How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page0 How to Easily Raise Capital in Nigeria - With or Without Collateral. Iroegbu Ikechukwu P.N. www.BusinessGuidesNigeria.com 2008 BusinessGuidesNigeria. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page1 Table of Contents Part 1: The Basics. 1. Capital the life of your business. 2. The Importance of a sound Business plan. 3. Getting the Money-Hunting Edge. Part 2: Ways of Raising Capital. 4. Personal Savings. 5. Getting Your Hands Dirty. 6. Other Peoples Money (OPM)/Trade Advance. 7. Bank Loans. 8. Small Personal Loans. 9. Selling off Your Luxury Assets. 10.Group Collection (Isusu). 11.Partnerships. 12.Private Equity Placement. 13.Economic Opportunity Loans. 14.Angel Financing. 15.Cashing in Your Life Insurance. 16.Bank Overdrafts. 17.Leasing. 18.Bartering. 19.J oint Ventures. 20.Hire/Purchase. 21.Going Public. 22.Selling Information. 23.Multinationals. 24.Minimize Your Start-up Costs. 25.Mistakes That Kill Startups. 26.Other BORIGCOMM Products that will help you. 27.Appendix:List of Micro Finance Banks in Nigeria (700+) [in CD]. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page2 NAPEP Contact Persons in Nigeria [in CD]. SMEEIS Guidelines [in CD]. Sectorial Distribution of SMEISS investments [in CD]. Geographical Distribution of SMEISS Investments [in CD]. BONUSES [in CD]. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page3 Part 1: The Basics How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page4 Chapter 1 Capital the life of your business On the premise, very few business endeavors can be started without capital. The only exceptions are some service based businesses which only require the expenditure of physical effort. Capital is unarguably the life-stream of your business. With it you can; purchase equipment, employ and pay staff salaries, rent business offices, run advertisements, etc. Most probably, it is capital that is keeping those brilliant ideas of yours from taking form, or holding back your business from its much needed expansion. However, with the different means of raising capital which I am going to teach you. Your nightmares, headaches and pains associated with sourcing & acquiring capital for your business will be turned into bliss. I am going to show you proven methods you can easily use to raise capital for your business right here in Nigeria. Shall we begin? How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page5 Chapter 2 The Importance of a sound Business plan Since you are going to approach either individuals or corporate establishments for capital, we cannot overstate the importance of a sound business plan. The factors that make your business plan sound include: a.Is it simple to (read through and) understand? b.Is it feasible? Can it be achieved? c.What are the risks involved? d.What are the potential returns (profits)? e.How long will the returns take to come in? f.Who are you? What related experiences do you posses? Which experienced people (in your area of business) are behind you? Your business plan tells your prospective partner/investor exactly what the money you need will be used for. It also shows how soon they expect to get their money back. Your income projection, target market, competition, etc. Furthermore, a business plan strongly helps you keep track of your targets, objectives and serves as a gauge to measure your progress over time. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page6 Chapter 3 Getting the Money-Hunting Edge In your quest to access funding for your business or idea, there are certain basic attributes that will make your work easier. To qualifyfor other people to entrust theirhard earnedmoney to you as capital, there are several qualities/attributes you must possess. Theseattributesandqualitiesmakeyourabilitytosecurecapitalmuch,mucheasier.Theywill literarily guarantee your success. These golden attributes/qualities include: 1.Expertise: How knowledgeable are you in the area in question? Do you completely understand the business/industry you are about going into; and its inherent challenges? As a rule of thumb, your chances of raising capital for a venture you are unfamiliar with is as much as nil if you do not already understand what you are going into. The chances are that you are going to waste the capital on costly mistakes. 2.Reputation: Do you have a reputation for integrity? Do you have a record for keep your word? Will you repay the money you are given when the time is due or will you wait until you are taken to court? If you are honesty, reliable and constant your chances of raising capital will be greatly enhanced. 3.Management: This is a very important factor that will determine how easily you can get access to capital. The person/persons providing you with funds will want to know beforehand; who are the brainsbehindyourbusiness?Whoarethepeopleinyourmanagementteam?Whatrelated experience do they possess? Of course if your business is engaged in football clothing, it might not do you much good having someonefromthefood&beverageindustryonyour team.Thepeoplethatwilladdthemost credibility to your business are people engaged in or who have previously engaged in the same business and have acquired some related experience. Furthermore, you might not have enough cash to attract the right kind of people into your team. However, this should in no way be a deterrent. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page7 Assuming you want to get someone like Pat. Utomi on your team but you cannot spare any cash at that moment. What options do you have besides say paying him upfront? Simple, you can offer the person some equity in your business. As I always say its better to own 2% of a business that is worth something, than 100% in a business that is worth nothing. Finally, being a doctor or a plumber does not guarantee your qualification to manage a hospital or a plumbing business. Managing a business is entirely a different science and art of its own. Hence, for your team, you will need to have people who are just not basically plumbers or doctors, but managers in that business area. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page8 Part 2: Ways of Raising Capital. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page9 Chapter 4 Personal Savings For the serious minded business person, the first source of capital for your business is your personal savings. To show how serious you are and then how much faith you have in your business venture. You should be able to raise about 30% or more of the needed money on your own.

