By Franklin Alli & William Jimoh
FINANCIAL experts say about 80 percent of Small and Medium Enterprises, SMEs, in Nigeria fail within the first five years of their existence due to lack of experience and other wrong business practices.
Ugochukwu Chris-Aladum, Lawanson Branch Manager, Stanbic IBTC Plc, stated this at a bi-monthly business networking event for young entrepreneurs and business professionals, organised by BizKonects Mega Corporate Limited.
He attributed inability of SMEs to access finance from banks and other financial institutions to lack of proper structures.
According to him, there are certain requirements that must be met before young business owners could enjoy bank finance including; bank statement and proper record of the company’s activities, adding that these will determine if the bank will be able to help. “Banks are also business enterprises and are in business to make profit too. So there is no way you can prove you operate a business without a bank statement which most businesses lack.
Also, before you can seek and get bank funds, you must have ran the business for about six months with your personal money. Security is one other thing needed and you should have market for the service you tend to provide. Though, SMEs are the largest employers of labour, insufficient capital, improper inventory record, poor management practices and lack of adequate financial records are factors that mar their access to finance,” he said.
Also speaking at the event, Victor Bisong, Head Corporate Finance, Cowry Asset Management Limited, noted that in spite of the fact that the environment for doing business in the country is very difficult; the company supports small businesses in two ways — debt financing and equity funding.
He urged operators of small businesses to run their outfit for a while before approaching the company for advisory, linkage and funding service.
On his part, Sunday Daniels, Vice President, Sales & Marketing, Aquila Leasing, told participants that the company finances start-ups. “What we can do for you as start-ups is to identify with your idea, develop the idea and seek financiers to fund the business. Get a lawyer, an accountant, get your bank statement; all these show that you are ready,” he said.
Jonah Ubong, Projects Director, Bizkonects, said the essence of the platform was to promote and encourage young entrepreneurs and business professionals in the country to network, develop and share ideas.