The Smart Way to Finance Your Business: Customers First

Hello and welcome. My name is Tavishima Aede. I solve sales and marketing challenges and I'm making today's recording at home, so expect to hear some noise in the background. The goal of this podcast is for business education. So if you're impressed, please spread the word so that your friends and family members in Nigeria and abroad can benefit from the questions that we tackle. They can do that by subscribing on Spotify, YouTube, Apple, or any player of their choice.

And if you'd love to connect, then you can call SMS on WhatsApp me on 08064662140. Today on the podcast, the very old question that seems to come back again and again and again in a different guise. And today it was a listener question from what's his name again? So let me check my notes. Jerry, yes, from Jerry in APO. APO is the, let's say, I'll put it now, Abu is in Abuja. Anyway, I don't know how to explain it. I say like a local government,

it's a part of Abuja. Let me just put it that way, where the old legislative quarters used to be. So Jerry from Abu runs a snack business and he called in not on the podcast because of course we can't call in on the podcast, you know, on my radio show. And he runs a snack business. And he was trying to see how he could drum some support for his business. Now, based on the yarns that Jerry and I had on the air, I got the feeling that what he was looking for was a benefactor for his business.

A benefactor is someone who out of goodwill or who out of kindness or who out of you know, I love Jesus Christ or you know, I love humanity or whatever person just decides I like your horse will let me just dash you money, no string attached. Now some of you always must be thinking, do people like that exist? And the answer is yes, there are benefactors. And if you think about it hard, you will see that either you or your parents or somebody, you know, has actually benefited from benefactors in the past.

There are some of those people who have said, you know, I like what you do. Let me just bless you with this small money or let me just support your house with this small, you know, this thing or nothing. So benefactors do happen. And yes, there are people who are looking for benefactors in business. I'm not going to fault anybody who's looking for benefactors. So that's the impression that I got. Nasha is benefactors that he's looking for.

And you know, we had the conversation. I mentioned the usual thing because to be honest, because benefactors are rare. Whenever anybody finds out that there is a benefactor in this community, excuse me, you find out that they're usually plenty people on their neck, like, oh, this is a good guy. He likes to drop paper. People will start flooding him. There's a good woman, she likes to take care of people, people who start flooding her.

So to be honest, even if there's a benefactor within arm's reach, before you reach that person, you go hard, honestly. And even when you do, a person is probably overtaxed. So benefactor for your business, you know it happens, but don't count on it. And yes, there are some things you can do from a sales and business development perspective, like using principles around stakeholder management to manage that kind of relationship because benefactors, I can assure you,

benefactors in Nigeria are used to people coming looking for handouts as far just give me money to solve my problem. That's all. Now, because there's a huge handout culture in Nigeria, if you happen to meet a benefactor, you strike up something with a benefactor, it drops some money for you and then you start doing good stakeholder management. It will leave an impression, I can assure you. You collect the money, you say thank you once in a while you show up and greed, not because anything, just because I'm angry, that's all.

Then once in a while you show up and then you give updates. Thank you very much. That 50K you gave me, I did like this. I did like this. This is what was able to I was able to do the money, I was able to increase it. I was able to achieve this impact. I was able to achieve that impact. So from those kinds of moves, yes, you will be able to maintain a relationship with the benefactor to make sure that next time you want to go and beg in quote, you know, you'll be given a favorable ear.

But then, of course, remember that I keep talking about over here on the podcast, it's not just about value that we extract. It's also about value that we can give. So we also should be keeping our eye open that this person has been blessing me, you know, with money every once in a while. What can I do to make this person's lives better? Small, small things. It helps. Very, very, very small, small things. I told you guys about how I got my first mobile phone.

Mobile phones had just come out. Things were damn expensive. Yeah, my mom, she had one. She bought one for my brother because he was in uni like by then. But I was in E fair. So, you know, there was no service because it took a while before service rolled out. But eventually service got to E fair and the things are so expensive. I just told mom. She like, you know, just flashy. No need. Like I don't need a phone. I know some of you will be shocked, but that was it was early days.

So like, how was I supposed to know mobile phones are going to become like revolutionary, you know, So I told her, no need. I don't need the phone. No Ala. But mom, she had a bunch of people that she had been carrying along in her career because of the circumstances around my parents break up and things like that. Mom, she has always kept a very sharp eye when she was young around young woman, like this young woman be like, say, you know, like she has something.