Withoutsomefinancialcommitmentfromyou,howwouldapotentialinvestorinyourbusiness idea/venture gauge or access your seriousness? Furthermore, you can kick-off your business from scratch with the savings youve accumulated while you continue to seek additional capital. Besides, it is much easier to secure capital for a business that is already in motion, than one thats still on paper (at the ideas stage). As a businessperson or as a potential businessperson, you have to form this very useful habit of saving money for future use. As all habits, it takes a little work at first, but then it gets much easier with time. Avery easy way ofsavingis to regularly set 10% or more ofyourincome aside as savings each month. When you start this, you will discover that you are able to live on 90% of your income just as comfortably as you did on 100%. Finally, if you have money stashed away for a rainy day, starting your own business might just be the wet weather youve been saving for. However, since more than 80% of all new businesses fail within their first year, you should always be very careful when using your carefully accumulated personal savings to finance your business venture. Plan carefully and make sure you know what you are doing before you begin no guess work. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page10 Chapter 5 Getting Your Hands Dirty If you are truly passionate about you dream and your idea, no work might be too small or too menial. Do you know that Mike Adenuga once drove a cab? Do you also know that former Governor Orji Kalu of Abia State was once into furniture making? Do you also know that Ibrahim J imoh (of NICON) raised his first significant capital by organizing seminars? Now, I simply cannot stress the following point enough: Pride is detrimental to your success. Do not ever let it stand in your way. Youreallyneedmoneyright?Whatphysicaljobshaveyoudonetoraisemoney?Canyouwash dishes, can you transport people, can you do laundry, can you engage in research for people, can you babysit, can you clean houses, can you fix shoes? Can you paint, do plumbing or carpentry? The list goes on. If you get your hands dirty today and then achieve your dreams tomorrow; who will remember? Now, even if people do, it will actually be a feather in your cap. Do not despise the days of small beginnings thedaysofsmallbeginningsaretheseedsofgreat,staggeringandmagnificentfuture accomplishments. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page11 Chapter 6 Trade Advance/(OPM) The acronym OPM stands for Other Peoples Money. In a more formal sense, its referred to as Trade Advance. This method is another beautiful way of raising money for your business. However, it does require before hand that you are a trust-worthy person or that you have an established reputation of reliability. Lets say you offer a service such as web-designing and hosting or that you sell books. Now if you are out of cash, you can easily make your customers or clients who trust you to pay in advance for the product they want. Then with the funds collected, you then simply order for the product or service. If you are a contractor or a manufacturer, you are also not left out. As a contractor, you are naturally entitled to a mobilization fee. And if you are a manufacturer, you can simply approach your whole-sellers or dealers with the request that they pay upfront for their next shipment. Now, if youve had an established precedent of delivering on your word, there are simply no reasons why your dealers will not happily comply. Can you imagine MTN, UAC or MOBIL being rejected if they asked their dealers to make an upfront payment two weeks before being supplied? The response to the request should be obvious to you as paying upfront to these companies poses very little risk of loss to the dealer. Finally, you dont have to be MOBIL or MTN before you can benefit from OPM. Lets assume you sell food supplements like GNLD or FOREVER on a retail basis. Can you not possibly collect money upfront from someone who has bought from you in the past and was satisfied? Then use then use the money received to order for the products? If you possess some imagination, you will never fail to see how you can use OPM in any business you are to engage in. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page12 Chapter 7 Bank Loans NOTE: No Bank will ever give you a loan without a reasonably guaranteed expectation of getting the money back. The Banker who should lend you money is your friend, yes, and he is also the friend of the person who gave him the money to keep! The way banks decide whether to lend money to your business is based on the SOLID business plan thatyoullbeexpectedtopresentandtheassetsyoupossessascollateral.Becauseofthis,its important that you spend time making sure youve covered every eventuality and have a plan in case things start to go wrong. The more preparation you do upfront, the easier itll be to secure the funds you need. If youre starting a business from scratch rather than buying an existing business or franchise, then as there are no assets to secure the debt against, you may be expected to secure the loan on personal property, such as your house, your already (developed) landed property and sometimes your Insurance or shares certificates . This then becomes a personal loan for business purposes rather than a business loan, but it still works in much the same way. Traditionally, it is easier for an already established business with physical assets, a customer base, a goodmarketpositionandgoodfinancialrecordstoaccessloansfrombanks.UnlikeVenture Capitalists and Angel Investors, banks are less likely to grant loans to start-ups and micro-enterprises. However, thanks to several programs initiated by the Federal Government to stimulate activity in the Real Sector. Like the Small and Medium Enterprises Equity Investment Scheme (SMEEIS). Under this initiative, banks are expected to set aside 10% of their profits before tax for equity investment in SMEs. YourCD(whichcamewiththismaterial)containstheSMEEISguidelinesforbeneficiariesand participating banks. You will also find records of SMEEIS Investments so far by Geography and by Sector all in your CD. