How Much Initial Investment in Start-Ups is Creating Unrealistic Optimism and Too Little Sustainability

Image

By Emmanuel Otori

Start-ups require capital to establish a business. Capital is the amount of initial investment plus any interest accrued early. The initial investment of a company initiative is the sum required to get things started. Both internal and external sources of funding are used by start-up founders.

Many times, a lot of work goes into starting a business, but can it survive the possibility of a brief lifespan?

Although some start-ups frequently fail in operation when they run a deficit, operate in the wrong market for their offering, lack industry knowledge, and conduct sufficient research, a business can survive and grow from an early stage of optimism.

An upbeat mindset known as optimism supports problem-solving, change adaptation, and aids in ensuring the welfare of the environment in which it resides. An environment that is optimistic fosters resilience and improves focus on reaching a realistic goal. It is a managerial tool, and employees are more likely to work harder with this mindset because a pleasant environment makes the objective more attainable and advancing.

Is optimism necessary in business? For a business that is still trying to raise the money it needs to stay afloat while also competing for consumers, paying off debt, and managing costs and sales. You need a positive outlook to be successful at every level of operation. Therefore, optimism is encouraged for increased productivity, especially for the success of start-ups.

Bear in mind that optimism alone is insufficient to generate a sustainable business; instead, a combination of enough investment and optimism results in sustainability.

A company prioritizes longevity through its tactics is considered a sustainable start-up. Because of this, it’s feasible to see a start-up making a loss but continuing to run. Typically, this is done to win back customers’ trust and supply products that will ensure long-term viability. When choosing sustainability as a business strategy for long-term value generation, consideration is given to an organization’s operation in the ecological, social, and economic surroundings. The foundation of sustainability is the lifetime of start-ups, which is why it is considered that employing such strategies will encourage this. Over the last decade, the involvement of start-ups in Environmental, Social and Governance (ESG) activities have increased to suffice and shield the business from instability caused by environmental attacks.

For the most part, entrepreneurs are fortunate to have sufficient funding to launch their businesses from angel investors, venture capitalists, and partnership funds, which can also last for years of the establishment before they start to realize profits. Not every start-up that receives a substantial amount of funding, however, succeeds. Most people who fail during the process do so due to insufficient market research and business ideas.

Being the heart of a start-up, a business idea needs to be specific and unambiguous. Nice-to-haves should be thoroughly documented for future considerations to prevent the allure of disorganized ideas brought on by increased output in that field. A company also loses its sustainability if it declares bankruptcy, is unable to satisfy client needs, or is affected by economic, social, and governmental circumstances. This is crucial because a business needs to be able to lessen harmful effects on society and the environment if it wants to survive.

Investment or Optimism – which is ideal?

Optimistic business owners often invest more money if their initial investment is insufficient. With the expectation of productivity in the future, an optimistic attitude has the propensity to overspend and underinvest.

While investment in a firm does not ensure the achievement of business goals, a start-up can optimistically face the challenges of investment and still achieve specified goals.

A founder with a high level of optimism improves the investment efficiency of an underinvested firm by reducing underinvestment. Because optimism provides solutions for every problem, a firm with optimism and investment strives for an effective and sustainable start-up. Therefore, it may be claimed that optimism is a wise decision.

Share
Related Stories
Image
20-February-2024

Navigating the Complexities of Media Monitoring: Strategies for Effective Brand Media Intelligence Gathering

By Philip Odiakose In today’s media landscape, the ability to monitor and analyze media coverage is crucial for brands seeking to stay ahead of the competition and maintain their reputation. However, the sheer volume and diversity of media sources, coupled with the ever-evolving nature of communication channels, present significant challenges for effective media monitoring. As the Chief Media Analyst at P+ Measurement Services, a leading Media Monitoring and Intelligence consultancy, I have firsthand experience in navigating these complexities. In this article, I will share key strategies for successfully gathering brand media intelligence amidst the intricacies of modern media environments. 1. Define

Image
19-February-2024

From Transaction to Transformation; The NDDC Way

By Jerome-Mario Utomi A peep into the profile of members of the present board and management of the Niger Delta Development Commission (NDDC), an agency conceived in the year 2000, as a fresh beginning and a more focused effort on development in the Niger Delta with its mission chiefly to sustainably develop the region in terms of infrastructure and human capital, will reveal that it is arguably filled with some of the best trained and most highly skilled personalities from the Niger Delta region, in the history of the commission. For instance, Chiedu Ebie, a lawyer, technocrat, former commissioner, former

