Unlocking Growth: Creative Funding Strategies for Nigerian Businesses

Hello and welcome to the show. Before we begin, the usual apologies because today is an out and about episode, so expect to hear some interruptions, noise in the background. And yes, today is one of those days where I'm recording next to a bunch of chickens. So if you hear any clocking in the background, that's where it's coming from. So let's see. OK, today listener shout outs. I'd like to shout out two people in particular, by the way, if you've reached out to me on LinkedIn or on WhatsApp and I

haven't shouted you out. It's just that the broadcast seems to be picking up in popularity these days. So I've been getting a number of people reaching out to me. And so, you know, we have a nice conversation and I mean to shout you out, but sometimes I forget because I don't have a production assistant. So I just, you know, I just wake up every day. Look at the list of questions that we have to record that I have to respond to.

And then I shout out people and conversations that I remember. So just in case you've reached out to me in the past and you would like to be shouted out to just give me a reminder. And yeah, I'll, I'll make reference to that. So for today, the last people or the two last people, I'm not sure you know the the right adjectives to go with. Is it the last two or the two last? So the last two conversations that I had with folks on LinkedIn that I would like to shout out are this or Lucia Go or Shun or Shuri day.

I'm pronouncing that correctly. So Lucia Go or Shuri Day, he reached out to me on LinkedIn and he says that my podcast is the best on sales for SM ES that is small and medium scale entrepreneurs. And because Shagun has said it, I will advise you guys to listen to your peers. So it's one thing if I say that my podcast is the best, but then it's another thing if your peers out there saying it is one of the best. So thank you very much Olu Shagun or or Shuri Day.

So thanks for the words of encouragement. And so Olu Shagun is into tech design and community in Canada. He's based in Canada and he's working on some interesting project, is working on the MVP. That's the minimum viable product. That is also one thing that I've been advocating for those of you over here on the show, that if you have some idea and you want to get into business, sometimes you don't have to wait until you have the finished product.

Just come up with the most workable definition that you can come up with for now so that people can understand the idea. So they can get to see taste, smell by use, you know, whatever, just to get things going. Because that's a good way to make sure that there is a demand for this idea that you're trying to roll out. Because it absolutely sucks for you to go into business. You try and front something and then you put together all this work and then it's like nobody even values what it is they're looking for.

So if you have an MVP, then it reduces the risk. You're able to see that, OK, there's some value here. Some people, there's some demand for this idea, some people like it. These are the kinds of people that like it so that when you come up with your fullest version, then you now know who it is that you're going to target. You're not going to be guessing, you're going to know that, OK, this thing works and it is best to go after Yoruba women aged between 45 and 60 living in Lagos and Illori because your MVP would have shown that those are the people who like it the most.

So when Orlucagon or or Shuri Day comes out with the, with the MVP, the minimum viable product, you know, I'll let you guys know and maybe I'll do another podcast episode again about why this is important and how you can go about coming up with your MVP. Remember, MVP in this case is a minimum viable product. It is not Most Valuable Player. So for those of you who watch basketball, MVP's Most Valuable Player, I don't know if they have MVP in football, but then if they do, forgive me.

I'm not a football junkie. The only thing I do is chess, so yeah. OK. So Olu Shengun, thank you very much for reaching out. Remember, he says that my podcast is the best on sales for SM ES. So pay attention to Olu Shengun because he sounds like he is an intelligent chap. Then there is also Abdul Kalik. Ibrahim Schweibu. I hope I've pronounced that name correctly. Abdul Kalik was an interesting name because I've now come across an Abdul Kalik before.

I've come across Abdul Kalim, I've come across Abdul, you know, different abduls, but never Abdul Kalik. So Abdul Kalik. Ibrahim Shraibu is a content marketer and a paid media specialist based in Lekki, Lagos. And yeah, he also reached out to me on LinkedIn as well. And both of us had a conversation on LinkedIn where we were geeking out about conversion rates. He sent me a message wanting to be sure that he understood properly, you know, my ideas around conversion.

