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Financial Literacy

How to fund your business without a debt sentence (Part 1)

The lack of funding is a great excuse for people who are not really ready to start a business. 

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5 things you can do to attract equity funding for your business

According to Mark Cuban, one of American’s entrepreneurs, owner of Dallas Mavericks, and TV Personality, the biggest mistake most people make is to think that they have to raise money to start a business.

As a financial advisor, I totally agree with Mark. There is no such thing as a successful business that became successful because of funding. Yet every week I receive tons of emails asking for advice on how to raise money or if I would invest in their businesses.

The answer always is “No” and you will discover the reason at the end of this article.

While I understand that certain businesses genuinely do need funding, and while funding is necessary at certain stages in a business, I do not think that every business needs funding to get started. And in fact, the majority of funding needs are not real funding needs, but the lack of ability to create money from thin air.

Most Funding requests are disguised gap in creativity and sales skills. Because with the right sales and creative skills, you can create the amount of money that you want. And you can also break down your business into the version that you can fund with your own money.

Read Also: Access Bank launches partnership with American Express to expand the acceptance of cards in Nigeria

Thus funding problem is majorly disguised creativity and sales problems. And quite frankly the lack of funding is a great excuse for people who are not really ready to start a business.

I know this because great entrepreneurs are not stopped by funding challenges. And the greatest entrepreneurs in the world all started in spite of funding challenges.

Amazon started out from the garage of Bezos’ in Bellevue, Washington. He started out with funding of almost $250,000 from his parents.

Facemash now Facebook started in 2004 by Mark Zuckerberg and a group of friends. They started out with sweat equity, technical skills, and the ability to sell their idea and build a solid community.

Apple started out in Jobs’ garage on April 1, 1976, by college dropouts Steve Jobs and Steve Wozniak. They started their business with sweat equity, technical skills, and the ability to sell a not so perfect Apple 1 product without a monitor, keyboard, or casing.

Read Also: The Peace Mass Transit deal explained – C&I Leasing boss

Bill Gates and his business partner Paul Allen built the world’s largest software business, Microsoft, from technological innovation, keen business strategy, and aggressive business tactics.

You will find a similar story for Elon Musk, Mark Cuban, Richard Branson, Dangote, and so on.

These men built their businesses from the ground up with sweat equity, the right attitude, personal savings, or support from families. Funding did not stop them and funding will not stop you if you are serious about entrepreneurship. Quite frankly funding at the early stage of a business increases business stress, dilutes control, and expands leadership complexity.

Jaiz bank

So while you may fantasize about some strange investor sent by God coming along. To lift your business off the ground. In reality, this rarely happens. You must find ways to fund your way to a proven business model. Investors rarely fund ordinary ideas or struggling businesses. They fund businesses that are already succeeding but need funding to expand that success. This is why banks rarely lend to SMEs but do so easily to successful businesses. And why the majority of successful business owners started off on their own

So why do people still waste time looking for funding?

Read Also: 4 reasons why some entrepreneurs succeed when they build their startups at this age

People gravitate towards funding for three reasons. The first is the Fantasy of overnight success. The second is the desire to use another person’s money to fix fundamental problems. That can only be solved through discipline and hard work. And the third is to make an already successful business even more successful.

Among these three reasons, only one is of interest to the investor.  Investors are not on a mission to rescue your business or make you rich. They are on a mission to increase their wealth and achieve more financial success. They will only invest in businesses that can help them achieve their goals. And until your business develops this capacity you are not yet funding worthy.

Thus the only purpose for funding is to transfer investor’s idle funds or funds that are less optimized to a profitable business vehicle. That has the capacity to generate higher profits. This means that your business must have the capacity to turnaround investors’ money very quickly. If your business is not yet at this stage. You should focus on bringing it up to this stage and then attracting investor’s funding can become easy for you.

The key to successful funding is to answer the three funding questions. First, is my business fundable? Second, do I need funding for wealth-creating purposes? And third is my business at the stage where it can turn around investors’ money without losing it? Answering these questions is key to funding your business.

A business is ready for funding when it has certain key attributes. There are seven key attributes that attract investors and make a business funding worthy.

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Watch out for the next part of this interesting series


About author

Grace Agada is The Senior Financial Happiness Director @ Create Solid Wealth. She is an Author and Column Contributor in Six National Newspaper. She is a contributor at BellaNaija, Nairametrics and Proshare and she is on a mission to help working-class professionals and CEOs become more financially successful. To learn more about Grace and how she can help you send an email to [email protected]

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    Financial Literacy

    How to grow rich with the power of profitable relationships (Part 2)

    The idea that you can build rich relationships with zero value is best left at Disney land.

