go back to you say no statistics but if you go back to look at statistics registered companies in Kenya in looking at a Kenya Bureau of Statistics for 2016 gave us registered companies at about 1.6 million but unregistered at 5 million. Right. So then using those statistics then I'll say the micro which are mostly the unregistered are more and then the mediums which are mostly the registered are less probably 20 percent. Okay. Yeah. Are there like rules and regulations that manage the operations of them? Yes. So in various industries there are rules and regulations that govern those and also if you look at the market trends there's a way the markets tend to govern how the various trends are the various businesses are managed. Yeah. In our country is it possible maybe to just touch on a few especially the ones that you had a chance and an experience to work with like how is the structure of the operations especially now we mentioned the Dubois and the Gikomba ones. So we have different classes of licenses that businessmen get. So we have the county governments if I use that structure that gives you a traders license that runs for 24 months. So the list is I think the cheapest list costs about 3,000 and running up but then there are also those traders who are given daily tickets. So you go to the market and they're given a daily ticket for just exposing your wares on the market. So that is about 20 shillings to maybe 50 shillings a day. So those so they those will be the two categories that are looked at and then the other flip of the categories you also look at then those who have trading licenses for bigger they have a fixed premises. So they have a fixed fixed location where you go and get them whereas these ones the daily tickets are mobile. So in Nairobi we call them hawkers. Right. But then also when you look at it from a point of no like an individual level when it comes to even accessing the finances for example now at Stand Big Bank if for example person who's watching the conversation right now and they want to get information on how they can access financing or funding for them. Is there maybe a criterion or a process if you can possibly take us through of how they can get to acquire funding or finances from let's say a bank perspective now from Stand Big to be specific. And thanks for bringing Stand Big in the conversation. Maybe it will be good for me to tell who the viewers who Stand Big is. Yeah, sure. Stand Big is a bank locally and we pride ourselves as being the supply chain bank for customers and supply chain because we want to provide support from the lowest level to the highest level of any supply chain and supply chain means if I use a dairy as an example the lowest will be the farmer and the largest will be the milk producer that you go mention any milk company. So those ones so that is how we look at supporting that value chain.  So we want to be the bank that supports them. So how have we done that? We want to look at three levels of engagement. We want to give these entrepreneurs access to banking services. It could be loans, it could be a transactional account, it could be insurance. So that is one leverage that we do. The second leverage is access to information. One of the items that SME is struggling with is knowledge and information around what they do and just the market trends. So recently I don't know whether you follow us on our social media. We took the market, we have the monthly report on PMI which gives the purchase power trend in the country and the last item is access to markets. Access to markets enables the SME to sell their products and we've even gone to an extent that we've created we've enabled SMEs to grow. So for example we have the Standbeek Business Club where we are getting our customers to interact with each other and sell to each other. But we also have an international platform we call it Trade Club where we allow any SME that is playing in the international market to access the market through our Standbeek Bank Trade Club portal. So that means again it's giving them information, it's empowering them and then also making them even have opportunities. Maybe they're like let's say qualifications for an SME to maybe qualify for that level. So to join the club provided in business and it's not a must for you to be a Standbeek customer. Inasmuch as we encourage you to be a Standbeek customer. But for us to extend money to you there are minimums. We'd like to see your business. At least you must have been in business for at least one year. Why one year? Because you want to see your full cycle. What was your highs and what is your lows? Because we base it on your story. Basically performance. Exactly. So once you've been in business for at least one year you're good to go. We'll then use the information that you have to check your ability to to access money. And whether you if you can't access money one of the things that we've done in partnership with the Standbeek Foundation is and some financial partners is to provide what we call catalytic fund. And catalytic fund you're giving SMEs a minimum of 10,000 shillings to a maximum of 100,000 shillings for startups. And for these startups mainly. Yeah just for startups because they have no financial background. They have no even documentation. Yes they don't have anything but what we do is we take them through a one month financial literacy training. And after we've taken them through the financial literacy training and they've taken them through the main the five pillars of our business they're able to give them this what we call catalytic fund. You know catalysis remember the high school chemistry. It's something that triggers you. It triggers performance. Yeah so we start from 10,000 to 100,000 and this is best on what you've built up as a story during the the financial fitness training that we're doing. So all you need to do is just have a good story about a business that's operation. Have a plan. A plan exactly. You know you can have you can somebody told me you can have a hundred million but when you don't have a plan on how to structure it you could end up with even 50 pop within a month. And somebody enhanced and said yeah have a plan that is written. A written plan. Yes. Why is it important by the way to have a business plan on that note? When you want to leave to go to town you'll tell yourself I leave my house I look to the bus stage I'll take matter to number x I will drop at point y. So having that plan becomes very clear because it