And then yes, so we had some DMS back and forth. So thank you very much to Lucia Guo or Shuri de and Abdul Khaliq Ibrahim Shraibu for reaching out to me on LinkedIn for the wonderful conversations that we had. I'm looking forward to Lucia Guo's MVP. For those of you who are thinking of getting into business, please adopt the same approach that Lucia Guo is doing. Come up with some form of an MVP so that you don't just waste money and time trying to promote a business and it looks like you know nobody even wants what it is that you're looking for.

Have a bunch of conversations with people before you roll out the main thing. Create something small that people can see, can taste, can smell, can taste, can buy, can criticize, can refuse, can throw away, can dump, can. Whatever it is that people do, it is all useful feedback to, there's all useful feedback to determining how it is that your business is, is, is going to grow. So what I would like to tackle today, questions tackled today is something I've tackled in the past, yes, But it looks like this is going to be a recurring question.

So no matter how many times it comes up on the list, I'll still address it. And there's a question of whether lack of access to resources and funding, whether that is a problem to Nigerian businesses. I'll respond that First off by saying that, well, this is a universal question, a universal problem because people all over the world, whether it's Russia or Atlanta or Australia or New Zealand, people have always wondered whether a lack of access to resources or funding is the main reason why your business has failed.

So for those of you who've been listening to the show for a very long time, we have over 800 and episode 850 episodes. Now you already know what my opinions are, but for the newbies who are listening today, let's dive straight into the into the topic. Now for those of you who are wondering whether lack of access is is worth killing your business or hampering your business. Yes, you guys definitely have genuine concerns because some of you that need to be able to afford equipment.

I've done some episodes that's back from Christmas up until now. I've done some episodes about you catfish people, Catfish and tilapia people. Well, that's because my wife is a fish person. She likes to eat fish. We were at home in the village. I know in the village in Makudi, that's the capital of Benue State. My mom's a fish person. My in laws were there with us. They're fish people. My children are fish people. So I'm alone, a meat eater,

surrounded by an island of fish people. And it just got me curious about that sort of business. So yeah, you fish people, You guys have to afford equipment. You need to buy seedlings. You need to buy, sorry, not seedlings. When you buy baby fish, I'm not sure what they're called. Is this seedlings or guppies or something? And whatever the term is, you have to buy seedlings or you have to buy guppies, Then you have to buy food, then you have to buy the tank.

You have to pay for Marua to come and be dumping water every day for the fish, you know, to keep them fresh. Let's see what else then your smoking and your drying equipment and things like that. So you have to afford equipment. You need to pay for employees because you're not going to cut all that fish by yourself. So you have to hire some somewhere or some young boy somewhere to help you kill the fish, cut it, clean it, spice it, dry it, and then all that.

Then you also need to rent space for those of you, well, that some of you are running these kind of businesses, you just run it from Bumpsy's backyard or you know, if you still live with Popsy, you know, you run from Popsy's backyard, but if you don't, you have to rent space for it. Let's see what else. OK. Then you also need money to manage inventory, to build inventory. So if you buy 500 guppies or 500 seedlings for catfish for this week, and OK, I'm not in the business so I don't know how long, let's assume that it takes them three months or maybe six months for the guppies or the seedlings to grow into huge catfish.

So you know you need money because as you're selling this set of guppies or seedlings 6 months from now, it doesn't mean that the money is going to come in quick enough for you to buy the next set of seedlings or guppies. Oh, by the way, for those of you who are angry people, let me know if I'm using the terms correctly. When you buy baby fish, are they guppies or are they seedlings? So these are the things that you need money for.

