It’s no news that the average Nigerian enjoys title more than anything else. Some see it as a form of identity and failure to stroke their ego proves very fatal in the circumstances.
It’s not uncommon to see titles like Chairman/CEO or MD/CEO being the title addressed to someone and while some people use it indiscriminately, it may be proper in the circumstances depending on the company. By the Companies and Allied Matters Act 1990, companies in Nigeria can either be public or private whether limited by shares or by guarantee. A private company is a company with members(owners) are not more than 20 while a public company typically has an unlimited number of members. These members are also known as the owners of the company.
For every company, a set of people are employed by the company owners to be the directing mind of the company who are in charge of the day to day running of the company. They are known as directors. There is a clear distinction between the owners or members and the directors. The owners are the people who pull their resources together to form a company while the directors are employees of the owners of the company employed to manage the day to day affairs of the company. Typically, a company must by law have more than one director: a minimum of two. These directors form a board known as the board of directors or management board as the case may be. They as directors carry out the executive functions of the company by making policy decisions, conducting other staff and ensuring the profitability of the company. The head of the board is usually the most senior director and the position is usually addressed as a managing director. He is for all intents and purposes the Chief Executive Officer(CEO).
For private companies, especially companies with small and medium capital base, it is not uncommon to find the owners also being the directing minds if the company. So if Mr David owns a company that fabricates metal scaffolds with a relatively small base of N2,000,000.00, Mr David will most likely be a director and being the owner of the company, he will typically be the most senior director who manages the affairs of the company thereby making him the Managing Director and being the most senior executive, the Chief Executive Officer. So, Mr David who owns the company and takes on the role of personally managing the affairs of his company is the Managing Director and Chief Executive Officer. It is not entirely strange to see a private company owned privately by a few people and ran by another set of people. A typical example would be Uber. Uber was founded by Travis Kalanick and Gareth Camp who are the owners while the day to day running is done by Dara Khosrowshahi who is the CEO.
It’s a different thing entirely for public companies. Due to the participation of ownership by members of the general public, there are strict rules of indoor management so as to ensure accountability to all members who are not directly involved in the running of the company. Typically, the management board of a public company consists of both executive and non-executive directors. While the executive directors carry out executive functions of the day to day running of the company, the non-executive directors are independent people appointed by the owners to assist the executive directors in policy formulation. The non-executive directors are in no way connected in the day to day running of the company as that is reserved for the executive directors. Remember that the most senior executive director is known as the Chief Executive Officer. Now in the case of a public company where there are both executive and non-executive directors, will there be a change in the nomenclature of the most senior director? It doesn’t change at all. There will only be an addition of Chairman for a member of the non-executive directors.
So in essence, for a public company, the directors are divided into executive and non-executive. Both the executive and non-executive form a board of directors headed by a Chairman who by law must be one of the non-executive directors within the board. The Chairman is not in any way connected with the day to day running of the company. The day to day running will be the function of the Managing Director/Chief Executive Officer who is also a member of the board. Drawing an analogy in Nigeria, Zenith Bank is a public company whose chairman is Jim Ovia but the MD/CEO of Zenith Bank is Peter Amangbo. While Jim Ovia presides over the board and assists in policy formulation, Peter Amangbo is directly responsible for the day to day running of Zenith Bank.
5C’s of creditworthiness: What lenders, Investors look for in a business plan
Business owners need to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.
Banks usually are not a new venture’s sole source of capital because a bank’s return is limited by the interest rate it negotiates, but its risk could be the entire amount of the loan if the new business fails. Once a business is operational and has an established financial track record, banks become a regular source of financing.
For this reason, the small business owner needs to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.
Will the business that an entrepreneur actually creates look exactly like the company described in the business plan? Of course, not.
The real value in preparing a business plan is not so much in the finished document itself but in the process it goes through – a process in which the entrepreneur learns how to compete successfully in the marketplace. In addition, a solid plan is essential to raising the capital needed to start a business; lenders and investors demand it.
Lenders and investors refer to these criteria as the five C’s of credit.
1. Capital: A small business must have a stable income base before any lender is willing to grant a loan. Otherwise, the lender would not be making, in effect, a capital investment in the business. Most banks refuse to make loans that are capital investment because the potential for return on the investment is limited strictly on the interest on the loan, and the potential loss would probably exceed the reward. In addition, the most common reasons that banks give for rejecting small business loan applications are undercapitalization or too much debt. Banks expect a small company to have an equity base investment by the owner(s) that will help support the venture during times of financial strain, which are common during the start-up and growth phases of a business. Lenders and investors see capital as a risk-sharing strategy with entrepreneurs.
2. Capacity: A synonym for capital is cash flow. Lenders and investors must be convinced of the firm’s ability to meet its regular financial obligation and to repay loans, and that takes cash. More small businesses fail from lack of cash than from lack of profit. It is possible for a company to be showing a profit and still have no cash – that is, to be bankrupt. Lenders expect small businesses to pass the test of liquidity, especially for short term loans. Potential lenders and investors examine closely a small company’s cash flow position to decide whether it has the capacity necessary to survive until it can sustain itself.
