Matthew the Enterprising Heir
- Stephanie Pius
- Aug 19, 2019
- 5 min read
Updated: Jul 17, 2020
Most people believe that once they have funding that their problem in starting a business has been solved. Nothing could be further from the truth. Creating and growing a successful business takes much more than capital. So many entrepreneurs have learnt this too late...
Matthew was able to raise funds from selling off a piece of property that his father had left for him upon his death.
Matthew had always wanted to own a factory that would harness the vast oil palm raw materials in his locality and at the same time provide employment for the youths whom he often saw sitting around idle with little or nothing to do. Some of them occasionally approached him to beg for food or money to buy food. Matthew felt sad about their condition as he felt that they were not as privileged as he had been. His father had been relatively well-to-do and had been able to send him to a tertiary institution where he studied Business Administration. Upon graduation he had gotten a job in the banking industry but lost his job after just four years at the bank due to a downward turn in the economy and the subsequent downsizing exercise at the bank.
Upon receiving the payment for the property, he launched full-scale into setting up the business. He had researched where to buy the best machines, how the plant worked and what he needed to do to set it up. He had also visited an existing factory and spent a couple of days looking at how the place was run and how the workers worked. He knew he needed to hire people who knew how to work the machines so he consulted with the machines supplier who was able to link him with the right workers.
You can get the information material for our recently concluded Doing Business Event here. You can be a part of Doing Business through our Facebook page or by filling in our Google form. Join our WhatsApp group here to keep abreast of information.
He used a piece of land that his father had left for his younger brother and which the younger brother agreed for him to use.
Everything seemed perfect.
He had also researched where to get the best nuts that would give him the desired amount of oil per nut and where he could get a steady supply of nuts. He had kept aside sufficient funds for buying the raw materials (nuts), transporting them to the factory, paying workers, and buying diesel to run the fairly-used industrial generator that he had bought.
Matthews started production. He was enjoying the level of activity which was so much more fulfilling for him than his previous work activities at the bank. He loved bonding with his team who were all young men, some of them were young men from the community where he lived.
What Matthews loved most about the business was the fact that he did not have to search for where to sell his produce. He had a steady demand from the two vegetable oil refinery companies that he made supplies to. One of the companies was within his state while the second one was in a neighbouring state. Once a certain amount of the produce was ready, he just needed to call them and they would visit his factory to pick it up. Payments were made within five working days directly to his company account.
After about four years of running the business, the electricity supply situation in the community where he established his factory became very poor. His industrial power generators had become very expensive to maintain as they had depreciated over the years, he needed to have access to the grid power supply to avoid losing out on his supply opportunities.
He consulted an acquaintance of his who worked at the local electricity board. The acquaintance informed him that there had been a rapid increase in the number of homes that had been built in the area and that the load had become excessive thereby causing inadequacy in the current community transformer and transmission lines. The man also advised him to invest in a transformer and transmission lines that could serve the immediate community where his factory is located so that he could then enjoy steady power supply.
Matthews then took funds that were available to him and invested over N8 million in a new transformer and transmission lines for his factory. He did not have the required amount so he needed to borrow another N2 million from family members to make up the required N8 million. He had spoken to a friend of his who had agreed to loan him at least N1.5 million Naira to buy raw materials that would help him re-start his business after investing in the power project.
Once the power project was completed, Matthews was exhilarated, the power supply was constant again and he could continue with his supply business to the vegetable oil companies. Matthews then approached the friend who had promised to loan him the N1.5 million Naira to ask for the money so that he could invest in his business.
The friend was sad when he saw Matthews because he knew that he did not have good news for him. The friend apologized and explained to Matthews that his mother had died the previous week and that he needed the funds to arrange the burial as he was the first born in the family and therefore the entire weight of the burial responsibilities rested on him.
Matthews was dumbfounded. He had stretched his family members and there was no one else whom he knew could loan him the money. He needed to think of something fast to avoid having to lay off his workers . He also needed to start paying back his family members who had loaned him money in good faith knowing that his business was a flourishing business that could easily give Matthews sufficient funds to repay them.
Matthews thought and thought and finally he decided to speak with a business consultant who advised him to commission a business plan and seek formal financing from a financial institution, preferably a government agency which would afford him low interest rates.
Kindly leave your comments below regarding Matthew's business situation...
Comments