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.

Human-to-human connections are the heart and soul of a business. Put simply, business occurs when an individual or group of people deliberately provide services that eases the life of another person in a profitable manner. A business is about solving problems, alleviating pain points, creating a rapport with consumers, and providing delightful customer experiences. Profit only comes when a sound business model is matched with a positive customer experience. At Credit Direct Limited, the knowledge of what business is truly about is what wakes us up daily, motivates us to join the early morning rush, sit in the road rage patiently with a simple purpose to arrive at the office as early as possible to serve our esteemed customers.

Our passion to serve is what propels the sales team to beat the torturous weathers of Sokoto, Gombe and Katsina States and meander through the slippery footpaths of riverine areas in Bayelsa and Rivers States in search of more Nigerians to solve their financial challenges. The joy and amazement on the faces of customers when they get credited with the requested loans within few hours is what motivates our management to workday and night strategizing new ways to make the business meet its promise and deliver a phenomenal experience to customers. Even though the Credit Direct team may get held up in traffic for long hours in Lagos, travel across the country to visit stakeholders or put themselves in harm’s way walking the streets up North seeking another customer to assist, our duty to serve and care for our customers brings fulfillment to everyone in our value chain.

At Credit Direct, we are a long chain of professionals, bond together by one mission – we enable Peace of Mind. The fact that majority of Nigerians still find it difficult to access credit at the point of emergencies motivates us to think deeply about how to solve this critical socio-economic problem. There are the loopholes to fill, there are openings to fix, there are needs to meet, and fortunately there is Credit Direct to meet those needs.

The Credit Direct Brand is all about meeting the needs of those who were uncared for and those with genuine need for money but could not be accommodated not because of any fault of theirs but because the neglect was widespread and deep, because the divide between the affluent and mass market was deliberate to ensure there is always a second class category whenever it is decision making time. Credit Direct continuously disrupt the space and does what a lot of people including experts believe and consider “IMPOSSIBLE” to achieve, what industry legends regarded as a definite loss of revenue and reputation if ventured into. In fact, when we started, 6 months our proposal stayed in the hands of top business executives and government officials and the verdict was “try this at your own peril” why was that the narrative and how did we change the narrative to a winning one? The answer is simple, because the idea was not for “profit” or “loss”. It was not set up for the Balance Sheet figures at the end of every financial year, it was not set up for big board meetings and extravagant Annual General Meetings, it was set up to put smiles on the faces of salaried employees who are real economic actors in the theatre called Nigeria. To bring peace and fulfilment to a father whose child laid on the sick bed and would not be attended to till he makes a deposit. For the mother who toils daily yet cannot afford to pay the fees of the child and he is driven from school on the first day of the third term examination just because her salary had not yet been paid. For the hardworking civil servant whose rent is due, and the landlord has pasted the eviction notice with a short timeline. Now those are the real heroes we were born to help, and yes, we have created a long list of promoters across territories who never knew their potentials till they got their loans on the same day and sometime instantly.

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Recession: Surviving the Years of Lean Cows, By Olu Akanmu

Nigeria’s recession, our own years of lean cows, is characterised by very high inflation, declining real wages and accelerating unemployment and underemployment. It manifests on businesses in three ways, which are the massive contraction of market demand, rationalisation of demand and the trade–down of market and product preferences as consumers shop for value. There are nine ways a business can respond to recession and pull through this challenging period.

“and the cows that were ugly and gaunt ate up the seven sleek, fat cows.” – Genesis 41:4

“and the thin heads of grain swallowed the seven healthy, full heads.” – Genesis 41: 7

 

This article discusses what businesses can do to pull through the years of recession. The years of lean cows are the years of famine akin to the years of economic recession. When Pharaoh dreamt, in biblical history, Egypt mobilized to prepare for famine or economic recession by building strong national reserves of grains in its years of boom and abundance. With such strong national reserves or savings of grains, the biblical Egypt of Pharaoh was able to minimize the impact of famine on its people even when it lasted for seven years. There was however a country whose Kings did not save its grains in its years of fat cows because these Kings did not dream; they had no vision and lacked foresight. When famine, the years of lean cows, came, there was limited supply of grains available in the country. Grains became so scarce that there were long queues of citizens to buy the limited quantity of grains available from the national warehouse.

The King, out love for his people, decreed that the now scarce and limited national grains should be sold to the people at the same price or close to the price they used to buy in the years of fat cows. Grains had, however, become more valuable in that country because of its limited supply in the now years of lean cows. The queues for grains were so long that millions of the citizens who wanted the scarce grains were willing to pay far higher prices than the official price decreed by the King, reflecting the true value of the scarce grains. This created very significant rent-seeking opportunities in the sales of the scarce national grains. A citizen would also need to be well connected to access the grains even if they are the most economically efficient user of the scarce national grains. This was because the queues for grains were so long that no one was certain when it would get to their turn if they stayed on the queue, as the supply in the national warehouse got depleted.

