Of the several daunting challenges assailing small and medium enterprises in Nigeria, from ailing infrastructure to policy topsy-turvy, socio-political instability to questions of business ethics, integrity and downright corruption, shallow management depth and the likes, funding has acquired an uncanny notoriety as the foremost undoing of budding business entrepreneurs, especially when viewed from the entrepreneurs’ prism.
Funding is of such crucial importance when we consider the import of our rudimentary basic economics, which listed factors of production as; Land, Labour, Capital and Entrepreneur. It is indeed instructive that capital (funding) shapes the scope of the entrepreneurs’ vision and defines the limit of the other input factors namely; labour and land. Isn’t it therefore logical to posit that, while the entrepreneur provides or sources (as the case may be) for capital; capital in turn facilitates the acquisition of land and labour. From the following, it is not far fetched why funding has become topical in the success of businesses nay small and medium enterprises.
Many otherwise lucrative business ideas never got off the ground or where they did soon crash landed in a fashion similar to the flying contraption of the Wright Brothers on the beach front of Kitty Hawk on account of paucity of funding. However, much as ample finance is imperative for business success, it need be emphasized that, ‘business success is threatened as much by too much money as by lack of it’. Balancing financing needs with its availability is therefore sine qua non.
In a depressed economy such as is the case in Nigeria, at the moment; the challenge of raising fund for financing start-offs, expansion or growth is further accentuated by the lack of liquidity in the system. Governments (both federal and state) are also facing difficulties due to dwindling sources of revenue as a result of the collapse in oil prices on the international scene. Their combined annual spend helped to fuel liquidity in the system in the past.
In addition to the severe drop in the level of governments’ spending inflationary pressures arising from deteriorating value of the Naira and general cost pressures and low liquidity, the sources of financing for businesses are facing survival choices of their own!
A small business or indeed any business for that matter could obtain finance from two basic sources namely: internal and/or external. Internal sources are those that are largely under the control of the business owner as to availability and timing.
