The growth of a business does not diminish the need for funding to, for example, introduce new products or services; expand into new markets; hire or contract additional help; expand facilities or purchase new equipment and machinery. While it can be quite tough getting the loan, managing it effectively to keep the business on the growth path consistently, is equally challenging.
This week, SuccessDigest airs the views of people who not only succeeded in getting loans but have utilized such loans effectively to expand and grow their businesses.
Mrs. Tolulope Ajose, Md/Ceo, Xtra Sparklean Ventures
Type Of Business She Is Into
Ajose says, “Xtra Sparklean Ventures is into the manufacture of liquid detergents, soap and customized cleaning agents, which has also been broadly classified under chemicals industry. We have been in the industry for close to a decade with our products tailored towards hygiene and health, because good hygienic practices are the best readily available preventive measure against communicable diseases”.
The Organization That Funded Her Business And How She Got To Know About Them
Ajose says, “Bank of Industry (BOI) is the organisation where I got the funds from. They marketed us at Pan Atlantic University, venue of a business seminar which our company attended. It is a business school - BOI marketed their services to all the attendees of the seminar and told us the effectiveness of their fund”.
How She Got The Fund
Ajose says, “To make the process faster, we applied as a cooperative body, the cooperative now disbursed the fund to individual entity”.
How She Used The Fund To Grow Her Business
Ajose says, “Based on my type of production business, I set the fund on buying machines, raw materials and packaging materials. With it, we were able to get the first mixing machine we have, then buy packaging materials in bulk from the company for our customized event containers. Then we bought raw materials in bulk for more volume production instead of buying retail and risking adulteration. This was precisely in February 2012 - meanwhile, the process started in April 2011”.
How Much She Got And At What Interest
Ajose says, “BOI gave us a million Naira (N1 million) at five percent interest per annum”.
How She Paid Back
Ajose says, “Interestingly, we have paid back from our proceeds. The payback was in the span of 30 months which is to end in August, 2014. Since I accessed the fund as a cooperative, paying back is through the cooperative's account with postdated cheques written to BOI from our cooperative accountant”.
Was Loan Given At The Start Up Or After The Business Had Reached A Certain Growth Level
Ajose says, “We had kick-started the business before we applied for the loan. This is to tell you that we just used the loan, mainly for the business's expansion”.
Was The Entire Fund Injected Into The Business?
Ajose says, “Yes, because that is what the fund was meant to cater for - equipment, raw materials and working capital”.
Challenges She Faced Before She Got The Fund
Ajose says, “I will say the major challenge is getting all the paperwork done - paperwork, documentation, guarantors, tax clearance, bank statements, among others. Also, how to put up a viable business plan is a challenge. But we were able to stand, by doing the neccessary documentation as a group. If you must know, there is no shortcut to getting it, as the processing time was long. We also learnt how to write an acceptable business plan.
“Another challenge is gathering a group of people together for the same purpose, which I will say wasn't easy. Also, we had to pay 10 percent of the loan as down payment. Getting that was not easy too. But all in all, we were able to scale through the hurdles and we have the loan for the purpose we planned it for”.
How Much Her Business Is Worth Today
Ajose says, “Well, as it is, this might be confidential a bit. I can as well say the business has not yet gotten there, but let's just say the business has tripled its initial stage”.
The Secret Of Her Success
Ajose says, “Well, as I have earlier said, I'm still in the process, still on the journey, not there yet, but the summary of everything is God's grace and determination. I can say I have been able to repay the loan and the business is still standing, on what condition? Well, I will say every business person needs determination, as staying power.
It is not an easy path to tread, but with God, it is possible. So, when challenges come, that is not the time to quit to another business, but the time to hold on. We really need to believe in what we are doing and see the big picture despite the many hurdles.
“Well, the growth of the business did not stop there. We sought for other avenues to grow. Selling in unconventional ways, improving on the product outlook, and projecting the business for more expansion”.
Mr. Atere Raphael, MD/CEO Raphgate Chemicals Nig. Ltd.
Who He Is And What Business He Is Into
Raphael says, “ I studied mathematics. I had it in mind that when I finish my training as a teacher I will get a job but unfortunately none of my kind of job was coming; somehow I was employed in a paint manufacturing company, Penguin Paint Nigeria Limited.
There I started as a pioneer member of staff. I started from handling raw materials of the company; to production; to quality control; to marketing - I worked virtually in all the various departments before I rose the post of a general manager in that company.
“After a while the company folded up because we couldn’t meet up with production because my boss was working in another company and we could not meet up with basic requirements for the company, so after some years everybody went on their own-so with the my exposure in the company I decided that I was going to start something, having worked for a paint manufacturing company for 6 years and gone back to stay at home.
