How a sou-sou helped this woman save money to start a business


    Editor’s Note: This post was originally published in 2016.

    Saving has always been a challenge for me. While continuously applying the pay-yourself-first principle to my finances, I tried to stay within my budget.

    When I wanted to start a cake decorating business, I needed another way to cover my startup costs. I preferred not to take out a loan because of interest expenses.

    One employee suggested setting up a sou-sou.

    What’s this? you wonder Well, read on.

    What is a sou-sou?

    A sou-sou is a simple savings plan.

    The West African tradition, which is also popular in the Caribbean, requires a group of people to deposit a fixed amount of money into a group account either weekly, bi-weekly or monthly, with one member responsible for collecting the money.

    The group will run a random drawing to determine the order in which each person will receive their lump sum payment. However, once each person has received their money, they still have to contribute until everyone is paid.

    A sou-sou can run for six months or up to a year – it all depends on how many people are attending it. Sou-sous continue until everyone receives a payout at least once.

    How I used a sou-sou to start a business

    Here’s how I started a sou-sou to make enough money to start my cake decoration business.

    Determine how much money you will need to start your business

    I made an inventory of the supplies I needed and then calculated the total cost of buying them. This helped me make sure I could get started as soon as I received my payout.

    Next, I shopped to find the best prices and then asked vendors for a discount for bulk purchases. It never hurts to ask! It helped me save 20% on the original cost when I finally bought everything.

    Find Cash in Your Budget and Earn Extra Cash

    I had to free up some cash to get to my sou-sou so I decided to remove an invoice from my monthly budget.

    I compared my cable and internet bills to see what was costing me more, then canceled my cable service for $ 50 per month.

    To make extra money, I sold cakes at community events at a discounted price.

    Think about how you can make a few extra dollars a month for your business. Consider this list of 43 Ways to Save Money Fast.

    form a group

    Everyone in my department had previously been involved in a successful sou-sou, and since we were all working towards financial goals, it was easy for the team to get on board.

    A total of 10 colleagues have joined the sou-sou, but you can start one with any number of people. Ask staff, relatives, and other Church or gym members if they would like to participate.

    Choose a money collector

    We nominated my manager as a money collector and put our money in a locked box in her office. Two people had to be present when money was deposited or withdrawn.

    Since we all earned monthly salaries, we decided on a deadline within which everyone has to pay.

    My supervisor was also in the sou-sou. If the person collecting the money is not there, they are sometimes paid a percentage by each member. If my supervisor hadn’t been a member, she would have received 5% of our income for managing the sou-sou.

    Decide on an appropriate contribution

    We reviewed our final goals and unanimously determined a realistic amount each person would pay.

    With 10 members, we’ve decided to contribute $ 100 per month each – which means we’ll receive a payout of $ 1,000 each.

    Some members were unable to contribute the full amount, so they joined another member to contribute $ 50 per month each. When the payout time came, each person received $ 500 – a payout of 50%.

    I decided to double my contributions and pay $ 200 a month, which means I would receive two payouts of $ 1,000 to help fund my business.

    Propose accountability

    We have suggested that each person in the group be accountable to another member to ensure that they are spending their money on achieving their goals.

    For example, I’ve selected a responsibility partner who will make sure I’ve invested my $ 1,000 in my business.

    If I didn’t, I would have to pay my partner 20% of my payout – a huge amount that we chose to motivate me.

    How my sou-sou worked out

    Our sou-sou started in January and I received my payout in May. Having doubled my contributions, I received another payout in November that I also used for my business.

    The group initiative was a big part of my motivation, and everyone agreed that the support of other members of the sou-sou is critical to our success.

    My decision to use a sou-sou rather than borrowing paid off. I owed no money to the bank and saved $ 200 that I would have paid in interest expenses.

    With the help of friends or family, save money to start a business is possible. Contributing $ 100 or $ 200 may not seem like much, but in time it might be enough to get your business off the ground or grow it without a loan.

    Kerry Mc Donald is an employee of The Penny Hoarder.


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