Mrs. Stella Odunwa is
the State Co-ordinator, Lagos, National Directorate of
Employment. In this interview with Okechukwu Nnodim, she says young
entrepreneurs should avoid starting up with bank loans.
In your words, what are the
key investment principles which young entrepreneurs must uphold?
It calls for diligence and
prudence. In whatever one is doing, there must be honesty and integrity and the
belief in one’s ability to accomplish so much. This is because if you have the
confidence in yourself that you will make it you will put all efforts in making
sure you actualise your dream. So for our small businesses, I want to recommend
that they first of all learn the intricacies of the business that they want to
go into. I like the Igbo men for apprenticeship, because when you understudy
someone who has knowledge of that business that you are going into, then your
risk becomes smaller.
So you learn the business
details and at times it really takes time to master the intricacies before
going into it. And if you can afford it, you can have some business venue and
if you can’t, you can start small by running it from your home. I also
encourage people not to at first jump into taking loan without in-depth
understanding, but to first of all get leverage on friends and family and the
little that they can put together and start small. In that way the mistakes
will be smaller.
When is it right for small
businesses to approach financial institutions for loans?
As they begin to establish
their footing in their businesses, they can now go ahead to take bigger risks
like approaching banks for loans. But this is only when they have been able to
establish their feet in the business and have created a network of clients and
have had reasonable periods of transactions from the businesses. They must be
established and must be grounded before they approach banks for loans and must
be able to determine the aspect of business that they want to put money into by
the time they get the loan.
This is because what we
experience is that some people just want to take the loan and by the time they
take it, that is when they start planning how to utilise it for they don’t even
know what the business terrain is like. So they jump into it and most of the
time they spend everything without making meaningful income and find it
difficult paying back the loan. Some of them buy cars with loans, furnish their
homes and what not; if you have not worked for money, how will you know how to
spend it?
What will you say about the
high interest rate by Deposit Money Banks and how it affects small businesses?
Well, what I will tell small
business entrepreneurs when seeking for loans is that the bank of agriculture
offers credit at lower interest rates to people who want to start small and
medium scale ventures. Their rates are lower than normal bank rates and they
offer credit to people who may not want to invest in agriculture but are in the
small and medium business category. They make sure the interest is simple and
across the board. Though I’m not too certain, I think their agriculture rate is
about 10 per cent and their non-agriculture rate is about 14 per cent.
People say money is not
always the most important thing when starting a small business; do you think
this is true?
We always talk to small
business entrepreneurs that they should not always place money first in
everything. This is because we have seen great businesses that started with the
little which they got from friends and well-wishers. Take for instance, I come
to your house to do cleaning for you and I ask you to buy some items for the
job, won’t you buy them? When I finish and you see I’ve done an excellent job,
won’t you invite me next time? Some people even go ahead to pay for the next
job. So it depends on the integrity and how you package yourself. This
therefore, means that you must prove yourself to be reliable and trustworthy.
Most of the time people are
afraid of putting their money or giving out their money because a lot of
workers have not proved themselves to be trustworthy. Take for instance, you
have a steward who has been trustworthy and honest over time in his services to
you, if he comes and ask you for N50,000 for something pressing and you have it
with you, won’t you give it to him? So if entrepreneurs can imbibe honest and good
qualities that will make people see them as having integrity, people are ready
to help. Once people are satisfied they are ready to stick their neck for you.
Also most of the time if you
make your proposal well and you are able to package yourself fine and believe
in what you are doing, sometimes you will find people who are ready to support
your idea. We hear of so many people who started small after getting assistance
from friends and family and they have grown so big in business and have
succeeded. Now you ask yourself, how did they succeed? So money is not all, but
integrity, honesty and diligence.
Would you mind shedding more
light on businesses which prospective entrepreneurs can undertake to make ends
meet?
Most of the businesses that
thrive so much are not necessarily buying and selling. Many of them are
businesses that you create with ideas or businesses that you do with your hands
and are able to produce certain services that people need. For instance, if you
are very good at barbing, even if you open it in front of your house people
will come and look for you. But most of the time people tend to look for
businesses that involve buying and selling and it does not always work that way.
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