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page13 Chapter 8 Small Personal Loans After exhausting your option of personal savings, this is the next avenue to exploit. It is often said that drops of water make an ocean and believe me this is really true. Using the Small Personal Loans angle, you can easily secure capital by approaching friends, family and your acquaintances that is if you are passionate enough about your intended venture, know the terrain and have some personal credibility. Naturally,itis easier to get a loanfrom someone who knowsyou well thanfrom atotal stranger. Additionally, it is quite difficult, in our African setting, for a friend or relative who is in a position to help to turn you down. By soliciting small amounts from each of these people (depending on their different financial abilities of course), you can easily obtain loans between N10,000 to N200,000 from 10 to 20 different persons. N10,000 in 20 places is N200,000 in the same light N100,000 in just 10 places is 1 Million. Are you getting the idea? Obviously, you will find it very difficult to secure loans on a personal level if you have a reputation for dishonesty and inconsistency. People will only give you loans only and only if you are reliable, honest and trustworthy. If you are not simply spare yourself the ensuing chain of rejections! Lists of most likely people to meet for this purpose include your immediate relations; your parents, brothers & sisters. Your extended family: your uncles, aunts, cousins, grandparents and in applicable instancesyourniecesandnephews.YourFriendsandacquaintances:yourschoolfriends,work friends, gym friends, religious friends, neighbours etc. Do not leave any potential capital source out. Furthermore,Ineednottellyoutoswallowyourpride.Swallowingyourpridemeanshumbling yourself enough to approach other people for help. You are not asking for alms, you are gathering resources to exploit a great idea. But bear in mind that you should not put other peoples money to unnecessary risk. Also note that you might find yourself in some serious financial mess if you misuse the money entrusted to you. Entrusted - because these people believed in your fair sense of judgment. The heightened sense of responsibility you should feel because you borrowed money from people who are so close to you should serve as extra stimulant to propel you to success. Finally, to make things a bit easier on you, you could sell them a stake in your business. However, you should ensure you draw up some legal documentation for this. This move (of letting other people in) will reduce some pressurefromyou and also addmore managementhands to ensure the greater success ofyour venture. And as I alwayssay; 70%, 50% or even 10% of a business that is worth something is always better than 100% of a business that is worth nothing. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page14 Chapter 9 Selling off Your Luxury Assets Howcouldyouhavetwocarsandstillbelookingforcapital?Howabout thoseexpensivesuites, watches, shoes, and all the other items you can live without? Have you thought of converting them into usable cash? Actually, when most people think of capital, they think in terms of heavy chunks of money from a single source; a huge bank loan or a huge private placement from a single individual. They never think of thelittle andnot so little amounts they can generate from the sale of some of their possessions which they can do without at least temporarily. Dont you realize you can easily buy more and better cars, houses and lots more from the income generated from your new business? [Note: it is a very dangerous and irresponsible practice to spend directlyfromyourbusinessprofits.Youshouldensureyouandyourbusinessoperatedifferent accounts. I am telling you from personal experience avoid it its something you will regret. Next time you think of generating capital, Id suggest you think closer to home. And put into serious consideration the conversion of those luxury assets you already have into business capital. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page15 Chapter 10 Group Collection (Isusu) This is a very beautiful way of raising capital for your business or in fact raising money for anything. However, it requires that you and your participating peers already have a steady source of income. In practice this is very simple to carry out. The first step is to talk to a few persons (usually less than 30 so that everyone can cycle out within 2 years), people who would be interested in either a savings scheme or who would need cash immediately or within a few short months. The first set of people who need cash immediately will be among the first to receive while the later set who want prolonged saving tenure will cash out later. After you have all decided on the amount each of you can comfortably contribute monthly, weekly or atwhateverintervalsyouallhavedecided.Thenextstepistowriteoutthenamesofeveryone indicating when each person will receive their respective pay out. Finally, from this point onwards, when it gets to the agreed interval, you all contribute the specified amount and pay all of it to the first person on the list - Hopefully you; because you initiated it. The next month or week, the next person in line receives too until you all do. Note that you should prepare some legal documentation which will be signed by each participant. This is to avoid any future problems or misunderstandings How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page16 Chapter 11 Business Partnerships A partnership is a type of business entity in which partners (owners) share with each other the profits or losses of the business undertaking in which all have invested. The primary reason for forming a partnership is to bring in people who possess strengths that will compliment your own, or strengths that could replace your weaknesses. It could be capital, managerial experience, access to customers, etc. Greater rewards may result from forming a business partnership as partnerships offer more freedom for business owners and the potential to earn higher profits. Because it involves more than one person, a partnership can either be a business disaster or a very rewarding experience. Before you enter into a partnership with anyone or any group of persons below are some factors you should consider very seriously. Factors to consider before entering a business partnership 1.Do you have thesame vision?: Do all the parties involved in the business have the same vision for the business? Are your goals the same? If you intend building an international enterprise and your partner or partners are only interested in dealing locally, your business is headed for some trouble. 