shows you the path you're taking as you run the business. It will also factor for you how much it takes. So for example from where you stay to town it takes 30 minutes but you know if it's Russia it takes one hour so you plan yourself around that time. So the the goodness of having a plan it helps you create a mindset of where you're going. Steve Covey say always begin with the end in mind. Yeah. So you get to know where you're going and then you build up as as you head towards the end. Right. True. Perfect. I love it. Now for example now for Agicomba let's let's imagine a trader right now who is at Agicomba market which you interact with a lot and how can they go about you know seeking financial support from you know your organization if you could paint for them a picture right now. So the picture that I'll work them through one is whether you are a very digital banker so they can open the accounts digitally they don't have to walk to the branch to open the account. So we have a website that they just click on that website they can open the account but I think the step of faith is we have a branch in Agicomba they will walk to our branch we have our business advisors within the branch and they'll walk them through their business plan.  Right. So once we get once we get at the background of the business we then need to understand what is the purpose for the money why do you need this money for and then we we run back the purpose for the money with the story it gave earlier if it adds up then voila you have the money. Right. Yeah and it takes about two days to access this money. Yeah. If successful. Yeah. Thank you for that. And also now loans now when it comes to loan issuance it's a great conversation but then I understand it must operate also within the presence of eligibility. I can't just wake up and say I want to go to stand back and I need a loan. Now for business from a business perspective and now SME what are some of the things that you guys consider for you to give a loan to an SME. The analogy I like using is if you can't ride a bicycle I can't give you a bicycle. Right. So one as I mentioned earlier we need to have seen you operate your business for at least one year and that that's one year gives us the history of the highs and the lows like the times you made the most money and the times you made the least money so that I come to get your average how much you average sales in terms of volume and what is the pricing that you sell. Based on that information I'll then see how much more money do I need to give you so that you grow gradually. Right. Because we avoid you having a high leap because when there's that high leap you tend to you tend to lose focus. One of the things we've seen is when you give people so much money they move money from the business to go and buy a lot of good things that are not even within the business. Yes so that's why we we try to have gradual growth and we have loans that run for six months. We have loans that start for three months and we have loans that run until 36 months. So depending on what you're investing in depends on then how much money you give and by the way we give up to five million shillings on an unsecured basis if it's on a straight purchase straight stock financing but if you're on a value chain for example you remember I'd say you want to be a value chain but if you're in a value chain we can give you up to 40 million unsecured basis. For example in a community like working between blue band what is the other brookside such a setup you're able to get such a huge amount. Yes yes you can be able to get such so the basic example I'll give is for for customers who run the petrol stations which we call them dealership so if for example you're operating under an Ola fuel station and I'm saying this because there's an it is a YouTube video of how standing can Ola have work to support their distributors if you check it on YouTube you'll see that. So what we do is then we just take the sales records from Ola of how the distributor has been operating and on the basis of those sales records we can give that distributor the petrol station up to 10 million unsecured basis and you remember here we're not asking him to bring us audited financials and bank statements we're just saying let's show us Ola give us the statements for this petrol station and on the basis of those statements we're able to give them access to about 10 billion shillings that is how simple we do some of these transactions. Does credit score really matter a lot when it comes to also the operation and also CKM for finances for SMS? Yes credit score matters so the CRB law was brought in a few years ago so there's almost Kenyans don't take CRB score seriously but for us as banks we take it seriously so we look at if you've been listed for an unperforming facility we tend to share away from you but you also want to understand what is this that you're listed for at times. You go to the extent of finding out for example SMS somebody got listed for defaulting like 20K you definitely pinpoint and get to it and get even the reason as to why they were listed. You see when you come in for and make a loan application to us we then go and run your CRB report then we realize that you are listed by Safaricum for example. So then I'll ask you you are listed for Safaricum for 3000 shillings what happened so one of the common examples I've gotten is you took a line for your brother who had just come from school at that time he didn't have an ID so you registered a line for him then he was operating with that line and guess what he took a full visa and since he didn't worry about it he didn't pay for it so it's affecting your credit it's affecting your credit score so depending on how that was positioned so I'll engage you and say okay please visit Safaricum clear their loan let them give you a letter of clearance and then come and discuss so there are some that you can enter into a conversation and discuss and understand and say yes this is a logical story let's support this person or you can you can talk yourself out of it yeah you can yeah I don't say talk yourself out because when you say talk yourself out it's like but it's it's about understanding the background behind the listing the sort of reason yes it's good to just it's good to wear the human face and understand the reason behind the listing and then if it's something that is addressable is something that can be redeemed then ask that person please make good of this payment get