Young entrepreneurs schooled on complexity of starting a business

Mr. Kenneth Kwamina Thompson, Chief Executive Officer of Dalex Finance and Leasing Company Limited, a non-bank financial institution has advised young entrepreneurs to brace up for operational challenges within the first five years of setting up.

“...70 per cent of business ventures will fail in the first five years. Most start-ups will fail because the right tools to propel it forward are not in place, largely due to the complexity of finding funds to start or expand a business," he said.

“Success in business is 95 per cent perspiration, and five per cent inspiration; however with careful planning and a good team, it is possible to be successful.” Mr. Thompson stated this at a business forum organized in Accra.

The business forum on the theme: “Financing your business with other people's money – friends, family and fools,” was organized by “ServLed Fridays,” a business incubator, and was attended by young entrepreneurs, students and unemployed youth looking for opportunities to start a business.

Mr. Thompson identified family and friends as solid sources for seeking for funding to start a business as “they provide strategic credibility, quicker funds and are less bureaucratic even though they will have certain expectations”.

He explained that people who have not had any family or friends showing interest in their ideas are less likely to be considered by outsiders for seed funding.

“The first integrity check on you as a person is whether your friends and family believe in you strongly enough to give you seed money for your new idea.

“Whilst friends and family are willing to help, they should be able to know what is at stake, by having an agreement which should include any payment terms, risks involved and written agreement...,” he said.

The Dalex Chief Executive noted that contrary to popular thinking, investors invest in people before they invest in ideas or product, “Investors want to know that you are passionate about your idea or business, you have researched it thoroughly and that you can demonstrate having skin in the game...”

“In other words, how much personal sacrifice have you made? Investors want to know that you are worth the investment risk,” Mr. Thompson stated.

Mr. Thompson advised that when going for money, entrepreneurs should ask for the minimum, set themselves milestones and ask for more when they have reached their targets, and be prepared to spend time with their potential investors.

“This should be communicated and agreed upon as it is a privilege, not a right for anyone to fund a business,” and cautioned against taking money from people who cannot afford to lose the money they have invested.

He explained that Dalex Finance success which includes ranking number 16 on Ghana Club 100 (2013), is based on having a strong team…“the Dalex success story has not been a solitary journey...create a winning team and team always win”.