Image
05-February-2024

A Cultural Journalist’s 15 years of Research on Ijaw Culture and Worship

By Jerome-Mario Utomi No man, according to Aristotle, chooses anything but what he can do himself. And thus, choice is limited to the realm of things humanly possible. Aristotle further stated that there is no choice among impossibilities. Choice, by its very nature, is free. A necessitated choice is not a choice at all but a great sacrifice, he concluded. The above lines from great Aristotle amply capture the ‘fate’ or better still the position of Asiayei Enaibo, Bobogbene community, a Warri, Delta state-based journalist who made a necessitated choice/sacrifice by opting out of conventional journalism to explore formation that

Image
13-February-2024

Aleph Presents Unique Strategies to Grow Business This Ramadan

As Muslims around the world get ready to celebrate the holy month of Ramadan, Aleph (formerly known as Ad Dynamo by Aleph) presents insights for businesses on how best to leverage Meta platforms for business growth. Did you know that… Ramadan’s focus on community and connection also enables brands to connect in a unique way with the audience? The research also shows that 91% of social media users in Nigeria like to see content that promotes community and togetherness on Facebook and Instagram. Advertising that respects and highlights Ramadan’s traditions, businesses can enter the conversation in a new and positive

More Stories
Image
03-November-2020

Unjusticiability of the Economic, Social and Cultural Rights in Nigeria: EndSARS Protest, a Cry for Help

By Oluwatobiloba Grace Lawalson The EndSARS protest might have begun due to the inhumane treatment and a cry for help in Nigeria against police brutality. Still, the protest was a cry for much deeper issues in Nigeria like hunger and poverty, governance, unemployment, etc.  I dare say all these result from the unjusticiability of the economic, social, and cultural rights in Nigeria. When a matter is unjustifiable, you cannot bring an action in court concerning it. Such matters might have become status barred, lack the necessary locus standi, etc. The economic, social and cultural rights, according to ESCR-Net, an International

Image
13-November-2023

Saudi Pledges to Assist Nigeria Solve Forex Liquidity Crisis

By Adedapo Adesanya The government of Saudi Arabia led by the Crown Prince, Mohammed Bin Salman, has promised to assist Nigeria in solving its foreign exchange (forex) crisis, which has weakened the value of the Naira. Over the weekend, President Bola Tinubu was in the Middle East giant for the Saudi-Africa Summit in Riyadh and both parties used the occasion to discuss bilateral ties. Mr Bin Salman, in a talk with his guest, expressed the readiness of his country to support Nigeria in the areas of foreign exchange, agriculture, and energy among others. According to a statement signed by the

Image
31-July-2023

SAHCO Shares Soar 43.83% as Value Investors Take Position

By Dipo Olowookere Last week, SAHCO was the best-performing stock on the floor of the Nigerian Exchange (NGX) Limited, appreciating by 43.83 per cent to close at N23.30. SAHCO shares posted significant growth as a result of the interest attracted from value investors in the market. They went for the company’s equities because they believed the stocks could yield more value in the future. Business Post reports that the trading week was marred with profit-taking, but SAHCO and others helped the NGX post a marginal 0.02 per cent week-on-week growth. Consequently, the All-Share Index (ASI) and the market capitalisation closed

Image
11-October-2022

What is the Future of Private Banking in Africa?

Africa’s growth story may have been hampered by COVID-19, and whilst challenges remain, there are still investment opportunities and wealth creation taking place. There are, at present, around 136,000 high net-worth individuals (HNWIs) living in Africa, with total private wealth held on the continent amounting to $2 trillion. Those numbers are expected to keep growing too. In fact, the number of HNWIs in Nigeria alone is expected to grow 40% over the next decade[1]. That means private banking in Africa, and in Nigeria, the continent’s biggest economy, will only become more important. Recent reports suggest that wealth in Africa is

Image
31-July-2021

Naira Fights Back, Appreciates Across FX Segments

By Adedapo Adesanya The Naira fought back against recent headwinds, appreciating against the US Dollar across the major segments of the foreign exchange (FX) market on Friday, July 30. At the Investors and Exporters (I&E) window of the market, the local currency appreciated by 0.06 per cent or 23 kobo to close at N411.44/$1 compared with the previous rate of N411.67/$1. During the trading day, the domestic currency was able to withstand the FX demand pressure as a result of the sufficient supply of foreign currency to the market. The turnover for the session, according to data from the FMDQ

