Have you seen folks who just say ‘iri business iri rine mari’ and then plunge in and invest? There are no sufficient studies to find out the profitability of the investment, the impact of the economy on the business, the regulatory environment, the impact of smuggling on the business, the impact of elections on the business-i cango on and on listing variables that affect a business. The point here is that when planning to invest a substantial amount of money in any business venture, you are going to do thorough studies or risk sinking money into loss making ventures.

The ‘business iri rine mari’ (this business is profitable) concept has led to the high rate of business failures and also the flooding of any emerging business opportunities. Take for instance the purchasing of a kombi-most just transfer funds to Beforward, receive your vehicle, get all the necessary permits, hire a driver and conductor and within a few weeks the kombi is on the road! There is no study to determine the current trends in the industry, current or future plans by the government, how many kombis already exist and future outlook. For most investors in the sector-its get sufficient funds to import a kombi and hire employees-end of story and this usually results in investors making losses because they may not have full knowledge of the business.

We often give the example of the quail bird projects which once took Zimbabwe by storm in 2016. Some took bank loans and invested heavily in the projects. A few months after investment then came the shock news of the project ban! Those who had invested in the project had obviously not done enough studies because they should have checked the position of regulatory authorities on the project.

Inorder to assist our members to invest wisely, we are giving you a free business template for download. Carefully study the contents especially on marketing, distribution, competition, future products, technology, products, finanial information etc. This should give you general guidance on what a business plan is. Subscribed members of the forum can downoad a business plan checklist from our Facebook page.

Schools are expected to open for the second term this week and if you were in Harare yesterday then you must have noticed the high number of parents and their children. Most of the parents were paying school fees at banks or involved in last minute groceries for kids going to boarding schools. It was a hive of activity in the city centre with a number of books shops or shops selling school uniforms enjoying brisk business.

Related to the issue is a big question for the forum and the question is ‘What are the top 6 areas where Zimbabweans are spending their money on?’ We carried out an unofficial mini survey within the ZBIN Community and came up with the top 6 which are below:

1. Food
2. Education
3. Accomodation
4. Medical costs
5. Transport
6. Entertainment -Dstv subscriptions

Are you interested in investment especially in the short to medium term? If your answer is Yes, then you may need to criticlly look at the 6 areas we listed above. The above 6 areas are not cast in stone as priorities are always changing and depend on the economy class that is concerned. However based on what is what is currently on the ground, most people seem to be spending money on the areas we mentioned.

Implications for investors

It is not suprising that recent financial statements from retailers such as OK Stores show marked improvements in profits when compared to last year. The same applies to a lot of retailers, large and small scale. You can compare and contrast with other sectors such as the Telecommunication sector where profits are slightly going down when compared to the previous year. So there is more spending on basics with little being left for luxury goods, real estate developments and other capital projects.

So if your planning horizon is short to medium term, then closely study the 6 areas and expand the list, removing or adding areas. As witnessed yesterday, Education is a top priority for most people and spending on education includes school or college fees, school uniforms, stationery, food and school tours.

On accomodation we have spending to a large extent rentals and rates, construction of homes seems to have been affected by the current liquidity challenges. Medical costs remain high especially for those without medical aid insurance. Transport costs is high for those using own cars and costs include daily running expenses such as fuel, service costs and insurance. On the 6th place we have Entertainment where Dstv subscriptions top the list. The inclusion of Dtsv subscription is not suprising because according to the Reserve Bank of Zimbabwe, the nation spend $206 million on Dstv subscriptions during the six months period of July to December 2016.

Conclusion

This list is a general list and should be taken with caution as we did not carry out a comprehensive survey. The intention of the post is to help members with investment decision making, to help our diasporan community to appreciate what is prevailing on the ground so that this can inform their decision making. Remember that for investment making decision, you do not just plunge head on based on general information-you need detailed business plans which shows the potential of an industry, the level of competition, analysis of suppliers, regulatory environment, market review, sensitivity to economic variables, risk and opportunities.