So my mom, she was always mentoring, carrying around people from one place to another like that. Young women in particular, especially people in the secretarial, like administrative staff, because you always find someone who is a secretary and you can't tell that no, this babe has something. She's sharp, she's intelligent. This person is executive material. So my mom had a thing for carrying these people along and grooming these sorts of people.

So Momsy was a benefactor to someone's career. The other person was a beneficiary and some of them will keep in touch with Mumsy, you know. So one of those ladies happened to get a job in a telecommunications firm MTN at an executive level. And that was a conversation like ma, all the things, you know, for my career, you know, I can't pay you back, blah, blah, blah. I know that Tabi doesn't have a phone. Just take this one and give Tabi.

And that was my first phone. Samsung Blueface and then when I held that thing in my hand and I was standing outside my room, you know you above me, I will know then I was in block 7 room 2O2 second floor. I stood in front of my room. I was looking at this phone. Something just struck my heart and a voice told me that this thing will make you millions. I was like mobile phone and then that's what my love with the mobile phone began anyway.

So it was a manufacturer basically. I was just trying to say thank you, ma'am, all you've done. I can't have money to give you back. So you know, your son doesn't have mobile phone, just management take and give your son. So we should always be having these kind of relationships with our benefactors. Don't just go and be collecting, collecting, collecting. Try and look for ways that you can show value for some of your benefactors.

If you try and give them money will be an insult. Like let's say I run into down with that down, which is like your correct guy. I like your podcast. You know, let me bless you. Just take this 500 M, I'll be very happy. But because that is a big boy, there's no amount of money I can take and say I want to give down with it. So even when I hammer and I'm a billionaire and I say down with a what's up now, you know, you really bless my life.

Just take this 1 billion, you know, you'll be somehow, you know, down with your say. Look, young man, when I saw you that time and I gave you this 500 M, it's not because I was looking for anything in return because I could see that you're a sharp guy and I say let me bless you. So don't try and insult me by thinking I did this thing for money. Keep your money. I have my own. So if Dan would, he decides to bless me with 500 M truth of matters, there's no amount of money I can give him back.

So I need to look for ways to be adding value to him. Who knows, maybe then he will have a young nephew or something. And I can say, oh, Uncle Dan would say, I noticed that your nephew is doing like this, Like this, like this. Yeah, no problem. Now let me take him under my wing. I can teach him one or two things, especially, you know, regarding sales, you know, let me just internship the guy, groom him in one or two things.

Then by the time we took him back in, your organization in downloaded industries, you know, will be a valuable asset. So maybe that's how after downloaded dashes me 500 M, I'll be able to, you know, sow into his, sow back into his career. But anyway, some of what I'm saying is benefactors very hard to find. If you find one, don't be a professional beggar. Make sure that you're only extracting value from the person, but that you're delivering value as well.

And if you listen to the podcast, you'll be able to learn things about stakeholder management, delivering value, all these sorts of things that you can use to build relationships with your benefactor. So those are some of the gist, but then I now decided to expand the conversation that you know what, for people who are looking for support for the business, it's not just benefactor, they're also investors who can support your business.

You can also collect debt that is DEBT loans to to grow your business. And you can also get support for your business or you can also finance your business by from your customers. Now the key thing I wanted to stress over on the radio, I want to stress right now is when it comes to support for your business or growth of the business, Benefactors is good, but hard to find the other two investors or debt is OK, they're good.

But the easiest or the safest way is actually to finance your business from your customers. Finance your business from your customers. Let me say one more time, finance your business from your customers. What that means is get more customers, do a good job in retaining those customers, increase, increase your prices, small, small, small over the long term. And then the cash flows that you get from that is what you throw back into your business.

Because when you have an investor, they want a share in your business and they want to determine one or two things. And some of us, the reasons why we entered into business is because we don't want to answer yes, Sir. You cannot take an investor in your business and say you will not answer yes Sir. You will have to answer yes Sir or yes. MA is just part of the package. Even if it was not part of the agreement, after some time, the guy will tell you that look,

young man, I gave you 10 M for this business. You're saying that I cannot tell you anything about how to run this business. Come on, be a realistic. Even if it's not in the agreement, I can assure you that one day that's what the guy will say. Debt. If you take debt, you must pay back the loan, whether the business grows or doesn't, whether you are fine or you're not. So these things come with obligations that financing from your customers does not.

