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Nano, Micro, Small, Medium and Large Businesses: Igniting Funding and Capital Raising With Over 25 Different Options in a Pandemic

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Timi Olubiyi funding

By Timi Olubiyi, PhD

In the country, apart from the known business challenges such as the decrepit infrastructure, inconsistent government policies, double taxation, regulation irregularities and the pandemic disruptions in recent times, overwhelmingly, lack of capital or funding issues contribute majorly to business failures.

According to findings of several surveys, one of the top challenges faced by entrepreneurs and businesses in Nigeria today is access to funding.

Seemingly, funding is the bloodline of any form of business, therefore, whether it is a startup, nano, micro, small or medium-sized business, or an established large firm, knowing how to raise capital can often make the difference between business success and failure.

In fact, funding is important at all business stages and cash which is most time refer to as “capital” in business terms majorly dictates the pace of performance in any business. Simply put capital is the energy source that all businesses need to operate, grow and mature into a strong, vibrant enterprise.

Invariably, without funding or capital, it will be extremely difficult to get any enterprise off the ground. However, the structure that exists in the business significantly affects the access to the choice of fund options.

Recall, every business has a different structure and needs, it is, therefore, imperative to state that no financial solution is one size fits all, fund options usually require different rules and steps.

Consequently, businesses will be required to carefully plan, research, learn, and understand the necessary funding option in order to come up with the right decision.

So, the big question for businesses is what are the ways to adequately raise capital for seamless operations? And this is the focus of this piece.

Capital comes into any business particularly in two ways: as equity and as debt. However, donations, grants, incentives, interventions, or subsidies can also be employed in certain aspects of a business to encourage activities in particular industries or sectors by the government.

Some government agencies and institutions responsible for this include the Bank of Industry (BOI), the Nigerian Export Promotion Council (NEPC), the Central Bank of Nigeria (CBN), Bank of Agriculture (BOA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Development Bank of Nigeria (DBN), Nigerian Export-Import Bank (NEXIM) among others.

Just like other forms of capital raising options these grants and subsidies can be initiated for either short-term or long-term purposes.

That said, equity capital involves exchanging a portion of the ownership of the business for financial investment in the business, most times it involves selling shares of the company in exchange for funding.

Equity capital is raised when a business sells its shares to investors. The ownership stake resulting from this equity investment allows the investor to share in the company’s profits.

Equity capital is usually a cheap form of funding and is an important source of capital on a long-term basis. However, sometimes it involves going public, getting listed on an exchange and also giving up partial or major control of the business.

On the other hand, debt capital is when a business borrows fund from individuals or institutions and agrees to pay them back later. Debt capital simply means loans and borrowings. The main consideration in debt capital is the ability of the business to generate sufficient returns to service the debt (interest and capital repayment).

A typical mode of raising debt capital is through bank loans. Banking institutions provide loans to individuals or businesses who approach them with a solid business plan and good business structure with capacity for repayment.

Bond is equally a debt instrument and a way of raising debt capital as well. Without doubts, it belongs to debt capital categorisation because the authorised issuer (business) owes the bondholder debt and it depends on the terms of the bond issuance.

The most significant difference between equity and debt is that, unlike debt, equity capital does not require an amortisation schedule for repayment. More so, equity capital involves the investor taking an ownership position in the business.

Significantly, there are several sources to consider when seeking business funding or any financing, some of them are expressed here.

The easiest and starting point for small businesses from context observation is usually with self-funding and personal investment, where entrepreneurs leverage their financial resources to support business operations.

Self-funding can extend to family, associates and friends for capital, otherwise referred to as bootstrapping. Both self-funding and bootstrapping lets business managers, operators and entrepreneurs leverage their financial resources to support the business operations.

Further to this is angel investment, where investors who are generally wealthy individuals or retired business executives invest directly in a business or startups owned by others.

These angel investors are often leaders in their field who not only contribute their experience and network of contacts but also their technical and/or management knowledge. Most times, this form of capital raising is in exchange for equity ownership in the business and an active management role.

Also, trade credit is another significant form of capital raising option where business suppliers are willing to transact or sell on credit.