“At some point I thought of putting my CV together to get a job, but still I wasn’t seeing the kind of job I wanted, so I decided to go a try something in line with what I was doing before which is paint manufacturing-but I still needed money, I still needed more practical training, practical teaching, so I decided to attend Fate Foundation, and I enrolled in one of their programmes to get practical training and viable knowledge, and we were thought how to run a successful business.
“After graduating from Fate Foundation, I started immediately on a skeletal level but in the year 2009 I was able to register the business as a limited liability company; and today, to the glory of God, our product is out, Horse Paint; and it is doing very well in the market”.
How He Got Funds For His Business
Raphael says, “I was in my house one day, when a client called because I was already doing some painting work, so the money I got from that job was what I used as start up, before I decided to go to LAPO (Leave Above Poverty Organization) Micro Finance Bank to get a loan.
At some point I also went to First Bank Micro Finance Bank. That was how I started, but one day I was just at home when a friend called me from Fate Foundation to inform me about the YouWiN! programme that the Federal Government has introduced to help small businesses. So, that was how I got to apply for the programme, and from stage to stage I passed all the tests and I qualified for N10million to run the business”.
The Different Stages Involved
Raphael says, “The very first stage was all about your idea: What can you do? What are you doing? Is it profit oriented? What is the potential of the business? Does your product have the market? These are basically the things they want to know, and this also applies if you are applying for a loan in a micro finance bank or any other financial institution. They want to know how possible it is for you to trade with the money you are getting and still make profit.
“The second stage is about your business plan, what your plan for the business is in the next 5 years, what your cash flow is and what your cash flow will be in the next 5years, and because I have learnt the trade and I grew in the business, these were the things I had known and understood in the business and because I had been putting all of these things to work before YouWiN! came. I have used other financial houses and we are still very active with a few of them because we have a very good track record.
So when YouWiN! came, it also helped to grow the business and the business is still growing, and we still need more money to expand the business.
“The third thing was that you need to know what to do and how to do it, and who will do it well. Then, you must have the market that will buy the product from you.
It is not all about knowing what to do, but you must also know how to sell it, you must also be sure you have people on ground to do the thing that is needed to do in your absence.
“The most critical thing that you must have is the market, and this were a lot of people miss it. They don’t really think about the market. They are only concerned about the money. This is a very big challenge in the business world, because they lack money and other resources… management skill, so even if it is their money if not properly managed, they will lose it”.
How To Overcome The Challenges Of Getting Loans From The Banks
Raphael says, “The major challenge when it comes to taking loans from the banks or any other financial institution is making sure you are able to pay back the loan you got.
For us it was not as if we were saints; we do default but once it happens, we get back to the bank, apologize for our default, pay all the fines that are attached to it, then we move forward.
The interest is very high, you pay up to 60%-70% per annum but we don’t have any other option, we have to pay it and move on.
“When it comes to taking loans from banks, you must be disciplined in following the purpose for which the loan was taken to ensure that the money is invested based on the original purpose - because we were actually spending the money on what we promised it will be used for, when the bank inspection units and monitoring units visited us unnoticed, they always found our records straight.
“If your records are not in other, you may have issues with financial institutions because they want to be sure that the money will be spent accordingly.
“Also, apart from the bank you need to ensure that your product is well accepted in the market. Having a ready market is a very big challenge.
If people are not buying your product, no matter how much you’ve invested, how much packaging you have done, you will be killing that business unknowingly. If you are able to solve this problem of having your product accepted in the market place, then you are in business”.
Was Loan Given At Start Up Or After Business Had Grown To A Certain Level?
Raphael says, “The very first ever money I used to start business was gotten from a client job and after which I got to LAPO, but the N10 million I got from YouWiN! programme came in four parts.
Like I said, the monitoring units, people from the Federal Government in Abuja, from SMEDAN, from the Federal Ministry of Finance were visiting unannounced, at different points, at different days to check our records to ensure that the ones we sent were in order; also to ensure transparency and integrity.
Once they find that you have integrity, when you are due for the next level of funding, the application will be approved and the money will get to you.”
How Much His Business Is Worth Today
Raphael says, “I can’t categorically say, but I know we have grown: this was a business that started in the backyard of my house in a rented apartment. Today, the business has machines running into millions; we have our own structure; we have our wonderful employees who are able and cooperate a lot.
We have painters because before the business started fully, I was a painter, which was what brought the initial capital. Now, we sell our own locally produced paints, and we sell paint chemicals. We have clients all over Nigeria.
“I wake up each day and I look back and I thank God for helping us this far; that some of my senior members of staff are so committed to this job.”
