Latest / Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint / Your First Investor: Why Unit Economics Beats External Funding (for Nigerian Businesses)

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Your First Investor: Why Unit Economics Beats External Funding (for Nigerian Businesses) · Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint

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  Hello and welcome to the show. Today's recording is from my
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  desk and I'm I'm home with the kids because holidays are on.
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  So I expect to have some interruptions in the background
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  if this is your first time of tuning in.
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  The goal of this show is free business education.
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  So hang on. We are going to be on for an
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  educational ride. And by the time we're done with
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  the podcast, if you feel like you got enough value from it,
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  then please share, promote and talk about the show so that your
• 0:28
  friends and your family members in Nigeria and abroad can
• 0:30
  benefit from the questions that we tackle over here.
• 0:33
  If you have any sales and marketing questions by the time
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  you're done with the episode, then call SMS or WhatsApp me on
• 0:39
  08064662140. The country code is +234 for
• 0:45
  those of you who are not Nigerian.
• 0:48
  Now today on the podcast, I want us to on the share another
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  question that I handled on my radio show, which happens live
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  on Radio Maria. That's 91.3 FM every Tuesday,
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  7:00 PM to 8:00 PM. You can only catch it live.
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  So stream it from the from Radio Maria's website, but it's only
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  live, no replays. But anyway, apart from Emmanuel
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  who called in on the show, I don't expect that all of you
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  subscribed over here on the podcast also listen to the radio
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  show. So that's the reason why once in
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  a while, if there's something really interesting that we
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  discuss over on the radio show, I'll come over here and share
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  that as well. Now, there's a caller that
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  called in her name is Peace in Abuja who has a restaurant in
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  Zone 3. She is a caterer and she was
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  worried about how to get finance for her business.
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  And yes, for those of you who've been listening to the podcast
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  religiously, you will know that I've tackled a couple of these
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  in the past. But anyway, I answered a
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  question and our I hope I was able to bring a new twist to it.
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  So that's the reason why I'm here today making this
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  recording. Now for those of you who are
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  long time members of the community, I say community in
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  the loose sense because I don't really have a community like
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  that. Like, no WhatsApp, no whatever
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  community. So we've spoken about how you
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  can finance your business either by bootstrapping, by getting a
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  loan, by getting a grant, or by getting an equity partner.
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  So I repeat, to finance your business, we either bootstrap,
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  get a loan, get a grant or get an equity partner.
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  Now, of course, bootstrapping means that you're going to be
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  throwing back profits from the business into it, you know,
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  reinvesting, also starting up with your personal savings and
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  then also talking to friends, family members and, you know,
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  some kind of associates because sometimes that is a source of
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  easy funding that we can use that doesn't carry, you know,
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  too many obligations. And we know how we can be now in
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  this part of the world. You raise some cash, you know,
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  from Mumsy and Popsy to start your business later on.
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  The business seems to be doing good.
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  You call mom, so you say, mommy, I want to pay shoes.
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  How? Not my son, Don't worry, it's my
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  duty to support you. And then, you know, they just
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  feed the thing. I'm not saying that when you go
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  and collect money from Mumsy and Popsy that you should, you know,
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  insist only being free. I'm just saying that it happens.
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  So there's the Bank of friends, family and associates, as
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  somebody put it when I was talking to them, I think like 2
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  weeks back. OK.
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  Now the thing that I forgot to mention, or rather that it
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  hadn't struck me yet was how you, you know, how we Niger
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  people now, we have branches everywhere.
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  So you're here in Niger listening to this podcast.
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  But then, you know, like your big C's, your cousin, your
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  younger brother, you know, somebody's in UK, somebody's in
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  Switzerland, another person is in America, you know, that kind
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  of thing. There are some people who have
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  been taking advantage of these global personal networks, also
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  raised financial business back here.
