Home Business Business Tip for SMEs #2: Be open to investment

Business Tip for SMEs #2: Be open to investment

What most SMEs require is patient capital which is given by venture capitalists. Patient capital is not like a commercial loan, you pay at reduced interest and you are given a longer time to repay. The long-standing issue is that we like to be the sole owner of our businesses. We need to jump-scale the young businesses and they need the right investments but they have not positioned themselves well to attract them. If you aspire to be the number one shea butter producer in Ghana, your investment will not take you there. It might take you a hundred years. If you position yourself well and build a good business case, it becomes easier for someone to say, I’ll take 40% equity of the business and that might probably give you one million dollars. This might, in turn, give you a revenue of five million dollars.

If you own 60% of your five-million-dollar valued company, that’s more than owning 100% of a 100-thousand-cedi valued company. That is why it’s important to find investors to give you long-term debts to be able to scale up. We are in a globalised world which is an equal marketplace. Products are coming in from China, Nigeria, South Africa etc. and we need to compete with them. The only way to do that is by scaling up. In Ghana, only about 10% of SMEs scale up to become large-scale businesses because most of them are not open to investment. If they open up, we’ll see more of the Kasapreko, Adonko Bitters, A1 Bread, Glitz Africa Magazine etc.

Source:

Nana Kyeremateng

Head of Corporate Communications and Brand Management, Access Bank Ghana

Glitz Africa Magazine Issue 22

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