How To Raise Capital For SMEs

One major problem confronting small and medium enterprises in Nigeria today is the start-up capital. Many people believe that starting a business in Nigeria requires huge capital and have therefore, resorted to looking for white collar jobs that are, unfortunately, in short supply in the country.

The minimum share capital for starting a company is different from one country to another: for example, for opening a business in Malta, you will need a little over EUR1,000, and in Italy, it is only EUR1

This trend has continued to increase the high rate of unemployment in the country as many Nigerians who could have been meaningfully engaged in the informal sector are roaming about the streets in search of job.
The Tide went to town to seek the opinions of some successful SME operators on the best possible way to start a small and medium scale business without running into problems. Below are some of the views expressed.
Managing Director of ACS Success Link Limited, Mrs Scholar Amuzie, who has been in business for over 20 years, said “start-up capital only posses a problem when a potential entrepreneur wants to start with a huge amount of money.
“The problem we have in Nigeria is that graduates fold their hands, moving from one company to the other looking for who will employ them, when they can turn themselves to employers of labour”.
Mrs. Amuzie who runs a supermarket said, “I started this business with N15,000. I will buy recharge cards and move round to sell to my customers, which other recharge card sellers do not do.
“Sometimes my customers would order cards and give me money to go and buy due to the way I package and do my business.
“If you want to start a business, you must first check the location/population and be sure that such business would move in that environment. Then, use small money to test-run it even if you have the whole world”.
She said that for one’s business to grow, the entrepreneur must live within the minute aspect of the profit and be serious with the business.
“For the business to grow, the entrepreneur must be disciplined and develop the habit of taking stock.
“When a business owner becomes lazy, the employee would run him/her down. Another aspect is aggressive marketing and opening of other branches.
“It is the best to start business with savings and take loan for expansion when the business is stabilised, she said.
To the Managing Director, Gid-Andreas Health Plus Services, Dr. Gideon Uwandu, raising a business capital to start a business depends on the type of business one intends to venture into.
“There are businesses that require building a relationship that would enable the company supply the goods for the entrepreneur to sell, make gains and pay before carrying another one. This helps the entrepreneur build his capital with time.
“In such a business, the SME operator needs to be very careful and faithful not to abuse the privilege or open door for law suits which will definitely crash the business”, he said.
Dr. Uwandu advised that, “the best is to start small, develop passion for what you are doing before growing and expanding the business.
“It is very dangerous to start a business with money gotten from money lenders with high interest rate. The issue of meeting up with the payment of the interest becomes the first blow to the new business.
“Another mistake that affects entrepreneurs is jumping from one business to the other just because you saw your neighbour making gains from the business”.
Dr Uwandu who has been in business for over 15 years, said that without creative minds and the preparedness to keep developing in the chosen field, “expansion would become a mirage.
“It is also important to save up to 80% of your gain and re-invest it in the business for rapid growth and development.”

In her own view, a garri wholesaler at Oyigbo, Mrs Victoria V. Jackson, said she started her first business with N5,000.
“The first business I did was selling of groundnut with N5,000. I continued to grow my capital till l made up to N10,000 and switched over to cloths and made up to N25,000 before l started the business of my passion which is garri selling.
“One needs to be up and doing to raise business capitals for the business you have passion for. Many people borrow money and start big but crash due to lack of experience”, she said.
According to her, sitting idle waiting for employment amounts to wasting productive years, adding that one can start business and still gain employment when the opportunity comes.
“Only lazy people sit down at home to wait for government employment or company employment, when they would have utilised the opportunity to be self employed.
She noted that one requires discipline, determination and consistency to grow in business.
She, however, advised against going into business one does not have passion for, saying skill acquisition can also help in growing business.