SEC-S20W2 | My Business Ideas |Capital Management

It is week 2 in the Steemit engagement challenge already and I'm delighted to share my participation in this week's contest which talks about Capital Management. Indeed this is a topic to talk about because every businessman or woman must have this management for them to grow.

Source

A few tips regarding this very topic have been given as a guide by the contest organizers and I will be using them to talk about this very important topic. Without further ado please let's go straight into the discussion of the day.

Q1. Please tell us about your initial investment value in terms of Steem as well as in US$, and how you manage it.

The business I started wasn't a small one and for that reason, it required a lot of capital to start the business. I started a mini loan business using the concept of Microcima Africa. Now I will be discussing in detail the cost that I incurred when I started the business.

A loan business is a capital-intensive business you must be ready to sacrifice a lot. Now since I was using the concept of Microcima Africa, an organization I worked with a few months ago, it cost me a total of 2,500,000 NGN which is equivalent to 8,143 Steem and it is also equivalent to about $3,000.

Now how did it get to such an amount of money? Let's begin. For the loan, I budgeted the sum of $1,500 which was around 4,000 Steem based on the current price of Steem at the time of writing this article.

Furthermore, I decided to also use the remaining part of the money to run other expenses which included renting an official office where anyone seeking for loan can come and then get himself or herself registered this cost me about $100. I also had to ensure that the business was registered to allow me to operate freely and the cost of the registration also amounted to about $100.

Putting a signpost so that those passing around and others within can access the location also cost me some tokens as I needed to settle the Internal Revenue Service. This cost me about $50. The office wasn't left empty after renting it so what I did was to furnish it to my test also so that when customers come in they can have a place to relax and also get their issues half solved so I used about $200 for buying of sits desk and other office equipment that are needed.

Lastly, to keep the business running I also employed some staff which included one office assistant, two collection officers, and a back office to see to the posting of all money to the appropriate channel when the repayments for loans are being done. I acted as the Branch Manager since at the moment I have to strictly supervise the entire thing going on within the business and that is where the rest of the money went.

Q2. A profit and loss statement is commonly known as a statement that shows details of your business's revenue and expenses over a period that we calculate on a monthly, quarterly, or annual basis. How do you determine whether your business made a profit or loss during a stipulated period?

Since I make payments to my workers monthly, I do my checks and balances about profits and losses every month. This also helps in no small way to address issues of concern and how far the organization can move ahead. So let's look at the strategy used which always keeps me on the profit-making side at the moment.

Source

Firstly, all my workers are placed on the target and your monthly salary is proportional to meeting your target so that alone has helped to put all my workers on their toes as they struggle hard to meet their target and even exceed it because there is always a reward for those who exceed their target.

Secondly, every new customer will have to register with at least 20% of the loan amount he or she wishes to collect. To also minimize loss, we don't give out a loan above $50. So this has helped so much to reduce the amount of losses.

The collection officer in charge of the customer must also do proper verification of the customer in other to ensure that the customer will make his or her repayment with the interest attached to the loan. So aside from the registration fee which is 20% of the loan amount, we also attach an interest of 10% to all the loans given out.

Also to keep the collection officers in check knowing that they are being paid every month, if they fail in their collection, their monthly salary will be used as cover-up for the month. So this means that they don't get paid if they fail a victim.

With that strategy put in place, you will agree with me that at the moment the business is running on a steady profit and we intend to keep it that way for the time being. So at the end of each month, we take a day to do a meeting called Members Performance Evaluation (MPR). After this meeting payments are made.

During the meeting, all the plus and minus will be done, and then the amount of profit will be ascertained, if there is an incurred loss, it will also be sorted accordingly. So this is how to know if my business made a profit or loss.

Monthly evaluation and sharing of ideas and strategies to meet the needs of the customers and also make better profits is what we do at least once every month. The more customers the more profit and that is why we don't take longer to make evaluations and also punish as well as reward outstanding staff.

Q3. Loans and working capital

As a loan-given organization, I didn't take any loan from anyone to start this business. I started the business using working capital because I know how loans work and the process involved in accessing it, especially when the amount is very outrageous just like the amount I used in starting this business here.

Source

Since I had some money that I had been saving for quite a long time, instead of continue stocking it in the bank I thought of the best way to help others while still gaining little profits for myself. I intend to ensure that people get employed and those looking for mini-loans get access to them without delays.

So having the money already on the ground made it even easier for me to run the entire thing. I just went ahead and withdrew my capital and then used it to get all the required things for the business which included renting the place, buying stationery, registering the place, and other expenses.

All of these came from the money I had already and as I have said from the beginning the business I'm into is a loan business and it doesn't make sense that I will go out and loan money to loan it out again. So my money is what is used to fully run this business at the moment. I'm sure that with time we may have partners in the business but for now, I'm the sole owner, and all the funds including other things belong to me.

Q4. Collateral securities and your understanding

Indeed before getting a loan from any financial institutions especially a large amount of money you will need to provide collateral. The essence of this collateral is that if you can not repay the amount collected, your asset will be sold and the money used for the repayment.

Different organizations in my country have their modalities of working on this and in my case, I adopted the method I learned from Microcima Africa. Now how does this work? Please follow me closely as I try to explain to your understanding.

Source

What happens here is that we don't give out large amounts hence we don't collect anything as collateral but when your repayment is not possible, anything we see with you or in your house worth the amount we will pick it with your consent and go and sell it. Immediately after that, we will return the balance if there is any.

Here in Nigeria, other financial institutions collects colletaral which will ordinarily be higher than the amount you want to collect from the ban and they are doing this to be on a safe side incase you default in your payment as a customer.

As it stands at the moment I have a running busine which is a loan business and I still need more money because there are customers who wishes that access more money from the organisation but because of lack of finance, we limited the amount a customer can get.

So I intend to get more loan to increase the amount I too give out and also reach out to others who are also interested in getting this loan as well. So that will be all about this very topic today. I wan to believe I have done justice to it.

I want to finally invite @josepha, @solaymann, and @suboohi to join the contest and share their entry if they haven't done so yet.

Cc:
@dove11
@aviral123