clearance then let me see a transaction for the next one month and then we pay but remember by the time we're walking this journey it means the only reason you're not qualifying for the loan is because you've been listed right so that is probably out of a check of five items this is the one of one of the item that the only item that is looking you out of engagement right to let's say to what big amount or least amount can up an SME or a person get listed in CRB and it can it can cost them when it comes to also accessing a loan from you can be listed for 500 shillings only 500 Bob yeah the law is clear if you have not paid any money you'll be listed so even if you borrow 100 shillings you will be listed oh my god there's no mercy out here it's it's the law the CRB apparently the CRB must you know Kamaibanda Kamashiriya exactly yeah so it's it's not easy but also financial literacy is very important I love the fact that you know you're offering that full cost to all your especially your clients that come to you and we've done for about 150,000 so far just in Kenya I'm in Nairobi just in in Kenya I know most of them is in Nairobi yeah but just in Kenya we've done about total about 150,000 right now since you mentioned it in Kenya before we get back to now defaulting is it possible to extend this conversation out to people who live in the rural areas because you know like we say most of the people who are privy to the conversation you're having right now on TV are basically people who have a know-how of how to work in Gikomba you know having to work in Masai market or Toy market in the rest of the market how can we make this conversation move to a places like in Bumola you know the interiors of western and and and such other places so that they get to have this information we're talking about as we speak today I have my colleagues from the foundation who are in Helge Marakot who are doing a health awareness uh cancer preventive session and also they're also doing a financial fitness training for women financial fitness training yes you'll explain that yeah in Helge Marakot as we speak today and the interiors now yeah in Helge Marakot and you at large the county I think it's within the county headquarters uh of Helge Marakot I don't know the exact but it's within so you're running a cancer screening session for women and also for for everybody the cancer screening sessions for everybody so because you're doing prostrate cervical and breast so that is done as a preventive that is just part of our way of keeping the community healthy but then for the women we are having the financial fitness academy financial fitness is to train the people around the four cycles of money right if I use if I use a family setup as a four cycle of money so there's one cycle being you just being fresh from campus right you've just left your your needs for money are different then the second level is you've just had a young family wife two children your needs for family will be a bit different then move to our next level where your children are now in campus in college your discussion on money is is different and the final leg is your kids are done with school of left now you left you and your wife alone in the house so the the journey that we talk about in the financial fitness is to position the money money discussion in those four stages of life we also then reflect that in the four stages of a business so there's the personal financial fitness and then there's the business financial fitness but the philosophy around the financial fitness is those four items and the fourth item on this when you're discussing the last item is legacy right what the history are you living post you for your kids for your kids for the business so the belief that we have is the business is not the business should not die with you so you you you've had discussion around first generation second generation third generation back in the world it's going in a chain it's a chain extension and the asian the asian community have done very well and to the extent that you have great grand children running the business running the business that was there 50 years ago yes so that is the kind of so the financial fitness academy we try to paint that success story of how do you run this business to the to the third fourth fifth generation right yeah really excellent so it's full circle training yes it is right the shortest period that it runs is two and a half hours the longest period can be about a week when we just have to build each aspect so if you have the short session two and a half hours done the long session is then all those four pillars are taken one pillar a day that takes about five days are they free yes we offer it through of charge okay yeah so what we've done is we offer it for groups organized groups specifically because it becomes easier to put them together and run that and you'll be happy to know that we've only not just done for for businesses I think once I think before covid I did I was part of the facility as we ran it for lady judges and magistrates and it was a full day session so we we we we ran it for this as I said is a component for SMEs and it is a component for individuals right so you as an SME you can invite us to also train your staff towards the financial fitness right interesting thank you before we move to savings I had mentioned about that defaulting for example now an SME runs out of operation V2 is a matter of bigger in short in a kubai like right now if they default in paying back or repayment what are the consequences and then like you said is it possible to also discuss it from a human perspective yes it's possible so I think the biggest mistake that SMEs do is is when things start going bad they start running away I think that is the best time you need to meet your bank what do you think triggers that even also for a person who has a loan with the bank at the moment and I knew now I'm a porter may change the line is it not even a bank even your friend you know your friend asks you for 2000 shillings exactly then it tells you'll pay after a week then two weeks later he's calling you to ask you are you going for this game right and you can't pick his call because you think he wants to ask you about the money right so it's a human it's it's fear some sort of fear so my encouragement to to businesses is the moment you start feeling like things are not right don't wait until they're worse you go down the pool that is the time you need to go to your bank come to