Such credit may range anywhere from one month to three months or as agreed. This is a very good method for businesses to fulfil short-term funding needs. It is an inexpensive method of funding for any business, I must say.

Further to this is private equity investment, where private equity firms raise equity capital that is not listed on any stock exchange for investment purposes.

Invariably, these firms raise funds from investors and then invest these funds in promising startups and businesses that require capital. The drawback of this funding option is that a controlling position or substantial minority position in the business is usually acquired and then look to maximize the value of their investment.

Thus, the entrepreneur might not have sole control over the business decisions, which may lead to conflict.

Looking at another capital raising option is retained earnings as a way of raising finance. It simply means businesses can reinvest any set-aside profits for business operations for expansion, equipment purchase, and development purposes.

In recent times, the use of crowdfunding to fund business operations is on the rise, where a large number of subscribers, called crowd funders, contribute or invest in a company or project.

A typical example of crowdfunding is proposing subscribers to invest N1000 and even if 1000 people invest, the business can raise N1,000,000 easily. Crowdfunding is getting popular because it is low risk for business owners and full business control is retained.

Crowdfunding continues to gain popularity with the rise of social media and the internet because it became easier to reach several people by putting in the minimum effort through this medium.

Some not too popular funding options include invoice factoring sometimes referred to as invoice advances which is an option where a business sells its receivables at a discount to get cash up-front.

It allows businesses to borrow funds against the value of invoices due from customers. Invoice factoring can be a great option if you have many corporate clients who have long payment terms or tend to pay as late as possible.

In addition to this is a business overdraft, which can be an ideal source of finance for short-term funding. An agreed overdraft lets businesses use their current business account to make payments that exceed their available balance in the bank.

Another similar source of short-term capital raising option is the business credit card. This is commonly used by structured businesses to access agreed funds on credit in the bank.

Fund withdrawal in life insurance policies and pension funds are other options for entrepreneurs and business owners. Many insurance companies have, in recent years, liberalized their criteria for allowing policyholders to borrow against the value of their policy.

There are other methods for funding such as though strategic alliances, getting business loans from microfinance providers, selling assets, access to inheritance, hire purchase/leasing, raising funds by winning contests, through co-operative society is another means, informal contributions (Esusu), gift and donations, franchising, or through on-line financing services are others but these should be used only if you need funds urgently, you are qualified and know the risks involved.

The key information from this piece is that there are many business funding options available for businesses. Therefore, business owners, managers and entrepreneurs do not have to get discouraged if one does not work out, other options can easily be explored.

To find the right fit, in-depth research and adequate due diligence are imperative, having in mind these following questions- how much is really required for the business? When is it required? How long will it take to raise the funds? What are the specific requirements to access the fund? What will the fund be used for? What is the associated risk with the fund type? From whom is best to raise the fund? How expensive is the fund? How and when is repayment? Is the business actually fundable or bankable? Because some fund option may be a perfect fit for a business situation, while others may be completely impractical, therefore due diligence is absolutely required.

Aside from every business having unique funding needs, each funding option also differs in availability, terms, funding amount option, and eligibility criteria. Therefore, each fund option needs detailed attention ahead of time. Whether a business opts for a bank loan, an angel investment, or a government grant, note that each of these sources of financing has specific advantages and disadvantages. Good luck!

How may you obtain advice or further information on the article?

Dr Timi Olubiyi is an Entrepreneurship and Business Management expert with a PhD in Business Administration from Babcock University Nigeria. He is a prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities and Investment (CISI), and the Securities and Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com, for any questions, reactions, and comments.

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Teeth Cleaning for Children and its Significance

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Teeth Cleaning for Children

Teeth cleaning is really substantial, so for children as for adults. Tooth plaque and bacteria can be removed by brushing teeth and avoiding the illnesses of gums and decay of teeth. People should brush their teeth in the morning and in the evening just before falling asleep, that is twice a day.

Parents should teach their children to clean their teeth early in the morning and make teeth cleaning an indispensable part of the list of their daily must-do activities so that this habit will stay with them when they become adults.

From what age, children should start off brushing their teeth?