When you finance from your customers, they get their product or their service. So they have no other hold on you nor the obligation on you. The money that you get is free and clean and yours to use. I'm also hoping that you will use it, you will reinvest some of it into your business. Don't make the mistake that some of us made. There was one guy who used to tell me that, look, young man, do not eat your capital. I did not understand what he meant when he kept saying don't eat your capital, Don't eat your Capital One day.

He put it like this because it was a much older gentleman. He said back in the days when we were in the village, not me. I didn't grow up in the village. I'm a Township boy. I was born in Makudi, then from there to Abuja and from there to Lagos and then the most rural rural place I ever lived was I'll say if if I was a small town by my city boy thrown through. So you say back in the village is how it happened. You will have like 100 heads of yam and you will sow all of them and they will reap yam.

What will not happen is you take yams and store in the ban. There are some that you will eat, you and the family. There are some you will take to the market and you will sell. There are some that you just decapitate the head and you keep that you will use to farm for the next season. So that's what the guy was telling me. Don't eat your capital. If you harvest all the yam, I eat everything now. Next season there'll be nothing to plant.

But I didn't understand and I went through a very long time of eating all my capital. If I do business, 400K enter pure. I'll clean everything if I do another one. 100K enter. Yeah, I'll clean everything. The one that I did. Me and my brother. 800K entered. Oh, boy. We just clear everything. We're eating our capital. So please do not be eating your capital. Some you eat, some you will apportion, some other you will invest back into the business so that in another season there'll still be something that you can eat.

All right, now, where are we? Because I lost my train of thought. I can't remember how we got here. OK, so so for Jerry, no benefactors. I mean, so I've already found what the benefactor is out of the goodness or the person's heart, out of the kindness, you know, person wants to be a nice guy or the baby wants to be a nice baby because that's your money. No, one reason why I think benefactors is not a good idea is because if you're suffering from some business problems,

then having a benefactor is just delaying the problem. And these are some problems that I wanted people to be really mindful of #1 is poor unit economics. And then number 2 is not enough customers. I repeat, problems that you can also by having benefactors #1 is poor unit economics and then number 2 is not enough customers. This is what poor economic means. Unit economic just means when you have a product or your service, a certain amount of time and money effort goes into creating that product or goes into creating that service.

When you sell that thing to the public, you want to make sure that you add enough money on top so that you're able to recoup the time and the money that went into making this thing. And then there's enough extra that you can use to flex and buy shawarma and then also to reinvest in the business. I repeat, if you create, let's say you import headphones, yes, gamer headphones now, and you import 1 gamer headphone AT200K.

If you sell the gamer headphone AT250K, is that 50K enough for you to put something in your pocket, enough for you to reinvest back into the business and then enough for you to settle, you know NEPA, what else? Because you have a physical shop, so you have NEPA, what else? You have to buy data. Then you also need to pay your sales people in the shop. That 5050 K you're putting on top, is it enough? So you need economics just means that you want to make sure that everything is adequately priced so that by the time you collect all that money on top, there's enough for you, There's enough for running expenses, there's enough to reinvest back into the business, and there's also enough to flex.

So that's what you need economic means. So if you're importing gamer headphones from America to sell in Nigeria, you know you need to look at the situation very well. You imported it AT200K per one. Should you be selling it at 2:50? Does that make sense? Or should it be 300K or 350K or maybe even 400K? Some of you who said no, I don't want to be a thief, you know, it's not about being a thief. You know, facts is facts.

We have hyperinflation in Nigeria. You pay for shop, you pay for salary, local government, people who come and harass you, You pay all kinds of things. There's money that's involved in running this business. It's a matter of just sitting down and looking at how much is it costing me to run this business. I imported 100 headphones. How much do I need to put on top to keep this thing going? It is that simple. It's no matter of being a thief because some people will hear that you imported the car for 5

million, but as you're selling it for 15,000,000, then they'll say you're a thief, that you're gouging profits. Look guy, this is not a matter of gouging profits. The numbers either work or they don't. So point economics now is that there are some people who are not putting enough money on top of the product that they're selling. And so because of that, they're losing money every single day. They just don't know. If a benefactor comes and gives you 5 M, you will think you are making progress, but actually you are not.

You are losing money because the unit economics is bad. Your business is dying slowly. It's just that somebody has used 5M to cover your eyes, so you can't see that your business is dying slowly. So there's some things we need to fix first before we start looking for benefactors. Then the problem of not enough customers. If we have not, if we don't have enough customers, then we're losing lots of traction on a daily, on a weekly basis.