stanbik talk to us tell us I used to sell goods I used to have sales worth five million every day now my sales is two million every day how do you work this journey so from the onset the bank is able to give you what is called restructure your loan we adjust your repayments from the high number that it used to be to a lower number that can suit your business right it might require you to extend the turn of the loan fund some little longer but then it helps you pay the loan in good time right it's easier to structure restructure alone before it goes bad right the moment it goes past 90 days rules and regulations from the regulator central bank come into play because the moment your arraias is past day 90 you're treated as a bad loan and the rules of how you treat a bad loan is not as favorable as when you're treating a loan that has just gone bad so my encouragement to SME is please talk to your bank right go have a conversation early enough yeah right now also the lending rates are they do they vary like from let's say SME to MSME do they vary also the size yes also the type of company in the structure as well please talk about that so at stanbik what we do is we call it risk best pricing or risk best pricing so risk best pricing it means we look at each individual business on its own merit so one business might be deemed to be very risky they'll have a higher interest rate another business might be deemed to be less risky they'll have a lower interest so currently our list interest is about 14.5 and our highest interest is about 17 percent right so depending on how we perceive you to be risky then that is where you sit and risk could just be some small items that for example how often do you actively use your bank account in terms of deposits with drawl yes deposit and deposit with the drawl you know for business i'm not even keen about your savings right i'm just keen about deposits active transactions and not use bringing the same hundred shillings you brought yesterday into the bank today because we can be able to tell whether this person is just trying to to make the account look good and somebody who's doing good business because these days apparently on the bank statement it shows the source of that money right so if you send money by a person from your own cell phone it will show your name right yeah and you can't be sending money from your own cell phone every day in the account i'll be asking you where is this coming from right yeah really shocking because anyways it's your money now why the question does it have we had a conversation with my co-host and i was trying to tell her that nowadays you can't withdraw like one million in a bank like you have to write a letter you know explaining to them why you have to withdraw millions like wow why then why do i have to give you a reason why i'm withdrawing my own money in my own account it's a it's a government regulation anti money laundering law how to curb that yeah so it's a money laundering law that says any amount of a million shillings and above and above you must give even a source and a purpose state the source source and purpose and purpose for that money oh but maybe you could be you want to buy a car or you're gifting a friend it's fine just say source source is my salary purpose i'm gifting this friend i'm somebody gifted you some money from states direct your car you're allowed to also mention the enough like there's this story of this lady with this belgian uh belgian boyfriend a limo 102 m gido go go go there they flag the account what usually happens they usually flag the account or they freeze that money that money will not hit the account it can't even it can't touch the other two five book it will hang somewhere until you provide relevant documents to support oh my it can't get to your account until you provide those documents and if you don't provide those documents that money will be returned to the sent back why are banks this jealous it's so it's it's not banks being jealous it's just being it's just being uh alive to the regulations yeah take your time and google some banks allow me not to mention names sure there are banks that were fined fined about a year ago about 10 million dollars for this money laundering issues so those transactions already happened the money was even like like it really in the end google is your friend just google bank finds for anti money laundering so money laundering is really it's a big deal big deal and yeah it's a big deal yeah all right wow crazy let's switch back to our topic let's talk about now saving stuff for SMEs of course you mentioned about you know financial literacy do you also encourage uh SME owners and MSME owners to you know take on that journey of savings because when you talk about saving I'm sure it's all about retaining and also multiplying are you able to retain the money and multiply it or also invest as well but are still it's still in that cycle of saving somebody mentioned saving and investing are two different things exactly yeah so I'll give some background so when when you're saving is you just putting money aside so that you'll utilize it later for something else probably you have no clear plan around that money you invest when investing is you're putting money aside and your critical interest is what return will you get from that money so somebody who is investing his main agenda is earning a return from that money somebody who's saving is putting money aside for an so you'll save for a holiday right yeah so you'll save for holiday so if you're going to bombasa in December you start putting a thousand shillings this month then by December you have 12,000 shillings enough for you to to go for holiday but when investing you're not going to pull that money out of it so don't stay there so yes we encourage yourself is to to both save and invest to save so that they're able to to raise to to build up capital for a huge investment so for example if you're going to get an asset finance we require you to deposit at least 20 percent of the cost of the asset and then we finance the 80 percent so if you intend to go and buy a vehicle for your business then i'll encourage you to start saving portions of your sales into a savings account so that you build the 20 percent like for example not an individual best level how much would you encourage for now like let's use the example of buying a vehicle from how much does it depend on like also if you're employed or you're also running a business does it depend on such