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    How to grow rich with the power of profitable relationships (Part 2)

    Hello friends, to catch up on this topic, you can read up on the first part by clicking here. Now let’s continue…

    The two rewards for solving high-income problems

    There are two rewards you can get for being a high-income problem solver. The first is the value reward and the second is the cash reward.

    The value reward is earned when you enter into relationships solely to extract value. This means that someone has what you need to succeed and you have what they need to succeed. And both of you are willing to enter into a value for value exchange relationship.

    For example, if you need a job and you meet someone that can help you get a job. And if this person needs contacts or a certain service that you can provide. Both of you can enter into a value for value exchange relationship and solve your problems. The important thing for this kind of relationship to work is that both of you must come to the table with value. And the value must be comparable and worthy of the exchange.

    READ: How to move from middle class to upper class (Part 3)

    The idea that you can build rich relationships with zero value is best left at Disney land. Frankly, it never truly works this way. In the corridors of wealth and power, it is value for value. This is why the rich keep getting richer. They are always exchanging value that creates more wealth. If you want to be rich or build profitable relationships you must approach relationship building this way. You must bring value to get value. And you must constantly strive to increase your personal value every day. The value for value exchange is common in the relationship among peers, friends, and business partners. It is also common in the relationship between the older and younger generation.

    Right now, there are certain relationships that you need in your life. But those relationships will not just fall on your laps for nothing. You need to have what these relationships need to attract them to you. And you must become a person of value to attract them. Success in the value for value exchange relationship thus begins with first becoming a person of value.

    READ: How to earn over 20% returns in real estate in Nigeria

    Sometimes a financial reward is what you get in return for solving high-income problems. This is common where there is a customer involved. And where a problem can be solved using products or services. When you engage in a customer-type relationship you must offer products and services, that can solve customers’ problems in exchange for cash. And there are two ways to achieve this.

    The first way is to sell your own products and services to customers. This is a slow and laborious way especially if you are a working professional. The second way is to find products and services that are already selling. And are owned by companies or organizations that you care about. And then sell them in exchange for income. This is the faster way. All you need to do here is connect people who need a solution to the companies that can offer those solutions. This is what I call Relationship Brokering and it simply means connecting two people who need each other and getting paid for your connection. To succeed as a relationship broker, you must become a value connector and this brings us to the second point.

    2. Become a value connector

    Becoming a value connector means connecting people with a similar problem that you have solved or are solving with the organizations that have helped you solve the problem or are helping you solve the problem in exchange for cash. It is connecting people that need help with those that can help them. And it means that you must first solve a personal problem for yourself, then partner with the company that helped you. And then find people with similar problems who are ready to solve them.

    Successful value connectors thus build three kinds of relationships. They build-relationship with business owners. They build relationships with customers and they build relationships with other value connectors. The key to succeeding as a value connector or broker is to focus on solving high-income problems for yourself. And to choose companies that you have used, tested, and trusted.

    You must also ensure that the company you choose has a good reward system that can help you earn a high income or at least is willing to negotiate one with you. If you do this successfully you will not only transform your life, you will transform the lives of other people and enlarge your income in the process.

    Jaiz bank

    The beautiful thing about being a value connector or broker is that you don’t work alone. You work in partnership with reputable organizations and people that can increase your value and credibility. All you need to do is be the one that connects people who need help with the companies that can help them.

    Perhaps you are thinking to yourself where do I find these companies, how do I know which problems are high income-producing problems, how do I negotiate a reward for myself and how do I do all of these with my busy work schedule etc. The solution is to join a problem-solving platform.

    3. Join a problem-solving platform. 

    A problem-solving platform is a platform that exposes you to a diverse range of problem-solving opportunities that produce high income, help you build rich relationships, and develop high-income skills. This means that you don’t need to set anything up all by yourself. All you need to do is join a platform that has already set it up for you. So if you want a one-stop-shop for solving high-income problems, entering into value for value exchange relationships, or developing high-income skills our platform is the answer.

    Our Relationship Brokering platform is focused on helping people solve financial, investing, retirement, wealth, business, and relationship or networking problems. So, if you want to solve any of these problems for yourself. And want to help other people solve this kind of problem in exchange for cash. You can join our platform. However, you must qualify to be considered. To learn more, send an email to [email protected].


    About the author

    Grace Agada is the most sought-after Financial Planning expert in the country and is quoted frequently in leading Newspapers, magazines, and blogs. Grace is a Renowned Keynote Speaker, Author, and Column Contributor in Punch Newspaper, This Day Newspaper, Vanguard newspaper, Business Day Newspaper, Leadership Newspaper, The Tribune Newspaper, and Online Platforms like Nairametrics, Proshare, and Bellanaija. Grace is the Founder of “The University of Wealth” The author of “The Financial Freedom MBA Program”, “The Better Life in Retirement Planning Blueprint” and “The Wealthy Business Blueprint”. Grace is on a mission to shrink the middle class and populate the upper class. She has been featured on BBC Africa. Business Day TV. Inspiration FM. and inside Naijatv. And she consults for Numerous Top Organizations, Company Directors, CEOs, Senior Executives, and High-Income Professionals.