Advice To Entrepreneurs
Raphael says, “I will just make it very simple: Be determined, be focused, be enterprising.
“Be determined: it doesn’t matter whether it is your money or a bank loan, be sure you don’t throw it away carelessly; be sure you are doing everything possible to use the money for its original purpose. Don’t take bank loan given for business to complete your house in the village, be determined that the business will succeed.
“Be focused: don’t have plan b; don’t think of an option - many so-called entrepreneurs after facing a challenge and think of going to get their CV to go get a paid job, don’t be moved by distraction.
Even when the bank is trying very hard to frustrate your efforts, keep on: at the worst, get money from one bank to settle another so that you can move on and keep the fire burning.
“Be enterprising: here I will not advice anyone who is just starting a business to go for loan, because I didn’t start with loan. You must start with what you have, because the banks will frustrate you if you are not ready to start with what you have.
You need to know the nitty gritty of the business to be enterprising enough to start as you are before you start to ask for loans.
“Finally, you must be very friendly to people and know how to manage people, because you will be working with people and must be ready to manage them to get their best all the time. See you at the top”.
Mr. Hule Aondokator (or Kator), CEO of Kator Hule Enterprises
Who He Is And The Kind Of Business He Does
Kator says, “My name is Hule Aondokator (or Kator). I was born on the 15th of June, 1982. I am not married. Educationally, I trained as an Agricultural and Environmental Engineer at the Federal University of Agriculture in Makurdi where I obtained a bachelors degree in 2010.
I am also doing a Masters in the same field and same university. Last year, 2013, I was selected alongside 49 other business owners across Nigeria by the Entreprises Development Center of the Pan-Atlantic University in a Diamond Bank PlC sponsored programme, themed, ‘Building Entrepreneurs Today’ (BET3), where I obtained a Certificate in Entrepreneurship Management. I have also been privileged to be a YouWiN! awardee, benefiting from the FGN's programme by N9.6 million. I am the CEO of Kator Hule Enterprises - which has its head office in Makurdi. I am a writer with several books in manuscript form.
One of my works (Business Plans And Proposals, An Engineered Approach To Writing Winning Business Plans) will be out by October this year. In terms of work experience, I worked with Research Writing Center online from 2009 to 2011 as a freelance technical writer. I am deeply involved in youth development”.
How The Concept Of His Business Come To Him
Kator says, “The idea that took me to the YouWiN! was packaging of fish products. The idea was born out of the need to make fish products more hygienic and more easily accessible and affordable.
I conceived the idea in 2008 and had been working hard on actualizing it; thank God the YouWiN! came”.
How He Got To Know About YouWiN! And When He Got Their Funding
Kator says, “I heard about YouWiN! the very first time the Honourable Minister of Finance spoke about it on TV in 2011. I knew that my time had come. I believed her, and believed YouWiN! was going to be a success, because of the Minister's reputation. My business received funding up to NGN9.6 million from the Federal Government's youth empowerment programme.
Ever since receiving the award, the experience has been both exciting and very challenging. It is exciting because it provided me with the confidence to start a life.
Since winning the YouWiN! funding, I have become more hopeful of realizing my visions and dreams in life. I happened to come from a highly less privileged background, socially speaking, and winning the YouWiN! funding enhanced my self-confidence and also built up my belief in Nigeria as my country.
Getting the YouWin! funding has provided a challenging experience because it appears this goodwill and support from the government has set me up in such a fashion that my failing in life is something I cannot even imagine; this has shot me to public light and I now have as many fans as critics.
1.“YouWiN! will be a better programme if the funds will be released in a timely manner. Although the payment process is transparent, most times the tranches are unusually delayed.
And it affects young businesses, especially startups. Policy implementation has to be matched with consistency for effective results.
2. The programme has to come with more intense business trainings. A certificate in entrepreneurship management for all awardees will not be bad. If government can risk putting so much into businesses, there should be the risk to invest more in developing the business owners.
“Lastly, young people should believe in YouWiN!, it is real” .
How were you able to use YOUWIN! funding to grow your fish packaging business? Did you buy more machinery, hire more staff, introduce new products?
I was not into active business before YouWiN! Quite alright, I had some entrepreneurial experience prior to YouWiN! but the programme launched me into the true world of entrepreneurship. At the age of eleven, I started off as a lifestyle photographer. I practiced photography until I was 22 (when in my university it became difficult for me to combine the two).
So, when YouWiN came, it was entirely a fresh opportunity for me to venture into entrepreneurship again. There is something I need to say; in my second year in the university, I made up my mind that I was going into entrepreneurship fully. This means that I had prepared my mind completely that I was not going to work with any organization or the government after school.