So yes, you guys have genuine concerns, but it doesn't necessarily mean that your business has to be dead on arrival. If you don't have an investor or if banks are not giving you money or if you're rich uncle in the village because he's quarreling with your father, refuses to give you money for this business. It doesn't necessarily mean that you're dead on arrival. There are some options that are available. And I've been talking about bootstrapping a lot on the podcast and the bootstrapping,

it sounds big, sounds fancy, but this is just what bootstrapping means. You're about to start business. You start the business with your savings. So if you've been able to save 50K and let's say your wife works with Zenith Bank, she has a 100K and maybe Epoxy says, well, my son, sorry, I don't have much to give you back. I give you 10K. You know, that's something that is bootstrapping. You've been able to collect your own savings plus your girlfriend's savings or your wife's savings.

Or, you know, if you're female, you've collected from your husband or your boyfriend. In fact, if you're female, please do not collect money from your boyfriend to start the business. I will talk about that later on in another episode or if any of you see me privately and you want to know what my opinions are about that thing. You know, as in babes collecting money from boyfriends and they're using it to start the business.

When you jam me in private, then we can talk. So, but that's the whole boot bootstrapping things. All these small, small savings, all these 1010 K, 2020 K5050K hundred 100K, depending on what level you are, there's some people that bootstrap and you know, they're able to raise 500K. So depending on your level, you know, that's bootstrapping. So savings then bootstrapping, collecting money from somebody called it the three FS.

They said friends, family and fools. I don't like that fools part because we're looking down on people who don't, who give us money. So let's say the two FS, you know, friends and family. So friends and family then. Yeah. So that's bootstrapping basically. So you can start off with that. Then there's also the thing of reinvesting proceeds. Now I know that this whole thing of reinvesting proceeds is really, really tough because when I started off on my wedding photography journey, yes, at the time I was living with Mom C and I was going to get married soon.

My wife was based in Abuja. So I'm, I'm here now and I was in Lagos and let's face it then flights were not expensive. You could fly to Lagos and back. Sorry, from Lagos, you could fly to Abuja and back with 50K if you planned it well, maybe like you planned it three or four weeks in advance, you'll be able to fly there and back maybe 20K or maybe 30 K because back then the longer you'd plan your flight out, the cheaper the tickets you'd get.

So there was a limit to how much reinvesting I could do because I needed money for flights. And what else? I needed money for flights. I also needed money for flexing. You know, back then I was an irresponsible young man. So it's not as if I flexed that much anyway. But you understand, Shah, I didn't have money for flights. I didn't have money for flexing and all that. So it's hard to reinvest proceeds. But we need to get into that mindset of if the business is bringing in 100K every month, it doesn't mean that that 100K is the one that will chop.

We don't have to chop the 100K and finish. Because I overheard 2 farmers talking a while ago. I can't remember when but what I liked was the wisdom that the older farmer was given to the younger farmer. So the guy said that do I talk? It was Yamdura planting, so they had a couple of heads of yams, I can't remember how much, let's just say 100 heads of yams. So the guy was advising the young man that, look, it's not all these heads of yam that you eat.

And it kind of made sense, like if you plant 100 heads of yam and 100 heads of yam come out, doesn't mean you have to eat the whole thing. So you eat some, you sell some, you keep some heads of yam to plant again in the next season. And things like that was just practical common sense from an agrarian point of view that we should adopt as well. So if 100K is coming in every month for your business, doesn't mean you should clean that whole 100K out of that 100K.

Yes, you know, some money before flexing, some money will be for, you know, whatever, but some money should be to reinvest in the business. So bootstrapping, reinvesting your proceeds, they can help crowdfunding. I'm sorry. I have promised time and time again that I'll do an episode on what extent crowdfunding is available in Nigeria because I know some Nigerian crowdfunding platforms, but it's not something I've researched anyway.