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    Financial Literacy

    How to pre-qualify for your banks’ Retail/SME loans

    The cash flow of borrowers taken in context with the nature of their businesses is crucial in determining their loan eligibility status.

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    Get a loan in 24hrs, no collateral, no plenty questions

    The CBN’s directive of July 3rd 2019 compelling Nigerian Banks to maintain a Loan to Deposit Ratio (LDR) of 60%, wherein SMEs, retail, mortgage and consumer lending would be assigned a 150% weight in the computation of this LDR, has definitely been a game-changer in the industry as more commercial Banks focus on retail and SMEs to meet their lending quota in order to avoid stiff CBN sanctions that accompany noncompliance.

    Indeed, the mass market has become the battleground for Nigeria’s financial institutions with institutional giants previously considered huge corporate giants jostling with Fintechs and MFBs for retail and SME customers, each outdoing themselves with mouthwatering rates and relatively easy to fulfil covenants for loans that are “a click away.” Naturally, this should be good news for the market as getting a loan has reportedly never been easier, but it is not. Most retail customers simply do not qualify for the type of loans they need.

    READ: Nigerians will soon use their gold as collateral for loans – Minister

    No matter the pressure from CBN, banks are still profit-making institutions that are duty-bound to protect the interest of their stakeholders, hence their need to comply with best credit practices even when disbursing the smallest of amounts as loans. Their loans are thus, only given to those who meet their requirements, whose records show favourable odds.

    Here are a few ways of increasing your odds at being pre-approved for your Bank’s retail/SME loan:

    READ: Interest rates of some loan apps in Nigeria

    Consolidate your banking activities

    If you are reading this, then I can safely guess you have an account in a Nigerian bank. If yes, then you probably have accounts with more than one bank; and you probably wear your resources thin trying to service these accounts because “they serve different purposes.” While this may be good for financial planning, it definitely works to your detriment in showing your true cash flow from your turnover.

    Most retail loan applications require just one bank statement, and in the case where you may be allowed to present statements of more than one bank account for your loan application, a reviewer may suspect duplicity of transactions. Save yourself the hassles and consolidate your banking activities to one account for the purpose of your loan request; to show your capacity.

    READ: 4 Nigerian banks that offer easy-to-get car loans

    Ascertain your credit status

    Do you have any outstanding debts owed to any financial institution? Perhaps you guaranteed a loan with your bank details or one of your abandoned accounts has a negative balance? Clear it before putting in your loan request.

    Credit is mostly about character. Any financial institution willing to lend you money will make sure that you are in the habit of settling your debts, hence their need for a credit check. There are no forgotten loans in the system; whilst they may have been written off, they are not forgotten. Know your credit status today.

    Build turnover and average balance

    Turnover is the total amount that passes through an account within a period while the daily overnight balance on the account summed up and divided by the number of days under review is the average (daily) balance.

    There is much emphasis on turnover amongst customers who seek loans; however, any credit officer worth his pay usually uses turnover in tandem with your average balance to make decisions on a loan request because the turnover addresses capacity while the average daily balance addresses available capital. Turnover may be easy to manipulate but your average daily balance is not. Build both.

    READ: FG grants N22.3 billion tax credit to Dangote Cement

    “Show your workings”

    As simple as it sounds, this could be the most common reason why some account statements are rejected as fraudulent and the loan requests of their owners denied – because they do not show any underlying transaction or pattern. They are haphazard at best.

    Jaiz bank

    It has become commonplace for SME owners to use their company’s account for personal expenses; withdrawing cash with their ATM cards and hardly describing their transactions in details such that a reviewer is unable to decipher who their suppliers or customers are from their bank statement. Not even salary payments appear to be recurring on these statements, as most transactions are in cash.

    Account statements like this show early signs of impropriety that will have any credit officer doubting the management competence of the loan applicant.

    Bottomline

    All of these points, well-observed, may get you pre-approved but no loan is disbursed without a verifiable source of repayment. Collateral will definitely help to assure the lender but the cash flow of the borrower taken in context with the nature of the business is key.

    While personal loans may be approved based on account analysis, valid Know Your Customer (KYC) documentation and credit checks (depending on the amount); contracting financial experts for proper bookkeeping and development of business plans could go a long way in getting your SME loan request approved.

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