Wednesday, May 22, 2013

Capital, the biggest handicap?

Allow me to remind you of Alex, my bosom buddy back in our village. He is the dude I once wrote about who never finished his primary school, got involved in petty crimes and abuse of hard drugs, survived attempted suicides, got jailed only to later reform and become a pastor.

Alex always had brilliant ideas. He is a man you could sit down with and he’d tell you so many stories non-stop about how guys who have come across money and wasted it as opposed to seriously investing the cash. In fact I had started entertaining thoughts of getting into some joint venture where I could finance him. But my sixth sense always tells me to be wary of fellow who talk a lot…..most of the time they are clanging cymbals. In fact when I hear someone claim that his biggest challenge is capital, I trend carefully.

The last time I met Alex was early this year. I have been trying all along to reach him to no avail until he called me the other day and we talked for like 30 minutes. What he told me during the 30 minutes is what shocked me. I however like his honesty coz he never hides anything from me. Early in the year he received some 1M from his sister in Canada to finally start his dream business. He did not tell me why he was so lost but of course the cash he received in a way explained why he was not reachable.

I was very keen to understand what he did with the cash. He explained how he bought an old taxi and got into that business but somehow it did not work out well. When I inquired what happened, he claimed that he decided to employ a driver as he concentrated on church activities. The driver misused the vehicle and he was fleecing him of the proceeds of business till he finally dismissed him but the then the car was on its knees. In fact as we talked he claimed it was now an immobile junk parked outside his house. So the reason he was calling me was to request for my assistance so that he can revive it.

I realized that despite his talk and brilliant ideas, his biggest problem was never capital. In jest, I told him that his life story was like of that man who waded his way past a pack of dogs only to bitten by a goat. Or he was bewitched and the ‘bewitcher’ died. Seriously speaking, I expected him to do better with the 1M coz he always cried about capital and when he landed some he seemed not to have utilized it well.
Many times I meet guys who are convinced that capital is their biggest impediment towards starting a good business. Sometimes it could be, but in most cases it is never the biggest issue.

Most successful businesses were built on smallest of capital and in any case if you have a brilliant idea which may need substantial capital, my take is that the idea can be bought by a partner and you do a joint venture. You can even approach financiers though this is never the easiest route to take.

It is therefore extremely important to have a solid idea which you need to have a grip on before you invest your money. Worst case is where you get the money and you are wondering what to do with it. It is always better when good investment ideas precede the capital. Before you convince yourself that you need capital….think again…the capital might arrive and you start running around like a headless chicken.

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