Running Your Business Using Other People's Money Without Tears!

This week’s story from SuccessDigest is on how Micro, Small and Medium Enterprises [MSMEs] can get funds to grow their businesses. We looked at it from the viewpoint of entrepreneurs in this category who have made use of funds from microfinance banks to grow their businesses successfully. As usual, it is an on-the-field business research story you can hardly get elsewhere. We hope you learn from it.

Entrepreneurs And The Kind Of Businesses They Do
Mr. Ndubuisi Nwankwo says, “I run a clothing business. I do buying and selling. I equally import from China. I have been into the clothing business for about 15 years now”.

Mr. Afolami Ayodele, Director, Straight Service Network, says,   “I am an entrepreneur and I am into events packaging, advertising and catering services”.

Mr. Ifeanyi Angus, MD, Blessed Ifeanyi, is a dealer in all kinds of shoes and sandals for men and ladies.

Mr. Lawrence Ubani says, “I deal in general ladies wears. I have been into clothing business for about 14 years. Clothing business is a very lucrative business. “Everyone needs to wear one form of clothing or the other. People can go out without eating but no one can go out without wearing clothes.

“Everyone is free to do clothing business. You just have to be able to identify good stuffs because it is not everyone that knows what is good. Some people just wear clothes. If you are not fashion conscious, you won’t be able to know what to buy that would move in the market”.

Mr. Ifechukwu Agbazua says, “I buy and sell fairly used shoes”.

Mr. Nonso Chukwudozie says he is also a shoe dealer at Arena Shopping Mall, Oshodi.

Mr. Tunji Ola, Chief Executive officer Greenminds Media, Ibadan, says, “I am into Printing, Publishing and Media Consultancy”.

Start Up And Expansion Challenges
Nwankwo says, “The challenge is just that the market is highly competitive. So, when you get your goods and you have people who also got the same kind of clothes you have, if you intend selling with about N200, you would have to sell for about N100.

“So, once you see your customers, you have to give them reduction below what other people would give to them so that the person would keep patronizing you. Another challenge is that in a bid to keep your customers, you offer some customers credit facilities and then they start dodging you. When next they come to the market, they take another route to ensure they don’t pass in front of your shop. Until you run into them or you start disturbing them with calls, they won’t take you seriously. But there are some you also give credit and they would come and pay as promised”.

Ayodele says, “Our challenges range from shortage of: events materials; modern decoration tools and cooking items to meet the current demand”.

 Ubani says, “The only challenge is that sales is not as we expect it to be. People keep complaining that there is no money. Also, another challenge, especially when starting up is capital. To really make it in the clothing business, you need  a good capital base”.

Angus says, “The major challenge we have in this business is competition, you know we get these shoes from different importers/manufacturers; once you get a particular supply before you know it another design is out, and when you get to the market, you are getting something different or another manufacturer has come up with something else.

“So, the stock you took is still there, waiting for customers to come and now you are confronted with the necessity of purchasing another kind of stock which is what others are selling because it’s new, and you will be forced to go for it, because when your customers come, they are asking for that type of shoe or sandals.

“And because cash is not always available to turnaround in this type of competitive market, I get it hard at times.

“So, what I have done is just to make sure I don’t stock too much so that if there is a new brand I can quickly get it for my customers; because some of these shoes, once a customer comes to you once or twice and you don’t have what they expect, that may be the last time you will see them in your shop, because we sell to other retailers within and outside of Lagos who come to our shop to buy”.

How They Got Funding For Their Businesses
Ayodele says, “Business was not delivering and yielding expected income and growth, until I got to know Grooming Microfinance Bank where I sourced a loan of N3 million with my car as a major collateral at 14 percent interest rate”.

Nwankwo says, “I started getting money from micro finance banks about one year ago. I had a nasty experience with a micro finance bank which I would not like to mention.  I had heard several bad reports about that microfinance bank. I learnt that when you get money from that particular micro finance bank, you would never use it to do something meaningful.

People have always said when they give you money physically, they collect it spiritually. But, I didn’t really believe those stories so I went ahead to collect loan from them and seriously got my fingers burnt. I joined money with some other colleagues to buy goods and when our order came, we realized that we could not sell the goods, we all sold below cost price just to get the goods out of our hands.

“So, for a long time, I never patronized any other microfinance bank. But Onyx Microfinance Bank came to market their bank to us and after a while, I started banking with them. I didn’t have the intention of obtaining a loan from them. I was just banking for saving purposes and unexpected expenses. But along the line, I heard from a friend who said he got a loan from them and had good testimony about his business compared to the one we all had bad experiences about. He said that their money is okay.