factors employment maybe a business owner or entrepreneur yes such factors so the the comfort that comes around employment is employment income is cyclic you can see like in the banks we can see the 15,000 has been coming every month so it becomes very easy to tell Collins earns 15,000 and that is the money that comes in the account every month on a business side it's not possible to do that because somebody has to do an analysis to see all this money that is coming in what portion of it is your profit and what portion of it is is a is a part of the stock so for example if you you sell bread you buy the bread from the bakery company at 50 shillings and you sell the bread at 70 shillings then you deposit 70 shillings in the bank account how much is your money 20 shillings so but when this person running a personal salary account deposits 15,000 shillings all that money is his right so when you are assessing a personal customer and assessing a business customer so those are the things we look at so for the business customer I need to look at these 70 shillings you've deposited which portion of it is yours which portion of it is part of the stock that you've been selling right yeah also I'd like you to talk about the statutory deductions and how they have massively affected also SMEs and individuals right now I think we are talking of the is the financial bill a statutory deduction is it going it can it make it there tax is statutory deduction so it can make it there it can make it there so being a being a live discussion I only want to dwell into the the politics side of it but I just want to look at it from a business side of it so the the small entrepreneur may suffer from from some of the tax components and the only tax component I want to talk about here is the turnover tax right so currently the government will be charging the the small entrepreneur turnover tax of three percent but my personal view I think that needs to be reviewed because of one thing I'll go back to my bread example right when when these when you're charging the the SME three percent on 70 shillings you're charging him three percent on both his profit of 20 shillings and is the stock the the stock itself of 50 shillings so actually taxing stock you know just taxing the income but remember tax is supposed to be income tax so that that for me is the only item that I'll say that the SME will stand exposed or when it comes to on the tax taxation regime that you're looking at currently right yeah oh and and and that has reminded me also of tax waivers how does it happen to a point you know a business is getting a tax waiver or an individual is it possible yes it's possible it's possible for a business to get a tax waiver I think I'm I'll give the process in a high level so when you when you want to get a tax waiver you the process is you need to to formally write to the Kenya Revenue Authority and also to the PS for National Treasury so I think the two institutions will then get into joint discussions and then they'll confirm will give you an approval for whether you get a tax waiver or not and when you have a tax waiver then you're given a tax exemption certificate right yeah and that will help you go down that road tax incentive there's another one that's popping what exactly does it mean for a business and now as an individual person an incentive tax incentives tax incentives designed to enable a business to venture into to promote a certain level of business so I'll give an example I think there's a tax-intensive incentive to manufacture in companies that are operating outside outside a big town so if you're going to set up a factory in some rural place you get a tax benefit purely by going to set up a factory there same company if it was putting up a factory in Nairobi might be limited to corporate tax of 30 percent but because they're going to set up a factory outside Nairobi say in some rural location so the the KRA and the Minister for National Treasury the PS National Treasury might consider giving them a lower tax as an incentive for them to set up the company there all right cool think that's clear also I'd like you to talk about maybe what the current government is trying to do to support SMEs I understand the Hustlers fund is one of the main ones do you feel like it's helping and now that they've rolled out another second phase of it that now can allow people to borrow up to they say a million they said a million right I've not seen statistics for Hustler fund so I might not be well positioned to talk about it but there are two things that this government has done the government has done to support SMEs so the first one is a credit guarantee scheme through the national treasury so the the national treasury has designed a what's called a credit guarantee scheme where they are working with a number of banks to give access to credit to micro SMEs for purposes of growing their businesses so that is one aspect that they've done very well and then the other piece that the government is also doing well is in partnership with MSA micro small and medium enterprise organization they've they've created cohorts of information centers where SMEs can go in and be able to to get information on specific areas of their business interest and then the last thing that the government has also done is in partnership with KERDI they're able to give small KERDI sound organization yeah KERDI is a government of organization I'm not so sure of the abbreviations but they allow SMEs to go and do productions so they have they have equipment that you can be able to do several levels of production so they allow SMEs to go and make their productions from from the equipment around that right so when I look at from it from that angle they've been able to provide SMEs with adequate platforms for growth right from future onwards do you think the environment is going to be conducive because if you if you're facing another you know economic crisis and you know it seems like there's no hope do you feel like the future of SMEs is at stake I don't think the future of SMEs at stake I might be I might look like I'm I'm not quite optimistic so I'll give an example Uber is with us right but does it mean there are no taxes before that there are we have Airbnb does it mean we didn't have accommodation before that it's just about how do we align to the need that you're trying to solve for so as long as an SME you identify a need and you're going to solve for it then you'll you'll you'll you'll prosper all