As the grains supply got depleted by the day, their value to the citizens increased at higher premiums to the King’s official price. The state was now selling its grains at old prices, lower than their real value, at far lower revenue, which constrained its ability to replace the stock of grains it had sold, such that the national grains reserves began to fall rapidly, creating even further scarcity. Meanwhile, there were merchants in overseas countries where there had been good harvest of grains. Those merchants would like to bring in ships of grains to the country to sell in very large quantities. They could see the demand from the scarcity in that country but they lacked the incentive to bring their ships of grains because they had to sell at that large quantity at the official decreed price, far lower than the true value of their grains. Therefore, there was very limited private supply of grains into that country to complement the limited supply of the King. The famine and recession therefore got worse and became unnecessarily prolonged beyond its natural course. Extrapolating this analogy, it is certain that if the biblical Joseph were Nigerian, he would have advised against an inflexible exchange rate policy in our current economic situation.

Nigeria’s recession, our own years of lean cows, is characterized by very high inflation, declining real wages and accelerating unemployment and underemployment. It manifests on businesses in three ways, which are the massive contraction of market demand, rationalization of demand and the trade–down of market and product preferences as consumers shop for value. There are nine ways a business can respond to recession and pull through this challenging period. The first is in re-engineering your product and services for value to keep them at affordable prices for consumers. Toothpastes and packages of consumer goods are now getting smaller to keep them at affordable price points. You can also take out the bells and whistles in your product to keep them at affordable prices. Bells and whistles are product ingredients that may be twenty percent of your cost and deliver only five percent value to your customers. By taking them out, you can effectively shave fifteen percent off your cost, making your product or service more affordable.

…find customers who can replace the import content of their product with your own local product. Today, retail chains, with their shelves getting empty because of their inability to import, are looking for local agriculture processed products to replace previously imported ones. Are there such opportunities in your own industry or in adjacent industries where you can become an effective, cheaper and available local substitute?

The second way your business can respond is to make your route to market more efficient. Find partners who have a wider market reach and plug into their platforms. It will be cheaper than doing it yourself, especially if you are a small business and your scale is small. You may, for example, plug into established digital and e-commerce aggregation platforms to reach a wider market while developing your own websites for more people to reach you at a lower cost. The third way is to find if there are new value segments emerging in your industry or market because of the recession. Enter such value segments early to colonize and dominate them. Such emerging value segments will be usually small and may not be able to accommodate more than one or two brands profitably. The first brands to get in are the ones who can build a minimum profitable scale, while the third and fourth will have very little market left to harness.

Fourthly, your business can identify markets, sectors or segments that are resilient and realign your commercial investments around them. Despite the famine in Isaac’s time in the book of Genesis, Isaac sowed and prospered because he had the skills of finding wells in dry and famine ravished lands. Identify your more resilient markets and realign your commercial investments to focus on those need or geographic segments. The fifth way your business can respond is to rationalise your product scope, offering and store-keeping units, to make them efficient in line with market reality. Are there products or product lines that consume twenty percent of your working capital but deliver only five percent of revenue and have done so stagnantly over a long period? Such product lines are candidates for rationalization to make your commercial programme more efficient. You must however be careful to preserve your core strengths and market advantages, even as you rationalise your offerings to ensure you can take full advantage of next market upturns when the economy gets out of recession.

The sixth is to increase the local content of your product to make your business less forex dependent. This also ensures that you can keep your prices affordable. The seventh way is to find customers who can replace the import content of their product with your own local product. Today, retail chains, with their shelves getting empty because of their inability to import, are looking for local agriculture processed products to replace previously imported ones. Are there such opportunities in your own industry or in adjacent industries where you can become an effective, cheaper and available local substitute? The eighth way is to run tactical promotions to stimulate demand. Lotteries and lottery-leveraged initiatives interestingly become more appealing to mass market customers as economic situation bites harder. The ninth way your business can respond to recession is to explore export opportunities for your products, which will give amplified local currency returns even at relatively small scale.

Best wishes to your business in the new-year.

Culled from the Premium Times

EMPOWER THE CORPS (ETC) a CDL initiative

Introducing Empower The Corps (ETC) a product of Credit Direct Limited (a member of FCMB Group Plc) which provides quick loans to NYSC corps members while in service. Are you a serving Corps Member accepted in your Place of Primary Assignment (PPA) and you need to urgently attend to some financial needs like start a small business, buy white goods for your room, pay rent, obtain a certification, attend a training, and learn a new skill or some other financial obligation? Look no further!

The Empowering The Corps (ETC) scheme has got you covered.

 

ETC Business Starter Package

 

QUICK LOANS FOR CORPS MEMBERS….a CDL initiative

Introducing Empower The Corps (ETC) a product of Credit Direct Limited (a member of FCMB Group Plc) which provides quick loans to NYSC corps members while in service. Are you a serving Corps Member accepted in your Place of Primary Assignment (PPA) and you need to urgently attend to some financial needs like start a small business, buy white goods for your room, pay rent, obtain a certification, attend a training, and learn a new skill or some other financial obligation? Look no further!