You know, steady your business is dying, but you don't know if a benefactor comes and dashes you 10 M, your business is still dying. You just don't know because somebody has used 10 M to cover your eye, but your business is dying slowly. The way I explained it is you are taking five steps forward, but 12 steps backward. OK, no, maybe that's too much. You're taking five steps forward, but eight steps backwards. Either way, the progress you're making is not like that.

The business will still die. So before you look for a benefactor, before you look for investors, before you look for debt, make sure that your unit economics is on point. You're selling things at the price that are actually good enough to be able to keep the business going and make sure that you're getting enough customers. It's not just OK, it's not just enough that the price is right, but you also need to be selling in the right quantity to keep this thing moving.

So if the right price to sell the headphone, you imported it AT200K and the right price to sell it is at 550K for one, but then you're only selling one a month. Is that enough to keep this business moving or are you supposed to be selling, you know, 3A week? But that's up to you to decide. Now for some of you that will say how can give me headphone with 500 Ki am not making this stuff up. This thing exists. I'm telling you, there's one time mom, she came whenever mom,

she comes to Abuja because she's a retail therapy kind of woman. She likes to go to shops, she likes to look and look and look before I know you should buy the shoe, buy the shoe, buy that. And I say, mom, you remember you're a retiree or it's not like before you know any salary again, no, she will laugh. I said how funny how, how, how things change. And so enter one shop now 'cause mom, she wanted to buy a printer because she still does some administrative work for some charities now.

So she was looking for a printer to buy. And I said, ah, I need new headphones. So, and I have small cash on me. I was thinking, OK, if I see one headphone that I like and you know, the money is not, you know, now just you understand now. So collect something from her and on top so I turned into the headphones section now for gaming headphones I saw one beautiful headphone this headphones looking sweet. I picked it and I said to myself self you have found brand new headphones.

And as I was walking to detail now, because when I was thinking, you know, like 50K or something, by the time I turned the bottom, I say, yeah, I saw 350K-350. 1000 naira for gaming headphones and this was before the price of fuel increase and everything. I know what not. So I am sure if I go to that shop right now, that headphone, I won't be surprised if the headphone is now 500 and K. These things happen. So yeah, there's some stuff I

make up, but some of these things believe I'm not making this up so. So it was the time. So OK, it's almost 12. I have a meeting so I'm not getting carried away. Let's refocus. OK, so otherwise I'm getting support for your business. So investors, now investor is just somebody who gives you money. Now, typically what a person wants is a share in the business, the share in ownership. They share in your profits. And so you have to ask yourself,

are you willing to do that? And then the investor is also going to need answer to some questions #1. The investor wants to know how much money do you need? Excuse me #2 what do you need that money for #3 How is this business going to make money #4 What is this business about? Self #5 Who are you? What's your background? Excuse me, what's your background? What are your skills? What do you bring to the table as people say nowadays?

What do you bring to the table so that you can make this thing work? Now all these questions are answered in the document that is called the Business plan. When you hear business plan sounds fancy, plenty of big grammar. Well, basically the document that answers that question, that is what the business plan is. You will have to come up with a business plan for an investor and you will have to come up with a business plan for debt if you're going to raise loan from a bank or any other financial institute institution.

So you can borrow from private individuals, you can borrow from formal institutions. But however, and I mentioned this on the show and I mentioned this here now, if you're going to borrow money from friends, from family members, from associates, if you're going to borrow from Mumsy or POPSY, you need to be very clear on a couple of things. What are the terms, Popsy, Thank you very much for this money. I appreciate that you want to support me as per I am your first son, you know, Popsy, I

really appreciate, you know, I'm glad. I really, really appreciate. But you know, I don't want to take you for granted. So no vets, but I'm just asking this money that you're supporting me with, is it dash or is it something you need back maybe like next year or like 2 years time? They hear what Popsy has to say. Popsy says no, my son, I'm dashing you. Oh good. Then you're free. But the Popsy says, my son, ordinarily I would like to dash you, but you know how things are.

I've been retired for like 20 years. So this money that I'm giving you, please manage it well. I will need it back in like 2 years time. Your younger sister is going to get married. And you know, my hope is that we should be able to join at this money to support your sister. She's getting married now at least you know very clearly that he's supporting you with this money. He has faith in you that you will do well, but that this money is needed in two years time when your younger sister is getting married.

