This month I thought I should write about sibling rivalry and forgiveness. This subject may seem far from where we started i.e. women and finance and empowerment. I strongly feel that all topics, when put in perspective, can be related to each other even when the title themes are vaguely or not at all related. Siblings in my assessment are the first level cluster where wealth can be built. When siblings work together, understand each other, believe in each of their strengths and, more importantly, trust each other there is a lot that can be achieved. It is also the level at which lobbying, conflict resolution, management and leadership can be learnt. Those coming from large families will attest to this.
I got thinking on this matter as I was preparing to give a talk to women entrepreneurs. Entrepreneurship in our country is a difficult endeavor. There is a shortage of unique ideas that can be developed on a sustainable basis or are exciting enough to attract money. Most ideas are not new or unique or solving society problems. People think being passionate about providing a product or service is enough to base a business idea on. They research on market opportunities, size and customers but are they willing to stake their savings on such an idea, or indeed take the risk of leaving their jobs to give it a go?
Speaking with the ladies was an eye opener. Some of the ideas have really taken off and the business was beginning to make sense. I was impressed. I discussed with them the importance of self- management, leadership and respect of the boundaries between the business finances and personal money. These issues had been an integral part of the induction to entrepreneurship. By the time we were finished with the conversation the topic typically turned to bank facilities and how possible this was. After all, they had been through the whole induction and had testified to being better managers than when they first started the journey. How could any financial institution deny them a facility?
The one thing that struck me about all of them was that they seem to be alone. There was no evidence that they had someone routing for them, backing them in some ways and being part of the solution finding, opportunity seeking. If indeed they do, it was not apparent or even evident. The focus was on where or how to access bank facilities. As someone who has been in this business for a long time, I can tell you that success is determined by how much support one is getting at home (in the development of the idea(s)). A business idea takes long to mature and during that time funding can only come from local sources. A combination of long term capital and grants. In the beginning there will be a few dead ends, a few false leads some of which can deal a fatal blow to the whole scheme. The trick is not to give up. When all the money is finished but the idea will not die, this is when family or siblings support becomes critical. If at any point before now borrowed funds would have been applied, it would be too costly.
This is the time to get siblings to understand your mission. The family will be more easily convinced of your commitment. After all, they will have been there from the beginning, they know how tenacious you are, whether this idea is sustainable and whether you are willing and able to stick with it. In short you will have earned your title as a bankable risk. Even family members will not invest in you for nothing. You will have to work hard to convince them. If one financially savvy family member understands thoroughly enough to be enticed to invest their money, the others should be convinced to follow suit. The business becomes a true family business. Everyone has a stake no matter how small. They will be motivated to help you whenever there is a hurdle.
How well off the siblings are can be the difference between success and failure.
I write this angle from personal experience as well. The investment into an idea can come from siblings, friends or indeed unknown people who may believe in the idea. I once was part of a group of impatient young people with more money than time or instinct to suss out an idea. Raising money was the easy bit and that is what we did. Looking for a good sustainable idea was a challenge and as they say a fool and his money are soon parted. It was bitter sweet defeat because we or I thought I was clever with investment.
The first step to entrepreneurship is to raise cash. The adage that ‘cash is king’ is not a hollow one. Raise the cash to fund your business. Talking to those entrepreneurs tells me their businesses has no cash to see them through. Like a body short of blood, without it on a long time basis leads to failing health and ultimately death. So before you do anything, start by building the cash reserves. As mentioned earlier, a good business idea takes time to bear fruit and so the time between planning, starting and growing must be supported by cash reserves. Many people do this from using their employment salary. For those that want to start right away because that is all they can do, realistically one must start small. Starting small means the risks are smaller, the losses lower. Take care to really understand your business when it is small. When the business has grown, you will be able to manage the risks much better.
Like baking a pudding, knowing your business intimately evokes confidence to those that are near to you. The businesses in my audience predominantly had a need for a cash injection, but not from the formal financial institutions. The amounts are too small for a growing company and therefore the risks still too high. Given these parameters the interest rates levied on such a fragile company will be too high and over a short time frame. A company at this stage would require much longer term capital of say 5-7 years and the banks will typically only give you 2 year. There is a serious mismatch between the needs of the company and the offer from the bank.
This is where family money comes in. Siblings and friends, let us get involved in efforts being made by those entrepreneurs close to us for their success. More credibility will be given to women’s efforts in our country if we have a track record of assisting entrepreneurs locally. In fact, this is the only means of soliciting for matching funds that are springing up all over the place. Matching funds are for the tried and tested. People should pool their resources take risks and plot a track record that someone can look at. It is on that basis that determines whether the risks are worth their money. This blog therefore is focusing on what are we as siblings and friends are doing to be the so-called first respondents to the problem.
There are many groups of cash resourced women out there who could establish funds that can finance these small businesses. Initially these funds are the building blocks of cash reserves in interest bearing accounts taking no risks. The more of these funds there are, the more they can be better defined to take care of businesses at different stages of life. Once we are in the habit of taking a real interest in what is happening to our women, we will be more useful to each other and when we advise, mentor or coach, it will be more effective because we can back it up with capital.
Our environment is now ripe for entrepreneurship with a growing middle class that have extra money to spend as long as the goods and services are of high quality, useful and priced correctly
So this brings me back to where we started. Entrepreneurship is a long term project. Starting with intent, build your capital. Yes, the passion will drive you but practicality and realism will get you there. Ensure your idea is solving a practical problem. It’s likely to be more sustainable that way. Get started and learn from the small steps so that you are aware of the risks.