Commence teeth brushing once the first tooth appears, in general beyond seven months of age. First and foremost, start to apply a mild wet cloth, as well as parents, can try cleaning the teeth using water and a mild toothbrush. Teeth are extremely significant for adults and, notably, for children. Teeth aid babies in speaking and eating, so it is significant to take care of them properly from the first months of life onward. Many children do not allow cleaning their teeth as it is an unpleasant activity for them. In this case, parents are advised to try to entertain the kid with the games on smartphones, for this a vivid instance can be the casino gaming like 22Bet Nigeria. So, as the parents adore much to play, they are able to grab the attention of children by these games and clean their teeth in the meanwhile.

The pickup of the right brush and toothpaste for kids

Children under 18 months only make use of only water during tooth brushing.

From 18 months to 6 years old, apply a toothbrush with a tiny head and mild stubble. Check out the fluoride quantity on the pack of toothpaste, it should be with a low.

Teach your kid the right brushing of teeth

Cheer your children up to be engaged in the process of tooth brushing with pleasure. Support them to adopt this skill and entitle them to brush their teeth on their own. After the age of 8, kids develop the perfect motor ability required for cleaning the tooth. Nevertheless, control over the children is mandatory until parents are assured that the kids are able to succeed in this activity and many others by themselves.

After cleaning, cheer your child up to spit out the toothpaste, rather than to swallow it with water.

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Making 2023 General Elections a Rewarding One

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2023 General Elections

By Jerome-Mario Utomi

The central interest of this piece is not to spot leadership faults in Nigeria or proffer solutions to what the present administration is not doing well to salvage the socio-economic well-being of the poor masses. Rather, the present piece is out to perform two separate but related functions.

First, as the nation races towards 2023 general elections, the piece x-rays the volume/strength with which foreign observers have in the past two decades raised strong voices against uncivil antics particularly the thorny transparency challenge that characterized concluded elections in Nigeria and the organized resentment it brought to the nation at the global stage/ exposed the nation to the pangs of sociopolitical challenges that prevent her from enthroning true democracy that ensures a corruption-free society.

Secondly, it is primed and positioned to find both practical and pragmatic ways Nigerians and particularly the present administration can use the forthcoming 2023 general election to correct the nation’s leadership challenge which is gravitating towards becoming a culture.

Aside from the fact that we cannot solve our socio-political challenges with the same thinking we used when we created it, the 2023 electoral project will among other things demand finding nations that have met the electoral challenges that we currently face, how they had tackled it and how successful they had become. We must admit and adopt both structural and mental changes, approaches that impose more discipline than is conventional.

Indeed, we are challenged to develop the world perspective in performing the traditional but universal responsibility which the instrumentality of participatory democracy and election of leaders confers on us, as no individual or nation can live alone and our geographical oneness has to a large extent come into being through modern man scientific ingenuity.

Again, with the amendment of the electoral Act that presently accommodates the electronic transmission of results, one can say that as a nation, we have made some political/electoral gains.

However, to help achieve electoral perfection in the country, there exists also, a study report which provides a link between the factors that impede credible election in Nigeria as well as made far-reaching measures that could pave way for development and orderliness in the nation’s political sphere.

The report was put together by the Centre for Value in Leadership (CVL), Lagos in partnership with the Policy and Legal Advocacy Centre (PLAC), and supported by MacArthur Foundation. It has as title; Ethics and Standards in Electoral Process in Nigeria (guiding tools/principles).

Going by the content of the report, an election is said to be credible when it is organized in an atmosphere of peace, devoid of rancour and acrimony. The outcome of such an election must be acceptable to a majority of the electorate and it must be acceptable within the international community.

If elections are to be free and fair, laws designed in that regard must not just exist; they must be operational and be enforced. And the power of freedom of choice conferred on the electorates must be absolute and not questionable.

But contrary to these provisions, since the re-emergence of democracy in Nigeria in 1999, our country has conducted different elections. These elections have many common features and few things differentiate them.

For instance, the elections were all conducted periodically as expected. They were closely monitored by domestic and international observers, and they aroused varied contestations from Nigerian politicians and voters and they were marred by varying degrees of malpractice.

The implication of this finding is that the electoral process in Nigeria is rendered vulnerable to abuse, through massive rigging and other forms of electoral malpractices by political parties- especially by those in power as they seek to manipulate the system to serve their partisan interest.

