I have been studying the interconnection of The Three C’s in business and I would like to share a few observations:
Every time I am interviewed about small businesses in Nigeria, I am asked how business owners or aspiring business owners can raise capital to start or grow their business. I usually suggest they start with looking inward and re-investing.We have The Famous F’s: Family, Friends and Fan. When the concept has been proven, you can then consider financial institutions and investors.
In reality, some of our clients are currently actively seeking additional funding to scale their businesses and it seems like a constant struggle with financial institutions being unwilling (or unable) to provide long term funding.
Whilst we grapple with the absence of long-term or patient capital, I have noticed another challenge with small business owners. This is a lack of clarity.
A couple of weeks ago, I spoke on one of the panels at the Connect Nigeria E-business Conference and the brilliant moderator, Shade Ladipo, put up an impromptu pitch challenge with the promise to give one participant capital for their business.
This pitch once again brought to the fore the fact that a lot of SME’s hide under the guise of capital as a reason for being stuck in business. None of the participants who pitched could clearly articulate their business plan and how they were going to pay back the money Ladipo was willing to invest.
Your business will likely grow faster if you are clear about crucial things like:
- Your business model
- Your market viability
- Your target market
- Your route to market strategy.
Another importance of clarity is that investors will have more confidence in investing in you when you can show them clearly what you will use the required funds for and how you will guarantee that they will not lose their money.
This brings me to my final ‘C’.
We have probably heard it often said that, “Your network is your net worth.” The real value of this comes from something called Social Capital.
“Social capital is your ability to build a network of authentic personal and professional relationships which you can leverage on.”
The importance of having such relationships is that they give you access to information and connections.
In the past few weeks, I’ve spoke to three different business owners who are currently raising capital to scale their businesses. One of them expressed his frustration about how hard capital was to come by. The other two shared stories with me about how their connections had connected them with private investors who had invested in their business. What comes to mind is the adage: It is not what you know but who you know.
The first person might have worked hard, done the correct market study and proven his business model, but because he did not have the right connections, it left him struggling to raise capital.
As you work to grow your business, you have to ensure that you are clear about your business strategy (this is usually what we do at Tale Alimi Global; helping business owners develop and clarify their business strategy). Also, ensure that you deliberately build authentic professional and personal connections.
One of the ways to build connections is to be part of a community. Our Business Leaders Circle is a community of progressive business owners who we work with; they also support each other to in scaling their respective businesses.
If you are in Lagos and want to know more about the community, you can attend our FREE taster session on the 17th of March. See details HERE.