The Empowering The Corps (ETC) scheme has got you covered.

No matter who you are and what your needs are? We have 4 unique packages to help create an easy and convenient life for you while in service.

2015 in review

The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 4,700 times in 2015. If it were a NYC subway train, it would take about 4 trips to carry that many people.

Click here to see the complete report.

MAKE EACH PUNCH COUNT & 50 OTHER LESSONS I LEARNT

Dear Readers,

It feels good to be back blogging after a few days away, i have been trying to drop my thoughts on the Mayweather/ Pacquioa fight and how i felt, my BBM and Facebook page saw a lot of traffic after my comments on the poor fulfillment of the expectations of the match, but apparently I needed a bit to know on the game of boxing.

My big buddy Akpo’s Adonkie filled me in with this write up, thought I should share it..

Enjoy……….

I still don’t remember ever staying up all night for a boxing match except for this one. Not even when Mike Tyson was at his ‘baddest’. I was fascinated by two things: the hype surrounding the event with the possibility of the two fighters taking home a pay of about $100m each and the person of Manny Pacquiao. To me, he is quite an interesting character. He is a politician, having been elected to the Phillipines House of Representatives, a basketball player, an actor and a musician. He is the head coach of a basket ball team as well as oldest rookie drafted and the shortest player in the Phillipines Basketball Association. He is also a Lieutenant Colonel in the Reserve Army of his country.  He is the first and only eight division world champion in boxing. So I rooted for him as I usually do for the ‘under-dog’.

As for Floyd Mayweather, I didn’t think much of him except that he is a ‘showman’ through and through. My heart was with Manny Pacquiao all through the match but there’s no denying the fact that Mayweather won fair and square.

So what are my take-aways from this match and how can we apply it to real life situations? Here we go:

MAKE EACH PUNCH COUNT
Mayweather threw 435 punches to Pacquiao’s 429. Out of these, 148 punches connected for Mayweather while Pacquiao could only connect 81. Implication is that while both fighters threw almost equal amount of punches (Mayweather threw only 6 more punches than Pacquaio), the rate of connection for Mayweather was almost twice that of Pacquaio with the former having a 34% success rate while the latter had 19% success rate. Success in life goes beyond mere efforts. Nobody rewards you for efforts but results. Anyone can throw punches but only the truly successful will connect. The reward never goes to the one who made more efforts. The difference between success and failure can simply be the fact that you throw a bit more punches than competition.

The Music Issue (Can a Christian Artiste Sing Secular Songs?) by @LekeAlder

A few days ago, there arose a Twitter storm of apocalyptic proportions over news that a young “secular” artiste was invited to sing during a church service. The young artiste is a Christian and the song performed was from his title album, God Win. One must assume that a song titled “God Win” sang in a church setting seemed most appropriate, but these are curious times.

There are many choruses that echo the same sentiment, some using exact same words yet there were a lot of issues raised. The very notion that a non-gospel artiste had been invited to “minister” in church consternated many. And not a few were peeved that the artiste in question performed from the “altar” – a most holy place. And how can an “entertainer” be invited to minister to “the people of God”, some wondered, with righteous and not so righteous indignation. Even the Pastor was not spared. What was his motivation? There was no shortage of opinion, aspersions and castigations. And there was no shortage of exegetes misquoting scriptures. Were Jesus on Earth he would have had to up his signature command of nature to calm the storm. He couldn’t do a reprise. This was no watery issue. But lurking somewhere in the sea was the leviathan of the fundamental challenge as to whether a Christian artiste can even do secular music. It’s not exactly a new issue. The Amy Grants of this world faced that same challenge in the 80s. It’s as if someone somewhere is instigating topical conundrum in generational cycles.

An analytical perusal of the issues however shows a confliction in knowledge on many levels. The idea for example that the “altar” is “sacred” betrays a mix-up in understanding between the concept of the temple in the New Testament and the concept of the temple in the Old Testament. In the Old Testament the temple was a building. It was basically partitioned into two parts – the Outer Court and the Tabernacle. The Outer Court contained the Table, Lampstand and Altar of Incense. The congregation could enter here. The Tabernacle was in turn divided into two parts by a heavy hanging curtain – the Holy Place in which only priests from the tribe of Levi could enter; and the Holy of Holies in which resided the Ark of the Covenant. Only the High Priest could enter the Holy of Holies and he did so once a year, on Yom Kippur or Day of Atonement. The High Priest must make atonement for himself before he entered the Holy of Holies. He would die otherwise. The sacrifice was his life insurance policy. And since no one can enter the Holy of Holies to retrieve his body, tradition says a scarlet rope was tied on his ankle. Small bells were also sewed around the helm of his robe. A priest in the Holy Place tended to the other end of the rope. He would drag him out by the rope in case something went wrong. If the bells stopped jiggling the priest knew something was wrong. You served God with your life as High Priest.

ON A LIGHTER NOTE..Vol 17- AY’s Election result announcement