But for those of you who are newbies listening to the show or exposed to the concept of crowdfunding, crowdfunding is just basically just accessing a large pool of online contributors. Yeah, let me put it that way. Some people say investors, but no, investing has a very specific definition. So let's say it's online contribution. So contributions from people online, that is what crowdfunding is about. Yeah, those are the interruptions I was talking about some major just came, I

was revving by my window. I don't know why some people behave like this. You can see now I'm on the phone here, you just be revving your car down in front of my my car. What was that? Crowdfunding? Yes, basically that's just lots of people are online. Some of them are willing to contribute to initiatives or business, well, let's say business opportunities that they think are worthwhile. So that's what crowdfunding is about.

Then there's also Angel investors. These are just individuals who like to put money in early stage businesses, usually businesses that have high potential. So yes, they are Angel investor communities and things like that. But let's say you come from, let's say Omware here. So from I'm assuming Omware here is in a number of state. So let's say you come from Omware here and maybe you have an uncle that made it big because he used to import and export electrical equipment or something like that.

And so he's like the Odubu, He's like the rich one in the family. And in your particular village, there are maybe five or six of those individuals and maybe another two or three, you know, big aunties in the community that really have money. You know, those that can be a source of Angel investing if they have been known to take interest in some young men or some young men in the community, like, OK, this business you're doing seems worthwhile.

Let me bless you. Let me help you with this amount. You know, stuff like that. Those are people to talk to. So before you get to formal Angel investor networks and things like that, all these sorts of informal Angel networks exist. Yeah, let me just leave it at that. So it doesn't have to be something excessively formal. Just anybody, any individual looks like this person is paid up and looks like they have an interest in early stage people.

They drop money every now and then. Sometimes they're doing it just because of love of Jesus. You know, they want to help people. Sometimes they're doing it because they think this thing has high potential. There might be high reward. So let me put something down. So that's also an option that's available that we can look at for those of you who are worried about access to resources and funding. Then one thing that I want to point out here, because a lot of you guys are not aware of it.

And in fact, the first time that I came across it as a teenager, I was, I was shocked. I didn't know that things like this could happen at all in business, not to talk of happening in Niger. And that is called invoice factoring. That is what invoice factoring is. Invoice factoring is when you have receivables. Receivables basically just means you've done the job. Somebody's owing you money. So if you're a Carpenter, you know, let me go back to the crevice thing.

So your guppies, you had 500 seedlings or 500 guppies. They have now matured. And let's say one woman in the neighbourhood for a restaurant bought 250 heads of catfish from you. You supplied the 250 heads of catfish. You supplied it on January 1st. Now it is January 6th. So the woman has not paid you yet. Or maybe the woman has paid you part. Well, let's say she was supposed to pay you 500 K. She was only giving you 100K,

that outstanding 400K that is what is known as receivables. You have done the job, you have delivered something, somebody is owing you. Those are receivables. So there is an industry of people call factors who what they do is they go around and they buy receivables. They say a young man is somebody owing you money, OK, no problem. How much is she owing you? She is owing you 400 K, OK, no problem. So what they do is they buy this your they say they buy this your debt and they say here this is what I will do.

The one is only four 100K, but I will be responsible for collecting the 400K from this woman. But in return what I'm going to give you is 250 K. Maybe you guys will go back and forth, maybe agree on 300K. And so for you, you take the 300 K from the guy or the girl and you go and you know you're cool. The person now takes the risk of collecting the whole money from the Madam in full. If the business is successful, then his profit is that 100K.

Now I was shocked as a teenager to learn about this because I didn't know that there are people who will go around looking for people's basic to buy, people's debts to buy. And the way that they make money off of that debt is if somebody is owing you 2.5 and you're really, really desperate and you meet a factor, the factor can say, OK, you know what, I'll give you 1.5 cash, take this 1.5, go and settle yourself. But then I'll be responsible for chasing the rest of the debt.

The person's profits will now be that one M on top of the whole money. So the business exists. And I'm surprised to find out that not only does it exist, it exists in Nigeria. And I find out, I found out about that because my mom was in, she was a marketing communications professional. And so she headed a consulting firm for, well, she was not the founder. It was, what's this guy's name, I can't remember his name, Sharp, but he was like a legend when it comes to advertising and public relations in Nigeria.