2.Avoid having equal ownership equity: It is clearly in the best interest of quick decision making in your business for the partners not to have an equal amount of holding. You should be looking at things like 55 - 45%, 75 25%, 30 30 40% etc. The most important thing is that it is structured in such a way as to tip decisionmakingmorein the direction of one partner. Thisis to avoid decision deadlocks. 3.CreateaPartnershipagreement: Since no legal documentation is necessary for a partnership agreement, most people tend to go without it. However, lots and lots of costly and business-killing misunderstanding can be avoided by simply drawing up a partnership agreement at the onset. A good Partnership agreement should specify the following: (a.)Type of Business. (b.) Amount of equity invested by each partner. (c.)Partners pay and compensation. (d.) How losses and profits will be shared. (e.)Dispute settlement clause. (f.)Duration of partnership. (g.) Restrictions of authority and expenditure. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page17 (h.) Settlement in case of death or incapacitation. (i.) Distribution of assets on dissolution. (j.) Provision for dissolving the partnership. 4.Definebusinessroles:Asuccessfulbusiness partnership synergizes the strengthsand skills of each partner. A business partnership will stand its greatest chances for success if roles are divided among the partners according to eachs strength. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page18 Chapter 12 Private Equity Placement Another often neglected means of raising capital for your business is through the private placement of your company shares. It involves an offering of securities that are not registered with the Securities and Exchange Commission (SEC). To carry this out, first youll first have to ascertain the total value of your business and get registered withtheCorporateAffairsCommission.Naturally,youwouldwanttoemploytheservicesofa competent consultant who will help you out. Furthermore,notethatyouaresharingtheownershipofyourbusinessandconverselydecision making.Becauseofthis,youmightwanttoretainagreaternumberofsharesthananysingle individual in order to maintain control. Additionally,dontexpecttobeginyourbusinesstodayandthenbeginseekingPrivateEquity tomorrow. This avenue is usually for businesses that are a bit established and have serious growth prospects. Finally,themostlikelypeopleyoumightfirstwanttotargetareyourfriends,relatives,business associates, etc, then the public in general. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page19 Chapter 13 Government Loan Assisted Programs Different governments, both at the State and Federallevels,from time to timeintroduce programs aimed at assisting small business owners with capital and sometimes even training. Whether the governments objectiveis to improveitsimage or to genuinelyhelp doesnot matter. What is important is that theyve provided a lot of aspiring entrepreneurs with business capital and that they still do so. There are the various NAPEP (National Poverty Eradication Program) that assist start-ups like The Capacity Acquisition program for non-graduates, The NAPEP Revolving Micro-Credit Scheme, The VillageEconomicDevelopmentSolutionwherebeneficiariesareentitledtosumsofuptoN50 million,andthePromiseKeepersProgramwhichiscarriedoutincollaborationwithreligious organizations. In the promise keepers program, the loans are provided through churches or mosques for them to act as guarantors so as to reduce delinquency and loan defaults. Finally, I hope you take the NAPEP program seriously and make enquiries in your area concerning their programs. If you are someone who reads and listens to news, you must have been hearing of the hundreds of millions that have been changing hands through these programs. Your CD contains a list with the contact details of several NAPEP representatives nationwide. You can call or send them an email with your enquiries. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page20 Chapter 14 Angel Financing An Angel Investor or a Business Angel is a well-to-do individual who provides capital for a promising business start-up in exchange for equity i.e. in exchange for owning part of your business. Angelfinancingis typically used to provide a second round offinancingfor high-growth start-ups after the small personal loans avenue has been exhausted. Business Angels know that they bear extremely high risks so they expect their investment to multiply by at least 10 times within a 5 year holding period. They plan to achieve this through an Initial Public Offering (IPO) or through the acquisition of the business by another body or individual. Besides providing long-term finance, Business Angels also provide their management experience and business knowledge acquired from helping other companies with similar growth challenges. They can also be a source to connect you to very important business contacts. Since Business Angels are usually retired entrepreneurs, they completely understand the needs of an entrepreneurandhisstart-upbusinessincludingthepitfallsalongtheway.Andsincemost entrepreneurs are by nature overtly exuberant, Angels provide a sense of balance which prevents the entrepreneur from making wrong decisions out of unbridled enthusiasm. Decisions which if carried out can be very costly in the short or long term. In economies with very developed private sectors like the US, UK, Australia etc. An increasing trend is emerging where Angel Investors pool their resources and investment capital together to form Angel Groups/Angel Networks. However, in Nigeria where we do not presently have such groups formally, you will have to take the directrootofaskingaroundandapproachingindividualswhoseprofilesuggestsAngelic inclinations.Peopletolook outforincluderetiredorretiring:entrepreneurs,corporateexecutives, senior government officials etc. Finally and most importantly, you must have a hard-to-resist idea that is easy to understand, workable and that is potentially very rewarding. If not, dont even waste your time seeking an Angel investor. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page21 Chapter 15 Cashing in Your Life Insurance (Life Settlement) A life settlement is a financial instrument that allows a consumer to receive the maximum current cash value of their life insurance policy. This is designed for people who no longer want their life insurance benefits. If your Life Insurance has a cash surrender value, you simply cash it in with your insurer at any time andreceivethecashamountaccumulated.Insomecasestoo,abankmightacceptyouinsurance policy as collateral before granting you a loan. Finally, if you do have a life insurance policy, just know that it could be the source of business capital that you need. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page22 Chapter 16 Bank Overdrafts Abankoverdraftsimplymeanswhenyouwithdrawmoremoneythanyouractualbalance.This facility is usually provided for current account holders with active accounts. If your account shows a reasonable level of activity, you can be able to receive an overdraft. Your cash-flow needs to be in such as state as to convince your bank manager or account officer to approve your overdraft. A good habit you should form as a business person is to carry out most of your transactions through your bank account. You can make all or most of your payments through checks and try to receive cash through your bank too. In addition, if you have a steady monthly income, some Nigerian banks like bank PHB allows you to easily walk into any of their branches and cash up to 50% of your total monthly salary in advance with no hassles. However, this requires that you domicile your salary account with them. On further arrangementsyoucaneasilytakeoutupto250%ofyoumonthlysalaryandthenpayback conveniently over a period of 12 months. Furthermore, other banks can even give you more. Zenith bank for example can provide you with a loan of up to 500% of your monthly salary and allow you a repayment tenure of 12 to 24 months. Nevertheless, you should note that this could be a very risky undertaking if you take out a sizable chunk of your living income as loan and then fail to raise money from the business you are engaging in. To be on the very safe side, avoid playing with more than you can afford to do without. You must be absolutely sure of what you are doing before you stake a substantial part of your salary on it. Finally, do note that the banks charge you interest rates that are applicable to other loans its what they are in business to do. Its how they make their money. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page23 Chapter 17 Leasing A lease is an agreement between you (the lessee) and a lessor, whereby the lessor allows you the use of an asset which he owns. In return, you pay rental at intervals agreed upon by both of you. The option of leasing can be very helpful in conserving much needed cash in your small business as youwillnothavetocommithugeamountsofmoneyforanoutrightpurchaseofequipmentor property. Additionally, banks now offer leasing services. To this effect, you can simply walk into your bank and make enquiries if the items which you intend spending can be acquired through a lease agreement with your bank. Furthermore,byleasinganequipmentorasset,youcanmosteasilyupgradetolaterandmore improvedmodels without having to spend hugefunds. You can easilyinformyourlessor that you wantthelatestmodeloryoucanlookforsomeoneelsewhodoes.Haditbeenyouownedthe equipment, you might first have to wait till you sell it in order to raise money for the newer one. Finally, below are some advantages of leasing over an outright purchase: It is convenient. It conserves working capital. It increases your purchasing power. Long payment terms. 100% financing in some cases. Tax advantaged. Possible free maintenance and repairs (if agreed upon).Helps avoid obsolence. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page24 Chapter 18 Bartering Thissimplyinvolvestheexchangeofgoodsorservicesforothergoodsorservicesbetweenone business and another. It is a transaction in which no money changes hands. Barter allows you, as a business owner, to pay for what you need with your own goods or services, allowing you to preserve working capital for other expenses The practice of bartering can seriously aid in preserving cash to help get your venture launched or expanded. In fact, bartering is a must have success tactic for operating your small business. Lets assume you are starting a magazine publishing business and you are in need of computers. You couldlinkupwithacomputerdealerandnegotiateforcomputersagainstadvertizinginyour magazine.Inthesamelightyoucouldmakethesamekindofarrangementwithofficefurniture dealers, printing presses, car dealers, etc. the list just goes on. Simply look for people who have what you need and need what you have. However, itisimportant to note that the goods or servicesyou are to providemust have an equal market value to the one you need at least in the eye of your negotiation party. Furthermore, you must ascertain the market value of the barter from both parties. To ensure a win-win situation a money and time value must be attached. This ensures that your products are exchanged for products of the other party which are of equal worth. Other advantages of bartering Helps to sell off seasonal products: If your products or services are seasonal in nature, the bartering approach can be used during slow or off-season periods. Frees excess inventory: If your business has an excess of goods you do not foresee selling off in the nearest future, you can use bartering to convert those excess products in your warehouseintoothergoodsorservicesyouneedimmediatelyinsteadofspendingthe limited cash in your possession. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page25 Chapter 19 Joint Ventures AJointVenture(JV)isastrategicalliancebetweentwoormorebusinessestosharemarkets, intellectualproperty,assets,knowledge,risksandprofits.Jointventuresareusuallyone-off transactions but in some cases they can be quite prolonged depending on the arrangement between the contracting parties. As someone who intends to start a small business or as a present small business owner, it is your duty to seek out and search for companies, establishments and individuals who it is both in your interest and theirs to pool your resources together. Furthermore, it is very important that you also draw up an agreement to protect your interest and of course theirs.Jointventuringwithalargecompanycanbesuicideifyouarenotprotectedbyan agreement as they could swallow you whole. Finally,itisimportant that you put a number of thingsinto considerationbefore choosinga Joint Venture partner.These include: Screening your prospective JV partners. An exit strategy and terms of dissolution of the Joint Venture. Special allocations of income, gain, loss or deduction to be made among the partners. And for the most, all the factors we listed in the chapter on Partnerships. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page26 Chapter 20 Hire/Purchase This is an arrangement related to Leasing (which we treated earlier). The difference here is that as you are paying termly rental for the equipment or asset in question you also have the option of keeping it after youve paid up to a certain predetermined amount as stated in your agreement. The most beautiful part about this is that you can actually be paying for a given item from the money you realize from using it. Most owners of high value equipment or equipment with high obsolence rates tend to place them on hire purchase. However, you can also talk people who are not previously disposed to hire/purchase arrangementstoconsideritifyoucanconvincethemofthebenefitstheywillderivefromthe relationship. Finally,donotforgetthatyouwillhavetofacesevererepercussionsshouldyoudefaultinyour payment. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page27 Chapter 21 Going Public (IPOs) Initial Public Offerings (IPOs) are exclusively for companies that have been operational for a while. Among other things, the NSE (Nigerian Stock Exchange) requires that a company wishing to offer its shares to the public must have a record of their audited accounts for at least the past 3 years. And that they should have a team of professionals competent in the companys area of business. A public offer is the issuing of the shares of a given company to the public for the purpose of raising capital to expand its existing operations or to for diversification into an entirely new line of business. Wheneverthisisdonetoraisemoney,theexistingownershipstructureofthecompanybecomes diluted.Thisisnotinitselfabadthingasitisoffsetbyanincreaseinthevalueofinvestors shareholding in absolute terms. A public offer is termed public in the sense that documents regarding the issue of new shares are made available to everyone in the public for subscription. The company going public must possess a share capital of the quantity that will accommodate the shares to be issued for subscription together with its already existing shares. There are two types of public offers; the first is the Offer for Subscription which means the issuing of shares to fresh shareholders while the other is Rights Issue which involves the issuing of shares to existing shareholders of the company. When a company lists its shares on the stock market, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issuedsharesgoesdirectlyto thecompany(incontrast toalater trade ofsharesontheexchange (secondary market), where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock marketinvestors to provideit withlargevolumes of capitalfor future growth. Maybe, your business is not qualified to be listed in the stock market at the moment. However, that doesnt mean you will never grow to such a size. Additionally, the NSE is toying with the idea of a third-tier securities market where smaller companies who possess a lot of growth potential but are unable to meet up with the first and second tier listing requirements will be able to float an IPO. The maximum amount to be raised through this is placed at N100 million. Chapter 22 How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page28 Selling Information One of the most lucrative businesses which someone with very limited finances can engage in to raise capital is selling information. What do I mean by selling information? Well, a good example is this material which you are reading right now. The paper on which the information it contains is printed and the ink with which it has been printed are obviously not worth N5,000. But you paid that much because of the premium information which the material contains. Of course everyone cannot write a book (or rather will not). The simple reason being that most people are not confident enough to attempt writing. You do not have to be a Wole Soyinka to write. All you have to do is look for an area where there is a demand for further information. You do not already have to be an expert in that area you can become an expert by researching that subject or area. Then with the information you have gathered you can package it as a short report. The report could be an eBook, a book, a CD or a DVD. On the other hand, you can organize seminars on that area. Do not let the idea of organizing a seminar scare you; you can invite other people who are also informed in that area to serve as guest speakers. I assume you must know the famous Ibrahim J imoh; the owner of Global Fleet and NICON. Recently,Ireadapaperwherehe(IbrahimJ imoh)wasinterviewed.Intheinterviewhesaid,I represent the children of the poor among the rich, my father was a bricklayer and my mother sold fish! Then later on when he was asked how he raised his initial capital since he came from a very poorbackground.HeansweredthathestartedbyorganizingseminarsforLocalGovernments employees during the Abacha administration. From these series of nationwide seminars he raised a whooping sum N46 million. Furthermore, I hopeyou do not consider the above rare or impossible.Myself, thefirstmaterial I produced sold about 3,000 copiesin 9months and the average cost was N4,000. Interestingly, the material was just an ebook. When you pay I just send you an email with the material as downloadable attachments.AreyougettingwhatIamsaying?(Justmultiply3,000copiesbyN4,000,youget N12,000,000). Finally, if you want to learn how to create your own cash pumping Information Products Empire. Ive created a step-by-step report for you. It leads you by the hand through the entire process. To get your copy visit: www.BusinessGuidesNigeria.com/infoproducts