Image
22-June-2021

Buhari Constitutes Team to Engage Twitter Over Ban

By Modupe Gbadeyanka A team has been put together by President Muhammadu Buhari to engage Twitter, popular social media platform, over the suspension of its operations in Nigeria. Twitter was banned in Nigeria by the federal government in early June after it deleted a tweet of President Buhari for violating one of its rules. The President had posted a series of tweets and in one of them, he threatened to treat those fomenting trouble in the South-East in a language they understand. He had earlier said those agitating to leave the country were too young to know about the losses

Image
03-July-2018

SEC Okays Mutual Benefits Assurance N2b Rights Issue

By Modupe Gbadeyanka The Securities and Exchange Commission (SEC) has given Mutual Benefits Assurance Plc the go ahead to raise about N2 billion from its shareholders. The insurer is planning to raise fresh capital from its shareholders through rights issue. Business Post gathered that Mutual Benefits Assurance hopes to use proceeds from the exercise to fund its five-year strategy plan. In this plan is the recapitalisation of the company. The firm is also planning to expand its operations during the period. Mutual Benefits Assurance also said it expects to improve its IT facilities to support its enlarged operations. It was

Image
23-March-2017

Zenith Bank Cancels Plan to Raise N100b

By Modupe Gbadeyanka Zenith Bank Plc says it will no longer go on with its plans to raise about N100 billion from the capital market through public hearing, rights issue or any other method deemed fit by the board in local or international market or combination of both. This comes barely 24 hours after shareholders at the company’s Annual General Meeting (AGM) in Lagos approved the board’s request to raise the amount to boost its operations. In a statement issued in Lagos on Thursday, Zenith Bank said it decided to suspend the exercise due to weak capital markets and struggling

Ad
Ad
Recent Stories
Image
26-February-2024

Global Finance Names Ecobank Best FX Bank in Nigeria

By Dipo Olowookere Ecobank Nigeria Limited has been named as the Best FX Bank under the Country & Territory Awards category for Nigeria in the 2024 Global Finance’s annual SME Bank Awards. The parent company of the lender, Ecobank Group, on its part, clinched the Best Bank for SMEs in Africa 2024 award, reflecting its unwavering commitment to meeting the specialised needs of SMEs across its diverse markets. At the award ceremony held on Tuesday, February 20, 2024, at the Glaziers Hall in London, the United Kingdom, Global Finance explained that the Nigerian subsidiary of the leading pan-African Banking Group

Image
26-February-2024

GTCO, FBN Holdings, Transcorp Close as Busiest Stocks on NGX

By Dipo Olowookere The trio of Guaranty Trust Holding Company (GTCO) Plc, FBN Holdings Plc, and Transcorp Plc ended as the busiest stocks on the Nigerian Exchange (NGX) Limited last week. They accounted for 343.584 million shares worth N9.431 billion in 5,659 deals, contributing 24.96 per cent and 29.86 per cent to the total trading volume and value, respectively Data obtained by Business Post showed that the market recorded a turnover of 1.377 billion shares worth N31.584 billion in 42,040 deals versus the 1.559 billion shares valued at N36.497 billion traded in 42,546 deals in the preceding week. Financial equities

Image
26-February-2024

Excitement as Tinubu Commissions Geometric Power Plant

By Aduragbemi Omiyale The city of Aba in Abia State is beaming with excitement as President Bola Tinubu is expected to commission the Geometric power plant today, Monday, February 26, 2024. The facility is the first integrated power plant in Nigeria. It is situated in the Osisioma Industrial area of Aba. It is expected to provide 24-hour electricity to the city and about nine of the 17 local government areas of the state. The 181-megawatt Geometric power plant cost about $800 million and was done by a former Minister of Power, Mr Barth Nnaji. Electricity from the plant will be