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  So picture this, let's say moms, he's back here doing the farm
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  maybe in Nassau. And then you're the one who is
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  here like supporting moms here on this thing when I'm big Bros
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  in the UK and maybe younger sisters in the US now because of
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  the nature of their jobs and nature of the economy.
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  If you sit down and you run the math, you'll see that the
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  interest rates will be cheaper raising money from them abroad.
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  And of course, it will be easier for them to pay back over, you
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  know, a 15 month period, A2 year period, a 2 1/2 year period, you
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  know, something like that. So those also things can work.
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  So there are people who have been taking advantage of those
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  sorts of things like this example that I just gave moms
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  easier running the farm in Nassau.
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  You, you're the baby of the house, you haven't checked yet.
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  So you're the one that is managing the whole thing.
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  It's possible they can get two of your siblings in the UK to
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  put up like 7500 lbs. They secure the loans based on
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  their salaries and you know they're paying back maybe over
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  two or three years or something. Maybe the way they see, that's
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  their contribution to the family business at home.
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  And at the time I made the radio show, I ran the math 7500 lbs
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  was 15.3 million naira at the time.
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  So you can see that apart from the interest rates being
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  favourable and apart from the interest rates being favourable,
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  you know with this all forex thing, when our people raise
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  coins in America and in the UK, it often translates into good
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  money, hefty money when the thing enters into Niger.
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  Now imagine if your people are doing OK and they can even raise
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  maybe like £15,000 to send back here.
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  But of course, I gave a warning for people who are trying to do
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  these sorts of things to make sure that the unit economics of
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  your business are tight. Unit economics just means for
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  every single unit that you sell, for every single thing.
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  In this case, peace Since your kid, she's a caterer on every
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  single buff, buff on every single meat pie, on every single
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  plate of rice, on every single grilled chicken, on every single
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  grilled meat. Are you making a profit?
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  Because if your unit economics are off and you're losing money
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  on the Bush meat, losing money on the grilled chicken, losing
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  money on the rice, losing money on the buff buff, then raising
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  this kind of money just means you're taking good money and
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  throwing it after bad money and then wasting it.
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  So you need to make sure that your unique economics are OK.
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  If you're going to take advantage of these options of
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  friends, family and associates who are part of your global
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  network abroad and they feel like, you know, let me support
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  you. All right, so that was one thing
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  that I hadn't stressed in the past.
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  And I figured, let me just come and stress it here, then let's
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  see. OK, loans, we're ready.
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  Everybody knows about loans. Loans, you get the money from
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  banks. Banks have high interest rates.
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  So I've always been talking about microfinance banks because
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  of their lower interest rates. Then of course, another person
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  called to find out about non interest banking or Islamic
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  banking as we call it in this part of the world.
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  And so, yeah, we had that conversation.
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  But since I got on the radio, you know, my directors, you
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  know, told me I shouldn't be calling a particular bank names.
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  So it doesn't seem as if I'm endorsing any bank in
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  particular. So I guess it's enough that if
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  you're interested in this sort of thing, you can just go and do
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  your research. Another caller called in to give
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  an example about how non interest banking, Islamic
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  banking can work. Pretty much the same thing, like
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  I said, but in their own particular scenario, it was a
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  work to the bank. They were needed to buy
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  fertilizer, so the bank did not give them cash.
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  The bank said you go and identify the buyer, we will pay
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  for the fertilizer, we'll give the fertilizer to you and then
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  you will now pay us back. Which was similar to my own
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  experience when I went to go and find out about non interest
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  banking or Islamic banking. It was with a particular bank in
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  Nigeria that has an Islamic banking.
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  So I went in, spoke to customer service, sorry, sales and
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  marketing people. And that's where I got the four
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  on one that yes, they would be able to finance equipment and
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  purchase, you know, so cameras, lighting, this sort of thing,
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  but they would buy it. It would belong to the bank.
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  I would be using it sort of like on 1/2 purchase basis.
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  But eventually when I pay everything off, then the
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  equipment will become mine. So yes, those options are
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  available as well. Then grants, OK, no grants.