How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page29 Chapter 23 Established Companies Big,establishedcompaniesout ofcorporate responsibilityalsohaveprogramsthroughwhichthey provide micro-credit to Nigerian entrepreneurs. Last Year Shell Petroleum Development Company, Bank PHB and Grofin (a South African company specializing in finance) partnered to create the Aspire Nigeria Project. Theprojectwhichrunsona$31million(N3.596billion)fundisentirelytargetedatSMEs.The volume of funds a single SME entrepreneur can access ranges between N6 million and N125 million. Theirprojectpreferenceisforenterprisesthathavealimitedcapabilityformeetingcollateral requirements, employfewer than 50 people with an annual turnover ofless than N600million. Or establishments who their net assets do not exceed N400 million. ThemostbeautifulcomponentoftheAspireNigeriaProjectisthattheyalsoprovidetheir beneficiaries with guidance to enable them scale through the various hurdles encountered during the growthonanenterprise.Youcansubmityourapplicationforaloanontheirwebsite: www.grofin.com/home.asp?pid=278 Additionally, other Nigerian companies are also providing micro-credit support for entrepreneurs. The list includes Nigeria LNG, Chevron, Exxon Mobil, etc. You can visit their respective websites to get updated.

Chapter 24 How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page30 Minimize Your Start-up Costs. If the amount of capital required to start a particular new business is estimated at N25 million and then byeliminatingsomeunnecessaryexpenditures,youreducethetotalcost toN19million.Youcan actually consider it to be that you have raised yourself N11 million! Now, if you look very closely at your proposed expenditures, you will see that there are several items which you can comfortable eliminate without endangering productivity. Do you need such a big office now that you are just starting? Do you need that number of cars? How about those inventories do you need that quantity to begin? Do you need that size of equipment? Must it be brand new? Do yourself a favor right now by eliminating all the items which are not critical to your kick-off. If your business plan is sound enough and you know what you are doing. You will be able to afford all those luxuries in due time. But for now when cash is dearly needed do not waste it on unnecessary items. Chapter 25 How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page31 17 Mistakes Start-ups Make BY JOHN OSHER Mistake 1: Failing to spend enough time researching the business idea to see if it's viable. "This is really the most important mistake of all. They say 9 [out] of 10 entrepreneurs fail because they're undercapitalized or have the wrong people. I say 9 [out] of 10 people fail because their original concept is not viable. They want to be in business so much that they often don't do the work they need to do ahead of time, so everything they do is doomed. They can be very talented, do everything else right, and fail because they have ideas that are flawed." Mistake 2: Miscalculating market size, timing, ease of entry and potential market share. "Most new entrepreneurs get very excited over an idea and don't look for the truth about how many people will want to buy it. They put together financial projections as part of a presentation to pump up their investors. They say, 'The market size is 50 million people that could use this product, and if I could only sell to 2 percent of them, I'd be selling a million pieces.' But 2 percent of a market is a lot. Most products sell way less than 1 percent." Mistake 3: Underestimating financial requirements and timing. "They set their financial requirements based on Mistake 1, and they go ahead and make a commitment to this much office space and this many computers, and hire a vice president of sales, and so on. Before they know it, based on sales projections that were wrong to start with, they have created costs that require those projections to be met. So they run out of money." Mistake 4: Overprojecting sales volume and timing. "They have already miscalculated the size of the market. Now they overproject their portion of it. They often say 'There are 200 million homes, and I need to sell [to] x number of them.' When you break it down, though, a much smaller number of those are really sales prospects. That makes it impossible to make their sales projections." Mistake 5: Making cost projections that are too low. "Their cost projections are always too low. Part of the reason is that they project much higher sales. There are also unknown reasons that always come out that usually make costs higher than planned. So on top of everything, their margins are now lower." Mistake 6: Hiring too many people and spending too much on offices and facilities. "Now you have lower sales, higher costs and too much overhead. These are the things that you see every day in companies that fail. And they all grow out of that first mistake: failing to research the size and viability of the opportunity." Mistake 7: Lacking a contingency plan for a shortfall in expectations. "Even if you're realistic in your estimates to start, there are things that happen when you start a new How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page32 business. Your sales ideas may be no good; bank rates may go up; there may be a shipping strike. These aren't the result of poor planning, but they happen. More often than not, entrepreneurs just feel that something will come along when they need it. They don't have contingency plans for it not working out at the size and time they want." Mistake 8: Bringing in unnecessary partners. "There are certain partners you need. For instance, you often need money, so you're going to need money partners. But too many times, the guy with the idea takes on all his friends as