Nigeria is a business-conscious country. But many factors pull potential entrepreneurs back. Among them is capital. EKONG EKPENYONG writes on how to prepare startup capital in the country
Preparing startup capital is a financial wealth management tool that provides a complete overview of your money as a business owner. The platform helps the entrepreneur to track investments, cash flow, budget and networth in one location.
Saving to start a new business can be made easy with discipline and by following a good budget rule.
Massachusetts senator, Prof. Elizabeth Warren, popularised the ’50:20:30 budget rule’ in her book, All Your Worth: The Ultimate Life time Capital Plan. The basic rule is to divide profit after tax into 50 per cent (needs), 30 per cent (wants) and 20 per cent (savings).
A startup is generally a young business, which is just developing. Most startups emerged to offer unavailable product or service anywhere in the market or to bring in innovation to existing businesses.
The main essence of startup has to do more with high ambition, innovation, scalability and growth. At first, these companies incur lot of expenses during while modelling, testing and marketing their concept. Since these companies are very small and initially operated and financed either by an individual or by partners, they face many challenges with limited resources availing with ample opportunities.
Every company needs to analyse every investment idea; after all there is limited amount of cash to use. To make it count, consider these four ways during the SWOT analysis. For the uninitiated, SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
A United Kingdom-based business consultant, Anthony Okon-Williams, told said, “A business owner’s first priority is to identify the gabs in the market and work out measures in which their proposed business idea can fill the gabs. Money is the last thing, albeit important, when it comes to startup capital for businesses in Nigeria.
“Initial funding can come from personal savings, which is known as bootstrapping in the startup space, and then the founders can go ahead to raise seed funds from friends, family and other sources.”
According to him, not all businesses require capital, but all businesses require customers; hence the ideal pursuit of every business owner is to identify target customers and ensure the product or service meets expectations.
Capital for a startup is often not easy in Nigeria, especially if a proposed business undertaking isn’t seen as viable, Femi Omole, aconsultant and agricultural entrepreneur told Financial Street.
His words, “These later options aren’t easily achieved, especially if a business just envisioned without any prior running experience or financial proficiency; hence it is best to start small and grow a business gradually.”
Occasionally, a startup takes at least three years on average to become break even. There is a cost for adding a partner or expert to the payroll as well as marketing costs, among other expenses.
A startup can make profit from a new product before three years. But these instances are rear, most owners need to be patient.
Accordingly, one of the biggest priorities should be to get debt under control. Understand the difference between good debt and bad debt, and try to avoid taking on any new bad debt whatsoever. For existing bad debt, aim to pay in excess of the minimum payment each month, and put together a payment plan that helps you confiscate those debt and the risk and cost associated with them as possible.
Preparing a startup capital in Nigeria is paramount because it reviews spending habits, debt, investment performance and networth.
One big mistake businesses make is to borrow startup capital, according to the Business Executive Secretary, Nigerian Institution of Estate Surveyors and Valuers, Lagos State Branch, Samson Echenim.
He told Financial Street, “It is highly not advisable to borrow to invest in your business at the onset. Businesses should start small with what they personally have and grow gradually. You can borrow capital for expansion, but not to start a business.”
Starting up a business in Nigeria requires a business-minded individual, said Dr Orok Ekpenyong. In a chat with Financial Street, the consultant said, “Staring business with one’s capital is what makes it seed fund, and the process of growth in line with income brings financial flexibility and suppleness to the business owner to build wealth.”
Once you have taken the time to sort out business capital as the owner of the business, make out time regularly to make ambitious plans. Then, you are sure to remain on track for your long time financial goals.
Get real time update about this post categories directly on your device, subscribe now.