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  I always recommend grants because grants is more or less
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  free money. However, you have to meet the
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  eligibility requirements because people who give grants are
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  concerned about certain kinds of things.
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  You know, maybe they're trying to promote women owned business
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  or they're trying to get girls into tech, or maybe they're
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  trying to get, I don't know, farmers into modern farming
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  techniques or something. So you have to meet the
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  eligibility eligibility criteria.
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  So the ones that I shared on the airwaves in the past were all
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  women for women owned businesses of a certain age.
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  So since I'm a man of a certain age, of course I'm not going to
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  meet the eligibility criteria. Then next is the reporting
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  obligations, because people who give grants, they want to be
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  sure that the money goes where they're supposed to go.
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  So back to this thing now about getting farmers into modern
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  farming techniques. If I go and win one of those
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  grants, I have to be doing reporting obligations, whether
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  it's physical visits, whether it's photo, whether it's video,
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  whether it's e-mail, whatever it is that we agreed to according
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  to terms of the grant. Because the grant owner wants to
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  be sure that I won't take that cash and I'll go and use it and
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  marry 4 wives. They want to know that the money
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  has gone to its intended purpose.
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  So even though a grant, yeah, technically it's free money
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  because you won't pay back, you won't pay interest.
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  You don't have an equity partner.
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  But you know, still they expect it to be used for certain
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  purposes and you will have to show that you are true to the
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  terms of the grant. Then there is equity.
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  Equity is I just described it as a long term business marriage,
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  somebody dropping some, some Ms. on you and they say, look, we're
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  going to run this name 5050. The person will expect to have a
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  say in the business and you can't turn around and say it's
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  unreasonable because it's kind of how equity works.
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  If you have somebody who just drops by and then the person
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  leaves you alone, then oh, OK, good.
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  Glory be to God. But The thing is, it's something
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  you have to discuss explicitly from the beginning because once
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  you've collected the money, you didn't discuss that explicitly.
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  And the person is trying to say no, no, no, you can't decide
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  this kind of thing without me. You know, quarter has entered,
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  especially if you're not in the position to say is it just cause
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  of 15,000,000 or I take your 15,000,000, you know, they go
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  leave me, I don't want your money.
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  If you're not in that position, then it's going to be a very,
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  very messy situation. So let me see what else.
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  OK, so that's just pretty much what I, that was how I tackled
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  the situation for Peace, who is a catrot in Abuja in Zone 3.
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  Now my goal was to have gone to her restaurant, of course,
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  Incognito 'cause I was tempted on it to get a very physical
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  look. Like, let me see the whole set
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  of like, what's it like the location?
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  What's it like? Because sometimes you go see a
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  place, you know, you sit down, you now start getting some ideas
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  about how you can move this business forward.
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  Because I'm always thinking about how we can run this
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  bootstrapping thing because raising funds, you know, it's
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  hard work is almost as hard as selling.
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  So I think sometimes might as well just put some effort into
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  trying to move our own market and grow the business
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  organically. So that's always my first all I
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  say my first suspicion or the first thing that I want to try.
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  Now, I wasn't able to get to that restaurant.
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  So what I did was before the show, I just went on and I just
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  checked Google sharply just to see what's up.
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  And then from doing a brief Recon on Google, I found out
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  that on her St. there is a guest, a guest inn that is
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  there. And in Abuja, there's this thing
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  that's happening now with lots of short let's apartments or
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  guestings where people come and stay, but they only give, they
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  only give, you know, bed, TV, furniture, that sort of thing,
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  but no food. So at all peace.
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  I think it's a good idea to just stroll because our restaurant is
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  at #19 and then the guest thing is at #51 So I forgot, it's not
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  a big deal. Now one day, just stroll, go ask
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  to speak to the manager or whoever.
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  You might be able to hook up something.
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  Now look, this is me. This is where my restaurant is.
