Funding: Raising Capital For Your Business Post COVID-19.

The outbreak of the novel virus Covid-19 has had a great impact on existing small businesses, especially in developing countries. SMEs in Nigeria have had to deal with anxiety over uncertainties that might exist after the crisis, challenges with cash flow, customer retention, and disruption in essential operation processes. Many have lost millions of Naira due to the economic implications caused by the pandemic, especially in industries that are customer facing.

However, in the midst of this, an array of companies has also sought out ways to raise finance to ensure their sustainability while also leveraging the relatively cheap opportunity to raise capital.

It is pertinent to note that of the many challenges faced by SME’s in Nigeria, the lack of finance is one begging to be solved. Statistics show that 80% of small businesses started in Nigeria fail within the first five years. This alarming rate of business failure is attributed to several reasons, the most commonly cited being insufficient capital, as well as poor access to credit facilities.

For a country suffering numerous infrastructural challenges, and a difficult business environment, the inability to raise sufficient capital presents itself as the deadshot to businesses. Credit facilities could have been a viable option, but this has not been the case.

A recent PWC survey has revealed that Micro, Small, and Medium Enterprises do not rely on banks to meet most of their funding needs. For the MSMEs interviewed during the survey, bank loans are impossible to get mainly because of their bureaucratic application process and high interest rate. About half of the respondents (50%) admitted that they did apply for bank loans over the last 12 months, but never ended up taking them due to their high costs. The report also noted that high cost of capital is one of the major costs to business operations in the country.

Thus, to aid startups and budding small businesses, these are a few alternative ways in which business owners can raise the much-needed capital they require to start, sustain, and scale their businesses.

RELIEF FUNDS

The Nigerian government earlier in May had announced plans to establish an SME Survival Fund to sustain at least 500,000 jobs in ‎50,000 SMEs. The said funds will be targeting businesses in critically affected sectors such as hospitality, creative industries, road transport, tourism, and schools.

Interestingly, the plan states that these grants will be disbursed through microfinance banks and fintech credit providers. A three-month timeline has been earmarked for the disbursement of these relief funds and the scheme will be implemented through the Steering Committee on the MSME Survival Fund, the Federal Ministry of Industry, Trade, and Investment, and the Bank of Industry.

CROWDFUNDING

Crowdfunding is another popular way of sourcing for funds; it depends on a system of generating small investments from many sources. It is believed that it is easier to raise small amounts of money from many people than it is to raise huge sums of money from a few people.

Some of the different types of crowdfunding are – Donation, Reward-based, Debt and Equity Crowdfunding, which is one of the most recommended. With equity crowdfunding, investors give money to business owners in exchange for a percentage of ownership of the company; then after a window of time, the company repays the investors with interest in return. Most times the investors receive repayment or reward with interest within a designated period.

BOOBSTRAPING

Provided that your business isn’t operating in an industry that requires lots of startup capital, like manufacturing or transportation, you can potentially fund your own venture—and it may be more feasible than you think. Although funding the business yourself carries lots of risks, it is important to consider your potential. If you believe in the vision for your business, you should feel comfortable investing your own money in your business. It also encourages potential investors who are willing to partner with you down the line.

SME SUPPORT ORGANIZATIONS (ACCELERATORS & INCUBATORS)

In recent times, we have seen the rise of accelerators and incubators in the Nigerian startup and SME scene. Numerous small businesses have been beneficiaries of the support of incubators and accelerators, such as Fate Foundation, Tony Elumelu Entrepreneurship Foundation, CoCreation Hub, Google LaunchPad, Y Combinator accelerator programme, to name a few.

Incubators are companies that provide support services such as office space, electricity, and business management training to small businesses. While an accelerator is a program that gives companies access to mentorship, training, investors and the support they need in order to maximize their growth.

Four Lessons I’ve learnt in 2020- So Far…

Stay with the News- Do not let your business suffer

Suddenly, we were almost swept off by the unexpected visitor, Covid-19 took the world by surprise. Not even soothsayers could predict this pandemic, the men of God did not see this coming, we all watched the world grind to a standstill. Some say it is a scam, some say it was caused by 5G, others said it is an ultimate plan and scheme by some top guns. Well in all of these, no one say it coming and no one predicted this and the outcome globally.

The impact of the pandemic mixed with the power battle for oil prices caused some countries to suffer. Russia-Saudi Arabia started the price way which saw a dip in standards of living for many in countries that are heavily dependent on oil. Oil prices fell to its lowest rate in history. It became free at some point. This impacted heavily on businesses as most of them could not survive the shock at the same time. Borders were closed, so most businesses suffered immensely.

The lesson here is, although most of the points stated here are beyond our control, we should at least stay up to date with happenings. Make right decisions on how and when to buy, store space to keep stock etc. Stay up to date, stay current, this would help you stay proactive to change and how to adapt.

Learn, Learn, Learn- Never Stop

The lockdown taught me that time can come and go if not used judiciously would be a total waste. One of the most common phrases that surfaced this year is “New Normal”. Everything has been disrupted, call it “a scam” or “political” the world has been reborn and only those who prepared for it would partake in the new world.

Most people did nothing new all through the lockdown, but they expect to win, no new skill, no new degree, nothing. So, at the end when we all self-appraise, I worry what the outcome would be. Well, its not too late to start as skills are learnt as quickly as you can start. Make the most of every minute you have and grow. Learn and never stop evolving.

Teamwork makes the team work

Fear on What next? Worry about long ending online meetings, losing touch with the past reality? Getting used to the new normal? Well these are what we should expect. Digital is replacing analog, the new has taken over the old and teams are almost losing touch of their bonding.

Leaders have experienced some of these working from home. Dropped deadlines, slow delivery, unavailability of colleagues and many more. Dealing with this is draining, but good news is that you can create activities that would help your team stay in constant touch. As a supervisor, never be too rigid to tell jokes or use trending phrases while in an informal setting. Allow the tension out of the window with checking into their personal life, care about their families, and everything including work.

When you are fully involved, and you are accessible to your team members across different platforms means you can offer extra assistance if they are facing any challenge in handling issues.

Build a passion project

Most people have skills and talents that can fetch them money if only they monetize it. A passion project is an activity or enterprise that you decide to take on—usually in your spare time–to gain some benefit for yourself. That is, it is a challenge that you willingly embrace because you hope to gain something from it. Create profit out of what you do for fun.

In conclusion

In summary, things are getting back to normal and the new normal is becoming the norm. some businesses would struggle to stay on, however persistent would only carry us through. Learn more, save money, save money …save money and be judicious. Customers would come and there is need to understand them all round and know what they need especially at this time.

Whatever you do, please win… win….and stay safe