3. Collateral: Collateral includes any asset an entrepreneur pledges to a lender as security for repayment of a loan. If the company defaults on a loan, the lender has the right to sell the collateral and use the proceeds to satisfy the loan. Typically, banks make much unsecured loans (those not backed up by collateral) to business start-ups. Bankers view the entrepreneurs’ willingness to pledge collateral (personal or business assets) as an indication of their dedication to making the venture a success. A sound business plan can improve a banker’s attitude towards venture.
4. Character: Before extending a loan or making an investment in a small business, lenders and investors must be satisfied with an entrepreneur’s character. The evaluation of character frequently is based on intangible factors such as honesty, integrity, competence, polish, determination, intelligence, and ability. Although the qualities judged are abstract, this evaluation plays a critical role in the decision to put money into a business or not.
5. Conditions: The conditions surrounding a funding request also affects an entrepreneur’s chances of receiving financing. Lenders and investors consider factors relating to a business’ operation such as potential growth in the market, competition, location, strength, weakness, opportunities and threats. Another important condition influencing the banks is the shape of the overall economy, including interest rate levels, inflation rate, and demand for money. Although these factors are beyond an entrepreneur’s control, they still are an important component in a banker’s decision.
The higher a smaller business scores on the five C’s, the greater its chances of receiving a loan.
Written by Chukwuma Aguwa
Don’t be fooled by COVID-related scams
Always consult the institution in charge of health-related matters to confirm any fishy information you come across.
The nature of and the manifestation of the Covid-19 disease is such that there’s only a little time available to remedy the situation before it gets chronic. Although the infection begins by exhibiting mild symptoms, if you do nothing in a short time, it could lead to death in a matter of days.
This whole picture has caused many to become desperate about Covid-related issues, launching into panic mode at the sight of any information. As a result, such people are not far away from falling for fraudsters.
With the different kinds of news flying around, you mustn’t be fooled by Covid-related scams.
The Coronavirus threatens the health of millions of people around the world daily, also killing thousands along the way. To curb the spread and remedy the situation, bodies like the CDC, WHO, and every country’s local health organisation like the NCDC, frequently circulate information around communities. However, it has also led to fraudsters taking advantage to provide fake news, and even asking for donations.
Each day, there seems to be a new account or NGO asking for donations into the health sector, and though some are legit, many are just fraudsters posing to take advantage of innocent citizens. So far, numerous complaints about scams have been recorded, especially with people who are looking to support the health cause in any way they can.
Channels used for COVID-related scams
There are three major ways scammers take advantage of the haziness of the situation to dupe people. To start with, they appeal to the emotions of humans, who see the high death toll and suffering. As a result of what is happening, people have been willing to donate funds for medical supplies, isolation centres, and financial compensation for medical workers.
Scammers take advantage of this by posing as charity organisations and solicit for funds. Most times, as soon as their target is met, they clear their footprint without leaving a trace behind.
Another way they scam people is by manufacturing and selling fake or low-quality health products. Everyone wants to get their hands on a cure, or something that can at least protect them from the virus, and scammers are meeting their needs by providing just that.
The World Health Organization currently approves only one vaccine, and any other thing outside it is outrightly fake or just a supplement that will help your body. Currently, only the Pfizer vaccine is clinically tested and approved to work. Be sure to not throw your money in the wind by purchasing some of these fake drugs around.
Lastly, scammers create systems to extract a patient’s personal information, thereby having access to the person’s true identity. It could be in the simple form of opening a registration portal where you supply all your details.
Therefore, only give information to approved bodies and not any random online site that appears legit. These fraudulent individuals can do a lot of damage to your identity. Stay vigilant, only communicate with approved bodies, and always ask questions if you are not sure or suspect foul play.
The place of electronics in COVID-related scams
These fraudsters usually reach out to you through the digital sphere. Hence, watch out for cold calls, text messages, or emails requesting donations to certain bodies. The best way to confirm the legitimacy of such a message is to visit the organisation’s official website in a different browser. Never follow the link in the mail or text directly, as it can be easily embedded with spyware. Therefore, a single click could see them extract all your personal information, including bank details.
Also, please stay away from those who claim to have a cure, and accompany it with testimonies of people who have used it. They are low graders desperate for your money. Vet them by searching online and see what people are saying. In all, always look out for suspicious messages, and opt out if you are sceptical.
In a nutshell, you should not believe any cure, vaccine or supplement that the World Health Organization does not approve of.
The government or legit health institutions do not cold call citizens to request donations or coerce them into making one. If you receive a call out of the blues, chances are it’s a scam, which is why they mostly try to hurry you to donate before you realise it. Always consult the institution in charge of health-related matters to confirm any fishy information you come across.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
- Ellah Lakes increases operating expenses by 33.36% in HY 2020
- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.