right so Uber came yes there were yellow tax the yellow line taxis packed everywhere but Uber came to me what was the need Uber came is instead of me leaving my house I can order for a taxi on my phone right and the taxi comes to where I am previously had to walk to where the taxi is it's the same taxi by the way but just because you've enhanced the convenience of getting the taxi to you and I think that is what SMEs you look at I think when I look at it that way the world is available for the entire SME world all right also do you think that loopholes that need to be sealed so that we cultivate we have them deep rooted in our country maybe some of the loopholes that may be also the government needs to seal also from a stand big now perspective that you guys we are pinpointing this and that so that you know we continue to nourish them I think for me the the key item that need to be sealed is matters of trust so what makes lending expensive right the the item that makes lending expensive is this help I'll give allow me give a small yeah please do number so you have a thousand shillings you want to lend out at ten percent so that you make a profit of a hundred shillings to earn a hundred one thousand one hundred right take that to be a bank so when you assume that four people will not pay the money you see the bank still has to make the one thousand one hundred right so what they'll do is they'll distribute this one thousand one hundred right to the six people who will pay potentially right so instead of the interest the the interest being ten shillings the interest has to increase to about 83 shillings purely because these four people I did not pay right so I think if we're able to increase the level of trust where people can pay on time then the cost of borrowing will go much lower the second piece is commitments by companies so you have a 30 days credit line then somebody wants to pay you after 50 days after 60 days remember when you borrowed from the bank you borrowed to pay in 30 days the moment you start paying after the 30 days penalty interest steps in penalty interest is slightly higher than normal interest rate so the more when you delay making a payment to an SME by 30 days you've increased their finance cost with a penalty interest for further 30 days you're wiping away their profit also in another volume also when a company for example delays to pay your salaries of course there's this accumulated you know costs that you accrue yes and all of a sudden catch up with you the moment you get back this is like you can't even you know function normally now in short you're in a crisis yes and speaking of crisis let's talk about shortly let's talk about debt for sms as well or generally I understand like somebody told me there's good debt there's bad debt how good or bad is the debt from a bankers perspective that's usually good for finance classes so it's a good debt is where you borrow for an asset that will one escalate in value and two will give you a revenue so even if I'm borrowing money to put up rental buildings that is good debt right because I'll earn money from the rentals and I will be able to probably make a return from there bad debt is borrowing money to go and put up a house in Ushago so you have a 10 million property in the village that you only go to use that house once in a year over Christmas so that's how I want to equate good debt and bad debt so good debt is you taking money put up a rental building and be able to to make money out of it bad debt is you borrowing money to go and put up a big house in the village that you only use once in a year that's a good example also now debt crisis at what point do you tell this business owner I'm at these clients who's in a bank setup that you are having a debt crisis problem and you need help there are two indicators for having a debt crisis so the first one is when the business starts issuing checks that are not honored so a business in a bounce yes so you're issuing a check for 10 000 shillings but you have don't have 10 000 shillings in the account and the habit is recurrent so that's a red flag and the other one is when you're behind your installment but even one day just a day yes it's a trigger oh my god yeah if you are just behind the installment by one day I ask myself why is Collins behind shillings by this one day right yeah so that's that's that's a trigger that you need to go back and check right yeah I wish you'd have had more time to talk about internal debt external debt and how our country is now on the but I think we are solving right do you feel like we are solving our external debt uh I understand they're going to read the budget on 15th this is actually after next week or next week yes by CS treasury that is professor sanjugunandungu do you think we are we are paying it kidogo being from the bank I learned to avoid that question I know I know but I think we need to do something but then somebody will say maybe perhaps these finance billies also get to us that but anyways not a conversation for now right now as we wind up I'd also love you to to tell people that have aspirations of venturing into small businesses in SMEs as well how can they get empowered if they actually want to reach out to you how can they go about it and also you know also if you have an email if you have a number that they can seek help so that you know they get to get ahead in life okay this is your camera and then later on you tell us if true people who work at the bank always have money yeah yeah so I think I look at it from Sandvik bank so we we've chosen to be the supply chain bank for for SME customers and we know we can be able to to provide that solution so if you want to reach us on phone I think the best easiest way to get us is send send an sms SME to triple 208 I repeat send an sms to us we start with the word SME to triple 208 somebody will certainly call you back to get given more information if you also then want to drop us an email send us an email to SME connect I repeat the words SME connect as one word at stanvik.com so with that information we'll be able to reach out to you to provide support and remember that said we are able to give you up to five million shillings on unsecured basis based on your business records right thanks for that do banks have money yes not banks do people who work at the bank like banks like you are do you always have money because I know you have relatives like hey bro to gonna to gonna come to our stanvik I'm gonna have to pay 10 000 