MSME Digest with Kola Owolabi

So many of my colleagues who run small businesses may not like this piece at all. Nobody likes to the told this. I have been there many times myself. Immediately one starts experiencing  any form of problem in business the first thing your mind goes to is lack of money. I think I need more money in this business. Where can I get more funds? I think I need a loan. How can I source money to execute this project?

A friend of mine had been coming to me to discuss the need of his business. He had wanted to start advertising his new line of business. He thought he needed a loan. He wanted to do radio adverts to generate awareness which he was sure will jumpstart sales and give his business the boost desired.

I told him he had to provide collateral for the loan he wanted. That was many months ago, about 8 months. He used the past 8 months trying to get the collateral. Last month he came back to me with some share certificates representing the collateral he was able to raise from a friend. By the time I calculated the value of the share certificates, he would only be entitled to about a tenth of the money he wanted for the radio advert. When I told him that he would only get so much from us he was devastated. He went again promising to look for more share certificates. I wondered why he was going through so much pain to get share certificates to support his loan application. I was sorry for him.

I saw him a week later. He shouted with joy from afar. He told me his advert went on radio. I was very impatient to hear how he did it. Did he get share certificates? Did he take a loan from somebody else? When he finally told me I realized that he wasted the past eight months. I discovered he did what he would have done 8 months ago. He begged them to start the advert on credit and when he finished the programme he was ready with the cash. That was how the first one went. He did the second one like that and money started coming in. That strategy is what is called credit purchase. Let me go ahead to explain this strategy.

CREDIT PURCHASE

Buy-now pay-later strategy is a smart idea to fund a variety of business ideas and start making profit from the first day you start your business.

You can make the fortune you desire by merely collecting raw materials, vital inputs and finished products and sell or process to sell without having to raise additional capital from any where else. So this is your chance of making your dream of being your own boss happen. Procuring everything you need on credit is the red-hot opportunity most people wish they had. You have it now because most people will want to sell on credit to you if you have a good credit rating. Everybody wants to sell his product. So if the person buying is giving 100% assurance that he will pay sometime in not too distant a future, then he will be allowed to carry the goods.

So get ready to take advantage of this strategy and strike it rich unlimited. It is a strategy you can use over and over again and continue to use once you are able to keep your credit rating intact. Following this is another condition that will make it work for you, which is integrity. If you get it right the first time, you just keep using it and keep building up profits. If you get it wrong the first time, you may never get the same opportunity again. One can summarize to say that using it is a matter of credibility; you will have access to unlimited quantity of goods or merchandise. Although most people will want to try you from one level or stage to another, you are sure of gaining access to more credit faster than you can imagine.

The fact that credit purchase is not allowed in some environments is because it had been grossly abused in the past. However, if you get serious about your business and demonstrate adequate commitment you will not make the mistake people who lack commitment make. The mistake revolves around the fallacy that what you don’t pay for, you don’t attach too much seriousness to. So it is either the goods don’t get sold at all or they take time to be sold thereby delaying remittance of money for the goods collected on credit. In addition, most people also neglect their obligation of paying for goods collected on credit  (even after they have sold them). If you fall into this error it will adversely affect your credit rating and it may not be the person that you are owing directly that will punish you for it, word of bad credibility goes round faster and you will discover that you may not be able to get credit from others too.      

You need to do the following to make sure you don’t end up with a bad credit rating. One, you must ensure you do your projections well before collecting goods on credit. Don’t collect goods at a particular price and then get to the market to find out that you can’t sell the same goods at a profit. Also you don’t collect goods and use them as inputs for processing a finished product, which nobody will be ready to buy.

Two, you must keep the communication line with your creditors open all the time. Keep them informed of developments in the running of your business particularly if there will be minor changes in your plans vis-à-vis payment schedule on goods collected on credit.

Kola Owolabi (08023203198), CEO, David Solomon Consulting Limited, is a Fellow of the Nigerian Institute of Management Consultants (FIMC.CMC.) The company has been helping entrepreneurs, both the new and highly experienced ones, plan and execute market entry with speed and minimal resources. The company can be reached via phone or WhatsApp at 08023203198.