Riba and How to Overcome It
False Sense of Complacency
Riba creates a false sense of complacency as opposed to functioning on our own cash flow that is generated from the business, thus making us financially in-disciplined and ending up in overtrading and utilizing essential working capital on fixed assets.
Stress, as a Result of Riba
Many people when they finally lose all or face so much stress, as a result of Riba, realize the causes of their unhappiness too late. Hadeeths clearly states that a person who hastens towards achieving anything before its time period will lose everything forever.
Source Capital
Let’s face it: The reality is we all want to expand our businesses and we need capital. So where do we source capital other than Banks?? We do have options and one is equity funding through angel investors or strategic investors. Other option is going public.
Proof of Profitability
But first we must have proof of profitability of our existing enterprise. For this we must have information that is up to date. Even Nabi Sas gave importance to information: When he reached medina, the first thing Nabi sas did was to conduct a census of the population.
Dawoodi Borah Community
Another practical example is the Dawoodi Borah community. Their leader many years ago, made a pronouncement that all businesses must not use any form of Riba and it was better for his followers to sleep on the road, if necessary, than to do businesses with Riba.
Own Cash Flow
The majority of the Dawoodi businesses in Sri Lanka, approximately 50 plus converted their businesses to operate only on their own cash flow. It was a huge struggle and now their businesses are thriving because they are cash flow disciplined and they don’t overtrade.
Murtaza
A good example is my friend Murtaza, just 24 years of age, had to take over the reins of his father’s business due to the unexpected death of his dad at just 52 years. Murtaza (approximately 25 years ago) told me “uncle my priority is only cash flow” can you give me sufficient information to run my business with my own cash. Within a short period, he far exceeded all expectations and his business YOY experienced exponential growth.
Multinational Corporations
Another excellent example of well-disciplined and consistently successful enterprise modules are Multinational Corporations. They prosper in any country and continuously expand, despite it being driven by a CEO who is not even a Shareholder.
Technology
They consistently invest and leverage state of the art technology in all areas of the business. However their main tool to create positive cash flow growth is the right information on time all the time