I don't know if he's still in the game, but he owns the Troika Group of companies. And so at the time my mum was heading, she was heading quadrant. So quadrant was the public relations aspect of Troika Holdings because Troika Holdings had quadrant, they also had MCA, that is MC and a that's marketing, communications and advertising. And a bunch of other firms. So my mom had worked in MC and A and ended up heading heading quadrant.

So while she was the head of quadrant, they had a client that was giving them lots of trouble. And I think what was being owed then was about 7 M that was being owed to the firm to quadrant. And she had a conversation with lawyers. And at the time, using lawyers to chase that seven M was going to cost too much because you know how it is now, you get the lawyers, you're trying to chase 7 M, you end up spending a bunch of millions at the end of the day.

There's no guarantee that you're going to get that 7M. But then they run into a factor who was willing to put up half the money or slightly half the money. And they just did the math that look, we can get lawyers and try and chase this thing. We end up spending extra M, It's not as if we collect all the money at the end of the day. So this factor is here and this person is offering to give us slightly more than half of the money now.

And so was an easy decision for them. They took the whole thing as a loss. They collected the the firm agreed it was a collective decision. The firm agreed, they collected the money, they sold it to the factor. Now if the factor was able to collect the whole amount, let's say the factor drops 3.5. So if the factor drop 3.5 M that was able to collect all the money at the end of the day, then his own profit will be that 3.5 M.

But of course, you know, it's a risky proposition because the factor can drop 3.5 M and may not recover anything at the end of the day. So it's a business that to be honest, I'm curious like people who start this business, people who operate this business, like how do you, how do you do this thing? So if you're a factor listening to the show and you'd like to educate me, then connect with me on WhatsApp or on LinkedIn.

I give my details at the end of every episode. So let's chat so I can I can get enlightened on the business of factoring also so that I can share to my wider audience on the business of factoring so that people will know that these are options available. You know, be a nice way for you to get clients because you know these Niger now everybody has some busy, everybody has somebody that is owing them money that they haven't collected and stuff like that.

So invoicing also, invoice factoring also is an option. If you had your 500 guppies, the 500 seedlings have now matured and you have sold 250 of them to Madam around the corner. Your bill, her bill is supposed to be 500 K. But instead of 500 K shares only give you 100K. You're not worried about cash flow concerns. How are you going to buy the next set of seedlings or guppies for your next round? That's an option that is available.

So these are some of the options available when it comes to access to funding and resources and things like that. So don't lose heart. It's not as if if you can't raise money now, it's not as if you're dead on arrival. These are some of the options that are available. We can always talk plenty, plenty, plenty about these things. So there's also government and government support and nonprofit support. So since you've done over 20

minutes, let me just leave that for the next episode. So we'll tackle the next episode. So thank you very much guys for your time and attention. Please, if you are a factor, if you are an invoice factor, this last business there that I spoke about now please hit me up because I'm curious. I want to learn about your business. I'm not going to join you guys because I don't know how to chase debtors. And you know the whole whatever that can be involved especially in Nigeria these days, any small thing people will now call, call police and call army.

So I don't think I can do your business, but still reach out to me, let me know that you guys are out there and let's let's share about your your business. But whether you're a factor or not, yeah, hit me up on WhatsApp. The phone number is 08064662140. The country code is +234. For those of you who are not Nigerian like Olushe Gong or Shurindi, OK, well, he's Nigerian but based in Canada. So for those of you Niger people in Canada, country code is +234.

In case you're one of those people who took off in secondary school and you can't remember Nigeria's country code, it is +234. Then also connect with me on LinkedIn. The name is Tavishima Ayede, I'm the host of the show. You can confirm the spelling of my name. In case it sounds strange to you, can confirm it from the link. We're currently listening to this episode. My e-mail address most likely is going to be there as well.

So thank you very much for your time and attention. I'll catch you guys at the next recording.