Elections, which are a critical part of the democratic process, therefore, lose their intrinsic value and become mere means of manipulation to get to power.

This, the study noted, derogates the sanctity of elections as an institutional mechanism for conferring political power on citizens in a democratic dispensation.

As a way forward, it underlined four basic conditions necessary to create an enabling environment for holding free and fair elections. These include; an honest, competent and non-partisan body to administer the election, the knowledge and willingness of the political community to accept basic rules and regulations governing the contest for power, a developed system of political parties and teams of candidates presented to the electorates as alternative choices. And an independent judiciary to interpret electoral laws and settle election disputes.

For transparency and accountability during and after the election, INEC should; be free from any form of financial encumbrance, funding of INEC should henceforth come from the first-line charge. The commission should also be removed from the list of Federal bodies. And, the procedure for the appointment and removal of the INEC chairman and members of the board should be reviewed.

To perform its role effectively as the final arbiter of electoral dispute, and curb the excesses of the politicians, the court must possess both juridical expertise as well as political independence. There should be adequate time between resolution of conflicts and swearing-in of elected officials; section 134 (2) and (3) of the Electoral Act 2010 should be reviewed such that election tribunal cases are expedited. And finally, the court must resist the political or financial pressure and adhere strictly to the underlying legal grounds in their consideration of injunctions.

Aside from adopting or enforcing provisions requiring aspiring candidates to have been a member of a political party to address a high prevalence of defections before elections which dilutes political party growth and development, political parties should act as a bridge between people and the government and help integrate citizens into the political system. Also, they should inform citizens about politics through socialization and mobilization of voters to ensure that the decisions are made by the people.

While the report stressed that any discussion on democracy without the right to receive and impart information is empty. It, however, regretted that journalism in Nigeria with regard to its constitutional roles is not scientific; adding that Nigerian politicians have always used the media in an unwholesome manner.

To exit this state of affairs, the report urged practitioners to help build enlightened electorates as public enlightenment is a prerequisite for free and fair elections.

The Nigerian Broadcasting Commission, private and state-owned media outlets should strictly enforce, and adhere to regulations on media neutrality and take steps against hate messaging and misinformation in the media. The media should uphold the ethos of providing accurate and factual information to the citizens at all times.

While this is ongoing, the Nigerian Police Force should be guided by,  and conform to the appropriate principles,  rules, codes of ethics, and laws governing police duties especially in relation to crowd control and use of firearms. They should maintain impartiality and eschew partisanship or discrimination between the ruling and non-ruling, big or small.

Jerome-Mario Utomi is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via jeromeutomi@yahoo.com/08032725374.

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Money, Society, Development and Economics

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By Nneka Okumazie

For some people, all they will ever become is what money can make them.

For them, the power of everything money can do makes everything about money.

They often measure to money and measure for money. They talk for it and ensure it is what is seen about them.

Many of these people have money above all culture in some of the countries the people there have described as unbearable.

In most of these countries, the same reason government does not work is the same thing outsiders are about, bringing the country to a contiguous halt.

Government is all about who can grab for self and interests, around power, resources and money.

This same reason is why many organized crimes exist and several kinds of harmful practices across the private sector.

Money will never develop any country. Though some continue to say money is what is lacking.

Money will never change anything about anyone because if there are real changes at any point, money may have enhanced it but was never cause.

Things that look like changes that money made does not change; they are just more of how money keeps itself important.

For many things done because there was money to do it, they are many times purposeless. There are also others that should be been important, but because money was more important in that project, it also became purposeless.

If in some developing country, someone lives in a nice apartment or drives a cool vehicle, making that individual seem important, the importance of the individual is to whom, and what purpose does it serve, and for what it serves, what does it change, affect or improve?

The comfort that is lived in many of these places is a false peak.

It keeps them there and there is rarely much else to find meaning for.

Money continues to dictate how to be seen to have it, going around in circles, absent of progress, but ensuring participants are unaware.

Money, for what it can, makes people become a sunset. Money stays important using people as tools to itself.

[Ecclesiastes 6:7, All the labour of man is for his mouth, and yet the appetite is not filled.]

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