partners. Many people don't provide strategic advantages and don't warrant ownership. But they're all going to get 25 percent of the company. It's totally unnecessary, and it's a mistake. Before people are made partners, they have to earn it." Mistake 9: Hiring for convenience rather than skill requirements. "In my first business or two, I hired relatives. It was easy to do, but in many cases, they were the wrong people [for the job]. And it's hard to fire people, especially if they're relatives or friends. More time needs to be spent handpicking people based on skill requirements. You really need super-skilled people who can wear more than one hat. It just bogs you down when you hire people who can't do the job." Mistake 10: Neglecting to manage the entire company as a whole. "You see this happen all the time. They'll spend half their time doing something that represents 5 percent of their business. You have to have a view of your whole company. But too often, the person running it loses that view. They get involved in a part, and they don't manage the whole. Whether I do this product or that product, whether I hire somebody, [I consider] how they [will] fit long term and short term in the big picture. Constantly try to see your big picture." Mistake 11: Accepting that it's "not possible" too easily rather than finding a way. "I had an engineer who was a very good engineer, but with every toy we developed, he would say, 'You can't do it that way.' I had to be careful not to accept this too easily. I had to look further. If you're an entrepreneur, you're going to break new ground. A lot of people are going to say it's not possible. You can't accept that too easily. A good entrepreneur is going to find a way." Mistake 12: Focusing too much on sales volume and company size rather than profit. "Too much of your management is often based on volume and size. So many entrepreneurs want to say 'I have a company that's this big, with this many people, this many square feet of space, and this much sales.' It's too much [emphasis] on how fast and big you can build a business rather than how much profit it can make. Bankers and investors don't like this. Entrepreneurs are so into creating and building, but they also have to learn to become good [businesspeople]." Mistake 13: Seeking confirmation of your actions rather than seeking the truth. "This often happens: You want to do something, so you talk about it with people who work for you. You talk to [your] family and friends. But you're only looking for confirmation; you're not looking for the truth. You're looking for somebody to tell you you're right. But How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page33 the truth always comes out. So we [test] our products, and we listen to what [the testers] say. We give much more value to the truth than to people saying what we're doing is great." Mistake 14: Lacking simplicity in your vision. "Many entrepreneurs go in too many directions at once and do not execute anything well. Rather than focusing on doing everything right to sell to their biggest markets, they divide the attention of their people and their time, trying to do too many things at [one time]. Then their main product isn't done properly because they're doing so many different things. They have an idea and say they're going to sell it to Wal-Mart. Then they say they're going to sell to [the] Home Shopping Network. And then the gift market looks good. And so on." Mistake 15: Lacking clarity of your long-term aim and business purpose. "You should have an idea of what your long-term aim is. It doesn't mean that won't change, but when you aim an arrow, you have to be aiming at a target. This [concept will] often come up when people ask 'How do I pick a product?' The answer depends on what you're trying to do. If you're trying to [create] a billion-dollar company with this product, it may not have a chance. But if you're trying to make a $5 million company, it can work. Or if you're trying to create a company [in which] family members can be employed, it can work. Clarity of your business purpose is very important [but] is often not really part of the thought process." Mistake 16: Lacking focus and identity. "This was written from the viewpoint of building the company as a valuable entity. The company itself is also a product. Too many companies try to go after too many targets at once and end up with a potpourri rather than a focused business entity with an identity. When you try to make a business, it's very important to maintain a focus and an identity. Don't let it become a potpourri, or it loses its power. For instance, you say, 'We're already selling to Kmart, so we might as well make a toy because Kmart buys toys.' If you do that, the company becomes weaker. A company needs to be focused on what it is. Then its power builds from that." Mistake 17: Lacking an exit strategy. "Have an exit plan, and create your business to satisfy that plan. For instance, I am thinking I might run my new business for two years and then get out of it. I think it's an opportunity to make a tremendous amount of money for two years, but I'm not sure [whether] it's proprietary enough to stop the competition from getting in. So I'm in with an exit strategy of doing it for two years and then winding down. I won't commit to long-term leases, and after the first year, we'll start watching the marketplace very closely and start watching inventories. Simultaneously, I will keep the option open to sell it in case I can't get something more proprietary. That means I won't sign international agreements that would kill any opportunity to sell it to a multinational. I will make sure that the patent work is done properly. And I'll try to make sure manufacturing is up to the standards of any multinational company that I might try to sell it to. How to Easily Raise Capital in Nigeria With or Without Collateral. www.BusinessGuidesNigeria.com Providing Nigerians with money making information. Page34 Another exit strategy can be to hand the company to [your] kids someday. The most important thing to do is to build a company with value and profits so you have all the options: Keep the company, sell the company, go public, raise private money [and so on]. A business can be a product, too."