size yeah to pay harder you know for us money is talk money is stationary or money is stationary money is stationary like it's like your normal paper all right yeah it's not it's not money it is talk it is stationary so when you look at somebody running a bakery bread is talk right even for me money is talk right yeah wow but do you get those calls they're like hey soon after you come back to me 10k daily yeah do they get annoying you're like bro it doesn't mean that you know I always have money wired to me daily that's true right yeah oh my goodness how do you handle it I think it's just to let people know that you're not able to meet their financial expectation boundaries yeah we just tell them sorry this is not something I'd like to to extend enter discussions around money because even my employer does not allow me to give money to you it's my internal is actually an internal regulation wow I'm not allowed to enter into exchange of money yeah right that's sad I had a lot of expectations but thank you so much I think we are right on time we have to speak into uh colin's or nyony who's head of enterprise banking at stand big bank uh sharing with us uh deeper insights on how to go about with sme banking or sme financing right that thank you so much colin's we'd love to have you once again more time you know yeah right i'm a phone call away right we'll do that thank you so much and this note we are ending it continue to interact with us on hashtag go ahead in the morning at white two for four channel at Brian so corner one thank you so much for watching have a fantastic tuesday see you next time


A new study has used a single injection to enable paralyzed mice to walk again, and it's getting some attention, including from some people you wouldn't normally expect, like Joe Rogan. The study was led by Northwestern University's Samuel Stoop, who is the founding director of the Institute for Bionanotechnology and the Center for Regenerative Nanomedicine. According to Stoop, the aim of our research was to develop a translatable therapy that could be brought to the clinic to prevent individuals from becoming paralyzed after major trauma or disease. To accomplish this, the researchers used modified peptides that are synthetic analogues of natural proteins. The treatment is injected into the body as a liquid, but soon self-assembles into a gel, which consists of a network of nanofibers similar to the extracellular matrix of the spinal cord. The researchers said that there are more than 100,000 molecules that move within the nanofibers, leading to them being referred to as dancing molecules. The study showed that the materials eventually biodegrade and disappear from the body without noticeable side effects. Stoop says that this paper, which describes a piece of science that was truly unknown, is probably the most important he's ever written. He also said that the researchers are going straight to the FDA to start the process of getting this therapy approved for use in human patients. And this is important from a life extension perspective. According to Northwestern University, life expectancy for people with spinal cord injuries is significantly lower than for people without them, and has not improved since the 1980s. If this is successful, it may not only improve quality of life, but could lengthen life expectancy of those dealing with spinal cord injuries. Popular podcaster Joe Rogan has also taken notice, posting to his Instagram to say, Spinal cord regeneration could one day be a real thing for humans. Limb regeneration is probably going to be a reality one day too. The question is, does it happen before or after they develop synthetic limbs that are superior to biological ones?  But I think humans merging with technology and becoming cyborgs might just happen before that. We all fear change, especially radical, completely transformative change. But it seems pretty likely that this is going to happen. I agree with much of what Joe Rogan is saying here and we'll be covering these topics further, so please subscribe so you don't miss out. I'm Ryan O'Shea and we'll see you next time on Lifespan News.


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I swear our school system something that they could do to improve so much is to make a mandatory class on how to apologize. I'm talking from elementary school to middle school to high school all the way up to college where you can take how to apologize 101. I say this because clearly people don't know how to do it. What is up everybody? This is Chris from the Rewired Soul where we talk about the problem but focus on the solution.  So if that's something that you are into, make sure that you subscribe, hit the notification bell because I upload a ton of videos. So like I said, we talk about the problem but focus on the solution. The biggest problem, not the biggest problem, one of the biggest problems is people do not know how to apologize. So before I jump into this story about Philip Mucin, I am going to give you an exciting announcement. My exciting announcement is I am making an entire playlist about how to apologize. All right. Now this is going to be pulling from pop culture because every other day someone's having to apologize for something. So I'm going to take this and teach you all this because here's the thing. I get it. I get it.  And the reason this ties into mental health is because I would fall into a piece of depression because well, well everybody's not perfect. Why don't people forgive me? And like I get into that mindset. I can get into that mindset. I know you can too. But we have to realize at some point the reason people aren't forgiving us is because we never apologized in the right way.  