Capital has been defined by various schools of thoughts in various ways. A similarity amongst most of these definitions is the factor that capital is expected to reproduce wealth for the benefit of the capital investor. So it therefore seems that everything that can be used to produce wealth can be termed as Capital.
Small businesses are characterized by a few things some of which includes capita size, customer base size, structure size etc. The one which is most interesting is the Capacity size. A business can only expand its capital base by expanding its capacity to handle more.
The real question that small businesses are asking therefore is HOW CAN WE RAISE CAPITAL TO START OR MAINTAIN THE BUSINESS?
A lot of write ups must have listed various ways ranging from borrowing, to saving, partnering and credit purchase etc. All of these are viable source of income and should be exploited. On this write up, we intend to address motives and bases of measuring capital usage and effectiveness. A lot of small businesses have not been able to justify the need for capital (whether to start or to maintain). The Justification for Capital need starts from the expected result of such investment
Small business owners mostly fail from the beginning of birthing the idea for their business. The smooth and ‘’wow’’ feeling of a business idea does not justify the need for capital.
A few questions that can address the extent of the need include.
- What is my Marketing Plan?
- What is your product/service?
- What is your pricing strategy?
- Where do you intend to sell?
- What is your Promo Plan?
- Who is your target Market?
- Why am I really going into business (Passion or Survival)?
- How ready am I to handle Losses?
- What is the Effective Cash injection I need?
These questions are basically meant to expose your business to the path of success.
Small Business Owners who have been able to address these questions have realized that capital is just one of the things needed for a successful business. The answers to the question in some cases, also help in choosing the best alternative source of capital.
Gbenedio Praise (ACA) is the Chief Executive Officer, Rolaise Consult, a business consulting firm based in Abuja, Nigeria. Praise is a lover of God, devoted husband and a go-getter.