Image
25-February-2024

Customs to Adopt Stable FX Rate for Cargo Clearance

By Adedapo Adesanya The Central Bank of Nigeria (CBN) has reviewed the formula for fixing foreign exchange (FX) rates for customs duties for cargo clearance after uproar over the constant changes in the rate. The apex bank asked the Nigeria Customs Service (NCS) and other related parties to adopt the closing FX rate on the date of opening Form M for the importation of goods, as the forex rate to be used for Import Duty Assessment,. This was disclosed by Mr Hassan Mahmud, the Director, Trade and Exchange Department of the CBN in a memo on Friday in Abuja. According

Image
25-February-2024

Climate Change: Agric Experts Advocate Smart Farming Practices

By Bon Peters Agriculture experts have advocated “smart farming practices” to combat climate change, improve productivity and enhance food security in the country. They noted that if climate change challenges were not nipped in the bud, more than 52 per cent of the country’s agricultural production would be threatened by 2050. The experts under the aegis of the Society of Action in Nigeria (SCAN), in collaboration with the University of Port Harcourt, disclosed this during a workshop organized for women and youth leaders on Thursday in Port Harcourt the Rivers state capital. A Senior Lecturer in the Department of Agricultural

Image
25-February-2024

VFD Group’s Adeniyi Adenubi Mentors Next Generation of Entrepreneurs

An executive director of VFD Group, Mr Adeniyi Adenubi, has mentored some students of the the Nigerian University of Technology and Management Scholars Programme (NSP). The mentoring session was to enlighten the next generation of entrepreneurs about the complexities of building a business, highlighting the impact of partnerships, entrepreneurial spirit, and service in the world of business, with the core message being Dream and believe in your dream. The Nigerian financial and investment expert spoke about his personal journey, which is intertwined with the dynamic principles of VFD Group, which include Entrepreneurial Ethos, Ambition, Agility, Partnerships, Innovation, Courage, and Commitment.

Image
25-February-2024

Why Trade Between India and Russia is Experiencing Upward Trend—Kotwani

By Kestér Kenn Klomegâh As President of the Indian Business Alliance (IBA) and the founder of the Imperial Tailoring Co., Sammy Kotwani, offers comprehensive insights on the evolving dynamics of Indian investment prospects in the Russian Federation. He also discusses, in this interview, aspects of business challenges and roadblocks in the context of geopolitical changes and competition as well as the current economic cooperation between India and Russia. Here are the interview excerpts: How would you characterize the geopolitical changes on investment prospects for Indians in Russian Federation? Geopolitical changes have significantly influenced investment prospects for Indians in the Russian

Image
25-February-2024

ECOWAS Lifts Sanctions on Niger, Mali, Guinea

By Adedapo Adesanya The Economic Community of West African States (ECOWAS) has resolved to lift some sanctions on Niger Republic, Mali, and Guinea. The resolution was taken at the extraordinary summit on the peace, political, and security situation in the ECOWAS sub-region in Abuja on Saturday. While the regional bloc said the political and a few targeted sanctions on the Niger Republic remain, it lifted some financial and economic sanctions on Guinea and others on Mali. Following the military coup in Niger Republic on July 26, 2023, which toppled President Mohamed Bazoum, ECOWAS imposed several sanctions on the country. Now,

Image
25-February-2024

SERAP Sues Wike, Governors Over Missing N40trn Allocations

By Adedapo Adesanya The Socio-Economic Rights and Accountability Project (SERAP) has filed a lawsuit against Nigeria’s governors and the Minister of the Federal Capital Territory, Abuja, Mr Nyesom Wike, over their failure to account for the alleged missing N40 trillion federal allocations meant for local governments in the states and the FCT. The suit followed the damning revelations by former President Muhammadu Buhari who in December 2022 stated that “if the money from the federation account to the states is about N100 million, N50 million will be sent to the chairman but he will sign that he received N100 million.

Image
24-February-2024

Consumer Goods, Banking Stocks Lift Equity Market by 0.84%

By Dipo Olowookere The Nigerian Exchange (NGX) Limited rebounded by 0.84 per cent on Friday, lifted by bargain-hunting in the consumer goods and banking sectors. The consumer goods index went up by 4.05 per cent during the session, as the banking space increased by 0.67 per cent, while the insurance counter depreciated by 0.09 per cent, as the energy and industrial goods sectors closed flat. At the close of transactions, the All-Share Index (ASI) grew by 849.20 points to 102,088.30 points from 101,239.10 points, and the market capitalisation expanded by N464 billion to N55.861 trillion from N55.397 trillion. Business Post