“From Onyx Microfinance, I have collected money about three times. And the loan process wasn’t difficult at all. I collected N70,000. I paid back N85,000.  I was paying back N7,500 on a weekly basis”.

Ubani says, “I just took N50,000. Even though I wanted to collect more than that I was refused, because they said it was my first time”.

Agbazua says, “Based on the type of loan I opted for, it is something from N40, 000 to 80, 000, but it is strictly a function of your performance in the small amount you had taken in terms of payback that will determine what you are given”.
Chukwudozie says, “Obviously as I have earlier explained, I needed to get the business expanded and grow the more, so it was after I had started the business I applied for the loan. Well, before I was given the loan, I had to open a savings account with the bank, depositing like N30,000 or thereabout for a minimum period of three months.

A surety was as well requested for, who stood-in for me. A surety in my case could be my colleague in the market or someone also operating with the microfinance bank. Though, the surety is not paying, I am the one to service the account before I am given the loan. Eventually, I was given N100,000”.

Angus says, “There is this micro finance bank called Onyx Microfinance Bank, that I usually go to for loan every month, and the package I am able to service very well is the N60, 000 monthly loan, which I have to pay back by month end. It’s not that I can’t go beyond N60, 000 but because of the package I feel I can handle, the condition I can cope with based on the way the market is going that I go for it”. Ola says, “I have been banking with my microfinance bank for over five years.

In fact, I opened my account with the bank when it was still a Community Bank. Not long after, it upgraded into a Microfinance Bank. My first loan ever in the bank was about N40,000 and since then, I have taken well over a million naira in loans. Compulsory opening of an account with the said bank, collateral of equal sum or thereabout are requirements; and you also need someone who has transacted business with them, with a view to standing as guarantor should any uncalled for happen”.

Interest And Repayment Terms
Nwankwo says, “If you were given N60, 000 for the space of three months you will be paying N9, 000 on that N60, 000”.

Chukwudozie says, “Mind you, I have a three week deadline and the repayment must be on or before the expiration of three months. Meanwhile, I have to pay some amount of money weekly. I was paying N7,500 every Friday for the spread of three months”.

Angus says, “Based on the package I choose, N2, 000 on every N60, 000 loan I take every month, and I don’t find it difficult to pay but it is not very conducive for the business because that kind of loan is a quick pay, a loan that has to be paid even before the month is over. My kind of loan falls under the “Daily Esusu” category - that means I must save N2, 000 everyday.

“For me to qualify for that N60, 000 I must have saved N22, 000 for 11days with the microfinance bank.  So on the 11^th day I will collect the N60, 000; I will now complete the payment by end of month by paying N2, 000 everyday to the microfinance bank.

“The beauty of this kind of loan is that you don’t really need to bring your landed property documents as collateral, or your fathers’ birth certificate so to speak; all you need to do is to introduce another trader like yourself to the micro finance bank and let him/her be servicing it at will, then you qualify for the loan”.

Ola says, “I have accessed loans a couple of times. The least I got was N40,000 over five years ago and I have done projects of over two million naira that the microfinance bank assisted me with. The interest rate is between 23% and 27%. It’s quite on the high side but it’s better than not having funds at all to do business with”.

Did The Microfinance Bank Evaluate Their Worth Before Giving Them Money?
Ubani says, “Because this is a market and they were the ones that came to market to us, they already know where our shop is. All they require from us is a guarantor”.

How Did They Use The Funding Gotten To Grow Their Business?
Ayodele says, “To be candid, the fund was necessary at that time because my business needed expansion, growth and development. So, we quickly deployed the loan into most needed items and profit-return-oriented products to boost our business. After the purchase of the needed items for the growth and development of the business, other things must as well work out. So, it is still for the betterment of the business”.

Agbazua says, “It was becoming unbearable that I had to move to the Arena in Oshodi, Lagos State. It was obvious that I will need some kind of help to start again, so I went to one microfinance bank, that I won’t like to mention, but the condition they gave was too stringent and their interest rate was too high. I felt it won’t serve my purpose. Later on, I was introduced to Onyx Microfinance Bank.

“Their loan facility is easy to payback, and with less interest. Once you get money from them, they will be coming everyday to collect daily contributions until you pay off the money before or by end of that month. I used their money to expand my business. I have since repaid the loan and my business is stronger. I am already processing another loan”.

Chukwudozie says, “The fund, though, it may seem little has really helped my business to grow: I have been able to buy an expanded variety of shoes and consequently, I have profited tremendously in my business. Growth and expansion were my major targets, so I put the whole amount into the business to effect some changes and I do not regret it at all”.
Ola says, “Most of the funds went into execution of contracts and buying of machinery”.