That is a guarantee. All right, so let's get down into the meat and potatoes of this video. So for all of my fellow video game nerds out there, this is a story about a guy named Philip Mucin. Okay. He was working for IGN. IGN is a huge, gigantic video game review website. Like they've been around for ages. And this story first came to my attention from the Philip DeFranco show. So what had happened was Philip Mucin was caught plagiarizing a very small YouTuber, not very small. He has twice the amount of subscribers that I do. Anyways, this is a channel called Boomstick Gaming. So this is about a game called Dead Cells. So what happened was Boomstick Gaming did a review of the game Dead Cells. Then Philip Mucin, he's an editor for IGN. He did a review of the video game Dead Cells. And Boomstick Gaming saw this. He compared the two videos and Philip Mucin copied it like point by point by point. So IGN, they took the video down. They said they're going to investigate. It was maybe a few days later that it was announced that Philip Mucin was fired for plagiarism. All right. So just a day or two ago, Philip Mucin, he actually started on YouTube and got this job at IGN. So by the way, any of you out there who want to get great jobs, doing something that you love, maybe start on YouTube or on Instagram, like we live in a beautiful time. Anyways, so over on Philip's YouTube channel, and I think he actually took this video down because I couldn't find it. Anyways, he said my side of the story. All right. And like, I couldn't find the original video, but I watched this other YouTuber who talks about video games and I will link his video down below. But the gist of it is, Philip says that he's going to tell his side of the story, right? And here's the thing. And I've talked about this with the whole Tanacon in Tanimojo apology and things like that. Like he says, this is, this is my fault. This is my responsibility. But then he fills the rest of the video with excuses and playing it, playing the victim and pointing fingers at other people and trying to get the attention off him. So he says that this wasn't intentional at all, but like you can watch the side by side and it was clearly plagiarized. So I like as somebody who was a professional like apologizer, if that's a word, like I thought I'm like, okay, how's this guy going to do this? How's he going to apologize? Like I thought he was going to say like, Oh, you know, with IGN, we have these like crazy deadlines.  He said, you have five minutes to pump this thing out. You know, so I screwed up and I copied this and I'm sorry. Like I thought he was going to say something like this, nothing, nothing, nothing to that effect at all. Like, come on, Philip, throw me a bone here, Philip. Like if you would have at least said that, I've been like, eh, you know, that sucks, right? But he doesn't, he doesn't. He says it was completely unintentional. So then he starts going on this whole thing about how other websites and video game places out there, they're using his name to get clicks, right? So he starts like pointing the finger at them, like, you say that my character is not good, but look at what you're doing. Like, don't do that. Don't do that. When you apologize, it's all about you. Nobody else. If you want to come back months later and make a commentary on that, cool, but never, ever, ever include that in your original apology. Like here's the thing. So many people apologizing this way, like, I'm sorry, but right? I'm sorry that I did that, but you know what I mean? Like, it is so hard for people to take full accountability and I know why I get it. I understand why it's because of the pride and because of the ego. If I take 100% fault for this thing, right, then I'm going to get judgment. Then I'm not as great as I like to think I am and all these other things. I cannot tell you all how much better my life got when I knew how to take 100% responsibility and accountability for my actions. And I'm talking about even at work. This is why I make these videos for all of you. Like, when I started going into work, like, I would screw something up, especially at a new job, right? I'd screw something up. I'd be so afraid. I'd be so afraid to tell them about my mess up and apologize. My brain starts thinking of all these excuses and how I could pass the blame and that.  I'm really sorry. I wasn't paying attention. I rushed through this, whatever it is, right? But I take full responsibility. Like they respect that so much. I'm like, so I just kept doing it. I just kept doing it. Like when I screw up, it's all about me. All right. Now, here's the thing. I'm going to give you this pro tip and I want you to listen very, very, very, very carefully. All right. This is the secret to apologies. Okay. So my theory and this has come from personal experience is people don't like apologizing, right? Like nobody likes to apologize. We hate apologizing. I hate like nobody is going to say like their favorite hobby is to apologize, right? Nobody likes apologizing. So here's my pro tip for you. You ready? Quit doing things you have to apologize for. All right. If you quit doing things that you have to apologize for, you don't have to worry about apologizing. And this is huge when it comes to improving your mental health to building better relationships. Like whenever I'm about to do something, whenever I want to make a mistake, whenever I want to do something sneaky or crafty or shady, like plagiarize, I think about, well, if I get caught, I'm going to have to apologize. Well, I don't want to apologize. So I won't do that. All right. So quit doing things that you have to apologize for and you don't have to worry about apologizing as much. Like you're still going to have to apologize. Like I do stuff. I'm not perfect. I screw up. But the fact that I make an effort to not do things that put me in that situation, people are a lot more likely to forgive me. All right. So I really hope you take that to heart. I really hope you take that seriously. Okay. Quit doing things that you have to apologize for. You don't got to worry about making as many apologies and worry about running into the whole mess that Phillips got himself into. Like I think he deleted his video. Twitter is losing their minds. There's even more videos and more articles about this guy. Like it is embarrassing. All right. So A, learn how to apologize and B, quit doing things that you need to apologize for. Simple as that. Become a better person. All right. So I hope you enjoyed this video and please share it if you think that other people don't know how to apologize and maybe this will help. All right. But do me a favor. Let me know down in the comments below. Like, do you struggle with apologizing? Let me know. Let me know. Let's have a conversation down below. All right. But that's all I got for you today. If you liked this video, please give it a thumbs up. And if you are new here, again, I'm just trying to help you out with your mental health. Go ahead and subscribe and hit that notification bell and a huge, huge, huge thank you to all of my Patreon supporters. You all are amazing. And if you want to check out some more videos on this channel, click or tap right there. Thanks so much for watching. Learn how to apologize and I'll see you next time.