BUSINESS CAPITAL: THE DIMENSION BUSINESS STARTUPS AND ENTREPRENEURS MUST UNDERSTAND

By Nnabugwu Chizoba (Development Practitioner/Sustainability Accountant

The understanding of basic business concepts play very important role in the creation, growth and sustainable development of entrepreneurship and businesses, as well as in the growth and prosperity of individuals, organizations and nations.

On the strength of the above, one would think that as popular as the word Business Capital is within the business community and among entrepreneurs, most especially startups, the confusion being observed, among business operators, with regard to the real meaning of the concept would not exist, especially, when it is considered in many quarters that entrepreneurship development activities, particularly in the region of Micro and Small enterprises unit in the country is witnessing increasing recognition.

Many Nigerians in their respective opinions have inferred that Micro and Small enterprise activities have assumed upward dimension, so much so that it could be reasoned that Capital is already a household name that needs no further explanation within the business cycle and among operators.

The above notwithstanding, I discussed the concept of “Capital” with someone recently; and she exhibited some degree of ignorance on the subject matter. The lessons of that discussion provoked my decision to do this write-up. This is in addition to the fact that I have been doing a lot with business startups and knows vividly that the ignorance she exhibited are somewhat common and run contrary to the belief of many, who have no dealings in the context of this discourse, with business operators.

I deem it necessary to point out here that I was particularly moved when she lamented: “it appears the more familiar you are with business terminologies, the more confusing they become”. 

The encounter that attests to the fact that the lamentation and confusion expressed above is not only valid but germane and also necessary for this discourse is aptly presented below. My thinking is that it would not only help the reader to connect very well with the idea that I set out to address but also bring to the fore a fresh perspective to the concept of “Capital” that is held by some business operators. 

The story begins:

I visited somewhere recently, and by a stroke of chance I met a discussion among friends, one of them, a lady graduate who said she started her business with very little capital, N10,000 (Ten thousand Naira) to be précised. 

Considering the value of the shop, well over N500,000 (Five hundred thousand Naira), I gave it to her for having put in a lot of energy, time and business acumen, to drive the business to the point I met it.

Her revelation sort of jolted me. It was a boost, an inspiration of a kind, and I made her understand I was very proud of her. I equally informed her she deserves to be celebrated. I did not mince words, when I told her that many people would marvel at her level of success. 

After complementing her generously for what I consider as patience, commitment, courage, passion and drive that turned her desire and ideas into very tangible business opportunity, I went on to probe into other issues, particularly how she started her business. Interestingly she was not stingy in her responses.

According to her, she approached some of her relations, for assistance. One of them assisted her with a shop, the rent of which he paid for three years, in a choice area of the city, where she so much desired to locate her fashion business. 

From another source, a relation too, her luck shined. This time around the relation in question discussed with a furniture maker in the vicinity and contracted him to make sets of furniture and fittings for the shop and deliver to her. Soon after that the items were produced and delivered to her.

In a related development, her God Mother directed her to meet and discuss with a wholesaler friend of hers (the God Mother), to make selection of the items she desired to trade in, to which she did. A month later the stock was delivered to her in good quantity and quality and at a relatively very good price, she said.

From the foregoing, you would observe, none of the relations gave her any cash. However, the only person that did gave her a cash donation of N10, 000.00, only.

From her submission, you will notice that the sum of N10, 000.00 (Ten thousand Naira), is the amount she referred to and declared as the capital the business was started with.

Based on her revelation, I sort to know from her what she understands as the Capital of a business, to which she replied, saying:

“Capital is the cash used to start a business”.

MY DEAR READER, I wish to invite your contribution to this discourse. To this end I ask:

• What do you make of her story, bearing in mind that she said “I started with very little capital?
• What does capital mean to you?
• Do you think the lady in question was right going by what she said was her startup capital?

More on this story and the concept of business capital will be revealed in the concluding part of the story in a subsequent publication.

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