The reason why I'm saying we ask all these things is because because people don't ask and because they don't clarify what the terms are, it causes all kinds of family quarrel. You will take the money, assuming it is a dash. Popsy will give you this money as you need to support. In two years time, your sister will now not be able to get the kind of wedding she likes. She will now be angry with Popsy, that Popsy has always been supporting you and not supporting her.

And she will now be angry with you that you have mismanaged her inheritance or Miss Man. I mean, see the kind of complications these things can cause. Serious. If you think I'm making this stuff up, just pay attention to your own family because I know it's not just in my own family that these things happen. It's a serious Niger problem. We don't ask questions. We don't try and clarify this way that we can clarify respectfully.

I know what it is because this thing can cause some serious quarrels. Friendships end over these sorts of things. Marriage ends over these sorts of things. The wife gives the money to the husband. The husband says he's thinking in his mind, she's my wife. She's bound to support me. I'm not bound to pay this money back. Ask my dear, thank you very much for this money that you're giving. I really appreciate that you've always supported me as a dutiful wife, that you are the long-suffering wife.

I truly appreciate you and I really, really love you. Thank you very much. But my dear, don't be annoyed. The money that you're giving me, I just wanted to know is this is this something that you're dashing or are you trying to become an investor, a partner in the business? Or did you take this money from our personal savings? And is it money that we need back and when do we need back? Oh, OK. We took it from personal savings.

OK. So we need this by the time school fees is coming up in eight months time. You see, you ask these questions, but you don't ask. You assume is my wife, it's our duty to support me. She had this money somewhere, she's duty bound to bring it out. Then next thing you are now quarreling when school fees comes round. So ask anyway. Let me stop this whole Nollywood stuff and move on. So yeah, ask these questions. If it's going to be a formal loan, the bank or the microfinance bank or whoever will also need to know some questions that they want answered.

The bank will need to know how much money for what. How does your business make money? What business are you involved in? Who are you? What team do you have? What is the background of your team? What is your sales and marketing plan? How do you expect to sell this product? When are you going to invest this thing? What are the horizons for return like? When do we expect to start seeing money back? You have to answer all these questions in the business plan.

Now, the reason why I say customers are the best support for your business is because there is no loan, there is no interest. Your ownership of the business is still your own. You don't have to go through the cumbersome process of writing a business plan. However, I still advise people to write the business plan anyway because the process of writing a business plan forces you to think about some things and forces you to put some critical assumptions on paper.

And then also a sales and marketing plan. They usually have one small chapter inside that is devoted to sales and marketing. That is the best part, in my own opinion, for a business plan because there you have to say this is the product we're making. These are the people who are the ideal audience. This is where we find them. This is how we're going to meet them. These are the methods that we're going to use to try and sell to them.

These are the channel partners that we're going to partner with, you know, to do the selling. These are the marketing. Whatever we're going to do, we're going to run Instagram advertising like this. You have to spell all that thing out. Now, the reason why that's the best part of the marketing plan is this of the business plan is this when you wake up in those days and your morale is low, very, very low and you don't know the way forward and you're confused, at least you can look at the business plan and you can remember that, OK, two years ago, this is what we thought,

this is the direction we were heading and this is how we thought we're going to solve our sales and marketing problems. And you can now take dressing from there. Now, OK, we thought we would do it like this, but this has changed. So because of that, we need to do it like that. So the business plan actually is an important document. So the long and short, what's the long and short of what I'm saying today's of? To be honest, I'm never sure what the long and short of today's episode is.

But bottom line is, yeah, you can get support for your business any which way. Don't count on benefactors because they're hard to find. If you find a benefactor, make sure you do good stakeholder relations and also deliver value to the person investors or the debt option will involve you will make you to have a business plan and remember that it has obligations that are wrong with it. The only one that doesn't have any kind of extra obligations is your customers, which is why I

really think if you're in Jerry's situation in Apple, your solution is not to look for a benefactor. Your solution actually is to look for more customers. That's the easiest thing. Look for more customers. You're in the snack business, look for more customers. Don't look for benefactors. But if you happen to see a manufacturer, please by all means keen and accept, accept the help, accept the money, any help you get, it's all good.

So that's it and that's all for today. Remember, if you'd love to connect, you can do so by calling, sending an SMS or the WhatsApp me on 08064662140. Thank you for your time and attention. I'll catch you next time. Same place in your headphones or in your speakers.