And it appears that everything worked as planned because YouWiN! came. I started the new business with YouWiN! money completely from the scratch. I leased a place for 15 years, renovated the building to taste and acquired machines, and hired staff.
What were the challenges you encountered while growing your fish business and how were you able to overcome them?
Talking about challenges, maybe I have to take a deep breath before answering this one. Entrepreneurship is a continuous journey for me. It has become part of my DNA.
I believe I am wired for this. I can say I have a digital nervous system that responds to entrepreneurial challenges. As part of my big picture in life, I am working on opening the first private university in Africa to be attended completely free of charge.
Why such a university?
I believe strongly in building human capital as a resource for transformation and development. I know that there are people who are very intelligent but sincerely don’t have the opportunity for good schools.
So this university is all about providing the best of education to people who deserve it. Every morning, I remind myself 'Kator, this is why you are here!' When I am awake at night, it is because I want to see this dream come to pass. And I know I will actualize it.
Although, with fine dreams, when the YouWiN! grant came, I pretty messed up at first (smiles). This is true. As a young man who is eager to make an impression, I hurriedly picked a clean EOD (Honda, 2005) and cleaned myself up. Of course a car was part of the business plan I submitted to YouWiN!, but it wasn't supposed to be such a luxury car.
Although, the car brought me 'good luck' and connected me with the who-is-who in the local sphere (and linked me with serious businesses worth much more than the YouWiN! grant), I have sold it and invested the money into the business because I later discovered I wasn't quite prepared for such luxury-spending so much on fuelling and the rest.
With the car, family and friends increased their demands. I would get a call anytime of the day or night (someone requesting I should pick them up somewhere). You see, these sorts of things are not part of business. They are sinkers.
How do one solve ‘sinkers’ challenge for good business growth?
My sincere advice is: Do only what you plan to do. If you are going to succeed in business, or even in life, every morning before you go out, plan exactly what your day should look like. This plan should match your Big Picture in life. Anything that comes along the day that is not part of that plan is not worth going along with.
We plan our poverty if we fail to plan our profit. The truth is, anyone who fails to plan his or her time for self-profit, will have someone else help them use the time for their own benefit.
Business challenges?
In terms of business, the challenges are there. Quite ok, I have been privileged to have some of the finest people work with me - majorly graduates - it is common to have employees who are difficult to handle. They are people who simply have a way they want to go.
So, you give an instruction and get terrible results. And this is a massive challenge because it can compromise quality or render the organization a bad image. For example, one of my businesses is a laundromat.
Laundry business is a delicate business. If you spoil a customer's cloth you can hardly get that customer back. And sometimes, your business spoils a cloth, you won’t even know until the customer returns it with a long face.
That's when you know how embarrassed you can be! And no one in your processing line would like to accept the responsibility.
As regarding this fish business, I am doing something else with it now but I will rework it back into the initial plan later in the year. The drift became necessary because of lack of funds to produce at a breakeven capacity.
If you are in business, you will understand that manufacturing businesses often have more challenges than other business types-particularly in Nigeria where we keep having issues with power supply and poor transportation structures.
Some people get loans and waste. What strategies did you adopt for your business that made it a success?
Oh, I am not different on this one. I wasted my money too. But, maybe I am lucky because my recovery was quite quick. There are two essential ingredients for success: God and Confidence. I can assure you that confidence propels greatness more than anything else; more than skills and intelligence. If there is any other element needed for success, it would be strategic planning - and strategic planning does not have a rigid rule; it all depends on prevailing situations.
Please advise an entrepreneur who gets such funds or business loan on how to use it in growing their business.
My advice to people who are lucky to get business support of any sort? Keep the money and keep any eye on it! Your business needs money. And your business' money is not your money! Liquid money is very important for the smooth running of your business! A business funding support may be a once in a lifetime opportunity. So, make sure it is always an opportunity.
There are of course people who get such support and do everything to protect it but their businesses still fail. Majorly, most people put too much money into capital equipments.
Too many people are too eager to impress; we have so and so machines! Machines don't bring money in business, people do! Invest more in people, then! If a process can be handled cheaper manually, then there could be no need for automating it. Just make sure manual labour delivers it faster! There are so many processes that your business can outsource.
Outsourcing is one fine thing I discovered with business. It means you don't have to be doing everything in your organization. If there is a company elsewhere that can do much of your work, then push the responsibility on to them and make sure you have a good quality check. It will save you more.
It will reduce your operating expenses. By the way, no matter what happens, your operating expense should not be more than 50% of your total investment.
Hope you have learnt something from this post, if you have then try and drop a comment for other readers.
Make sure you check back because we shall be featuring a high profile business person this week...
See you lerra.
Thanks for sharing bro,God Bless you
ReplyDeleteYea true Racheal
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