My work with SMEs has me wearing a lot of hats and over time I have become more than their business strategist but also a confidant, friend and a financial adviser.
Working with small business owners and seeing how hard they work to stay afloat, to keep progressing, to not give up and to see someone like me come in and tell them to make some hard changes, it is inevitable to get invested emotionally in them. One of the things that saddens me is how so unprepared a lot of these small business owners are for retirement, accidents, illness – short term or long term.
One of my long term visions is to impact business owners through financial literacy and to help them prepare for retirement, long term illness or any unforeseen events that would affect their ability to keep running their business.
There are various ways that business owners can invest for their future. I’ll go through a few, please bear in mind that this list is not exhaustive and also please seek the advice of professionals before embarking on any of the things listed below.
I hear some of you saying, your business needs to generate excess cash for you to invest, well yes and no. Some things listed below should be part of your business expenses and should not be compromised.
1. Business Insurance – This is one of the most important things any small business should have. Depending on the cover you go for, this protects your business should fraud, theft, fire, damage e.t.c occur and your business can not function for a period of time. Rather than find yourself in a position where you lose all your capital and lose your source of livelihood and get stressed because of lack of capital to start again, get a business insurance. Do your research, ring up insurance companies, I am sure they would be more than willing to help. To even make it worthwhile and maybe get it cheaper, get a couple of your friends who are small business owners together and get a representative from an insurance company in. A few insurance companies that come to mind are Leadway with their Leadway Boss product, ensure, AIICO e.t.c
2. Life Insurance – This insurance would protect you when you are at an age when you can no longer work. You can either get a lump sump after a certain age or if you were to die, your family could get a lump sum that would help them fair better after losing a key financial provider in the family.
3. Health Insurance – This one I cannot emphasize enough, get health insurance for you and your family members. I have seen it happen too many times, when a business owner falls sick, all the business money is spent on taking care of his/ her health expenses or one of the family members fall sick and all the business money is spent on medical expenses. Getting a health insurance would protect the cash of a business should ill health happen.
1,2 and 3 should be factored into your regular monthly business expenses.
4. Real Estate Investment – This is one of those that has to be done from excess cash flow or profits of the business. The good thing is that real estate investment has changed and you can buy now and spread payments over a couple of years. Real estate is one asset that never loses value, so ring up a broker or a real estate agent and talk to them about your needs and also your budget. Remember even if you do not have the money now, having that conversation will help you plan better.
5. Mutual Funds – This gives you an opportunity to invest small amounts as you have it into a portfolio. Some of the bank’s mutual funds have a minimum investment of 5,000 naira. Ring a bank and speak to a financial adviser and start investing today. The key is to start small but as they say …tiny drops……
6. Other Investments – There are other investment platforms where you can invest, for example there are crowdfunding platforms, agriculture is another good one, or even diversifying by going into other business when you have the excess cash by collaborating with other business owners.
I cannot emphasize enough though, that before you put your money anywhere, seek professional advice including legal advice. Make sure every contract is legally binding and protects you and your investment. Pay a lawyer and an accountant. It will be a small price to pay compared to getting duped of your investment.