Challenges They Faced Before They Got Funding
Ayodele says, “As regards challenges during the process of getting the loan, of course we faced some - the likes of compulsory opening of an account with the said bank; collateral of equal sum or thereabout; and you also need someone who has previously transacted business with them to stand as guarantor with an open cheque signed should the uncalled for happen. But as soon as you have met all the requirements, there wouldn't be further delay in granting you the loan”.

Agbazua says, “There were really no challenges, if you are willing to comply with their policy, rules and regulations regarding the loan you want to collect. It’s like saying, ‘I want to go to the river and fetch water, I must first be determined to trek the distance, knowing that the empty gallon I took with me will be filled up with water and that I must be willing to carry it home’. You can’t be challenged because they are here to help us”.

Chukwudozie says, “As I have earlier said, it is just that I needed to have different types of the product I sell in stock for customers' satisfaction, but because I was incapacitated due to insufficient funds before, I had to move to access the loan. Also, the challenges of paying back, even with interest cropped up, but I got through this by being focused on the business - not allowing any distractions along the line. I had to permanently be on standby; I got more serious and meticulous than before, in resuming at my shop, on spending priorities, among other things.

“However, I would say I didn't face any challenge getting the loan, as soon as I was due to apply and access the loan after three months, I got it without any stress”.

Ola says, “There was really no challenge whatsoever. I had to bank with them for over six months before I could access my first loan. I also had to fill the loan requisition forms; and I had a chat with the manager to convince him about the viability of my business”.

How They Knew About The Microfinance Bank That Gave Them Loan
Ayodele says, “I was introduced to the company by a friend who had transacted business with the organisation and confirmed their speedy response and affordable interest rate of 14 percent.

Meanwhile, before you seek a loan, you must have opened a savings account and ran it for a period of two months; and you will be paying into the account on an agreed day of the week - a particular amount on the spread of the loan for six months - but the more timely you are in paying the lower your interest rate”.

Agbazua says, “A friend introduced me to Onyx Microfinance Bank, and I approached them for loan which I got by just introducing another business colleague to start banking with them”.
Chukwudozie says, “I got to know about the organisation - Onxy Microfinance Bank through a friend, who was a colleague in the business world. He has, times without number, applied for loan in that same organization”.

How Do You Pay Back?
Ayodele says, “It is very simple and there are no stringent conditions, as I pay back weekly into my savings with them”.

Penalty For Not Paying Back On Time
Angus says, “If you fail to meet up with the payback time, for the package I am in, you will miss the opportunity to get that loan again. What you just displayed is your inability to do that business successfully. Another possible penalty is that, because you still need the money for business you will be considered; but you will only get N30, 000 instead of N60, 000, which signifies that you are not capable of paying N2, 000 everyday, which will now be reduced to N30, 000, amounting to N1, 000 everyday”.

How Much Their Business Is Worth Today
Ayodele says, “It might be somehow confidential, but what I know is that we are still waxing stronger in the business - by God’s grace, the business has grown and is still growing. All thanks to God for the privilege we had in getting the loan. I’m thankful that we were able to pay back as at when due which is very important; this also points to the fact that we have really grown since accessing the loan”.

Nwankwo says, “I won’t say I have expanded because I am still managing the same one shop. But the money helped me. I was able to buy more goods. And all the goods I used the money to buy, I was able to sell them”.

Ubani says, “The loan I took also helped my business at that particular time I took it because I needed it then”.

Angus says, “By the grace of God I will say yes, I am successful because like I said earlier, a business I started with less than N200, 000, six years after I started, I have gotten married with children; I have built my own house in my village – so that anytime I and my family go to the village we have a place of our own to stay in; I and my family live in a decent residence in Lagos.
Our bills are paid as at when due and the business is worth over N600, 000 now. I am bold to say this is the type of business I do because it is profiting me and God has been very faithful, making me a success in the business.

“You as a businessman, the more money you earn the more responsibility you carry, you spend both for your family and save, and do some other things that only money can do for you. I will say to the glory of God this business is worth N600, 000 now, minus other things I have achieved in the process of doing the business. Like getting married, building my own house in the village and so on”.

Agbazua says, “Yes, God has been helping me, I have long paid back the loan my mom took from her village women meeting, my younger brother is still doing this business in Akure. I have gotten married and I have been paying my bills and I thank God for all this. Apart from some other things I can mention here now, this business I started with N14, 000 almost 10 years ago, is worth more than N200, 000 now. I know God is taking me somewhere, if not for those challenges of shop demolition I would have gone far, but I still give all glory to God”.

Chukwudozie says, “The business has really grown resoundingly. The loan has borne fruit”.

Ola says, “The business has climbed up to about N5 million in worth”.

By SuccessDigest Extra.