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  This is the kind of cuisine that Ioffer for the people who stay
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  here. I'd appreciate if you send
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  business my way or we can partner like this or can I drop
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  some Flyers or can I have access to your e-mail database?
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  So I can say, I mean like, you never know.
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  Should I just go in and just start the conversation?
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  You never know. There's also a furniture store
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  that's not far from my restaurant furniture store.
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  Of course, the employees will be there.
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  There's a supermarket that has employees, there's a DHL ADHL.
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  Well, I said DHL office not far from her.
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  So I told her that, you know, you can also go there, talk to
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  some of the employees. You know, I'm here, there's my
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  restaurant, you know, here at the flat, you know, take some
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  Flyers. These are my rates, you know,
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  blah, blah, blah. You know, you see how you can
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  start prospecting small, small looking for business.
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  Prospecting just means who's interested in my product or my
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  service. So you can start doing these
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  things small, small, small, small, small and make some good
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  progress. Then her restaurant is also
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  close to the customs headquarters.
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  That's Customs and immigrations, you know, people who give us
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  passport in Niger. So I told her, yeah, you can
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  also like you never know, just go try, maybe you can talk to
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  facilities manager or somebody. Your restaurant has been there
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  for a while. I'm sure that some staff people
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  also know you can drop Flyers. Yes, they may be staff canteen,
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  but you know, this is Nigeria. We know how things can be.
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  No staff canteen, definitely the person's prices will be, you
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  know, higher so they can milk their contract.
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  So there's some people who probably need to know that a
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  restaurant is nearby. So I told her customs
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  headquarters try. Funny enough, she's also close
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  to Civil Service Commission. So I also said you can also do
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  the same thing, stroll over at the Civil Service Commission.
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  You never know, they might allow you to drop Flyers just
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  strolling to promote your business.
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  You never know. Funny enough, she's also close
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  to Foreign Affairs office and is also close to NIN office.
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  That's Niger, also called national identity number.
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  So these are also some opportunities.
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  So now it's just part of my advice from looking at our
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  situation. So I think sometimes we rush too
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  much to think about loans and grants and equity.
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  Like where can I get outside money?
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  And we don't pay too much enough attention to this whole
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  bootstrapping of a thing like is my business profitable?
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  Are the unit economics correct? OK, the unit economics makes
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  sense. How can I now double down on
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  what it is I'm doing? So if the unit economic makes
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  sense on the Bush meat, you're making maybe one or five profit
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  on the Bush meat and then maybe on each plate of rice you're
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  making like a 500 profit or something.
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  You know, the goal now will become OK, how much Bush meat
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  can I sell? So if that particular customs HQ
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  office maybe is mostly Middle belt people that are there, you
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  know, tea people and plateau people and stuff like that, OK,
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  maybe that's like the Bush meat eating kind.
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  I mean, who knows, maybe you might go and present some nice
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  Flyers there that emphasize your Bush meat cuisine or your
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  grilled catfish or whatever. I mean, you never know.
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  That's our sales is, you know, we sit down, come up with some
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  very common sense simple ideas and then start running it.
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  See the one that works, the one that works, double down on it.
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  So bootstrapping option, especially reinvesting profits
• 15:45
  by trying to grow your sales, I think that's something that we
• 15:48
  do not do enough of. So let me see, let me check my
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  notes. I think that was a pretty much
• 15:55
  about peace and financing for our business and fundraising.
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  So that's why I made today's episode because I think it's a
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  slightly different emphasis from what I did the last time,
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  because I think the last time I strongly emphasized this thing
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  of grants and I came up with specific grants.
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  I'm at home and abroad for women based women run businesses in
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  Nigeria. So that's all for today folks.
• 16:19
  If you have any questions that are sales and marketing related,
• 16:22
  then call SMS or WhatsApp me on 08064662140.
• 16:29
  Again 08064662140 the country code is +234.
• 16:37
  So thanks for your time and attention.
• 16:38
  I'll catch you guys at the next episode.