• Thursday, July 18, 2024
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BusinessDay

How to finance your business indirectly (5)

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Learn to use OPT and OPM:

Do not let pride and superiority complex prevent you from asking for help from other people. It is a proven source of investment capital. There are lots of services you can get from friends and thus save some money for yourself and the business. For instance, you can find a friendly accountant who will help with a simple financial and operating plan, a friendly journalist who will help with press release, a friendly consultant who will help with information. If you have to wait until you can pay for these services, then you may need to look for a big chunk of money.

If you have an innovation to promote or finance, first think of your family. Many families now have engineers, accountants, lawyers, etc. You can always get free services from them as long as they are willing to help. Just learn to use other people’s talent. That is what OPT is all about. If on the other hand you do not have family of this make up, you may not have to look too far away to find help in your immediate neighbourhood.

To ensure you receive the right kind of assistance, you can offer future rewards without giving the business away. Just as you can use other people’s talent (OPT), you can benefit from other people’s money (OPM). For example, if your company has attracted a substantial order from a large corporation because you can meet its specifications, at a discounted price, the client may be willing to make an advance payment or deposit for you to use to purchase supplies. Put in another way for better understanding, you can ask people to make prepayment for their orders. Your distributors or wholesalers can also be asked to make prepayments.

Almost all established manufacturers use this method to accumulate large sums of working capital. If you have the right type of product you can do the same. Depending on your relationship and trust on both parties involved, you can purchase your input on credit and make payments later. In this case, your suppliers are providing you with money. These and a lot whole other initiative are proven methods of using other people’s money (OPM) to finance your project. OPM works like fire if and only if you are trustworthy.

•Business angels:

Business angels come from your extended network. They are the men and women who have money to invest and a desire to do so in their local communities. Entrepreneurs value them as much for their wisdom as for their money, which suggest that the best way to find a business angel is to look for a mentor. Concerns of business angels include:

•Talented people,

•Substantial long-term gains and fun.

•Specifics of funds needed…

•Strategic vision and details of existing revenue and costs.

•Understanding of risks and critical success factors.

•Daily Contributions:

People and individuals raise funds through daily and monthly contributions. In the case of monthly contributions, people come together, agree on certain terms and raise funds for a particular individual member to meet his financial obligations.

To some people it is known as “isusu” While daily contributions help a lot of people to save some amount of money, the person who organises the daily contributions can also lend other people some money from the amount contributed, thus helping people to start their own businesses. But before one can benefit, he must have been contributing with the organisers.

• Effective Network:

In my research and study, I have come to understand that sometimes one need not stash his account with millions, thousands or even the easy-to-get few hundreds before he becomes a success. For me, I have come to the conclusion that this world is ruled by ideas. No wonder, one of the greatest philosophers of our time declared, “imagination rules the world”. How true that is today!

Having discussed character at the beginning of this article of which integrity is a part, the later obviously need to be emphasised as without it, success in business remains an illusion! Cases abound where many have risen to the apogee simply because they possess this single, neglected ingredient and yet very vital for business success.

For instance, a supply business is one in which a lot of integrity comes to play. With it, you can also get referrals or recommendations through the network you have built. You may not know the main person involved but your ability to know someone who knows the person, or put in another way, your ability to know someone who knows who knows the person places you at an advantage than someone who just appeared from the blues. In your own case, some elements of trust are speaking for you through the chain of referrals or recommendations.

They know you in one way or the other and can always vouch for your integrity and capability. In the words of Orji Uzo Kalu, former governor of Abia State, and chairman of Slok Group of Companies, “Your ability to know the decision maker, whether he is behind the scene or in the open is key to success.”

 

JOE DAVID

Joe C. David is author of the following books: Be Your Own Boss and Be Super Rich. He is a consultant and the host of The Money Making Summit. You can reach him through: www.joecdavid.com. Email: [email protected] or 01-8938379, 08034740126.