… it is not necessarily “money” you need as an initial capital to start a business: You can start with nothing in hand
For most people, particularly our young university graduates, “It is the initial capital; thus, ‘lack of money’ that is in their way to self-employment”. I tell you what? That is not the real hurdle in starting a business. Additionally, in almost all cases of people’s failure to develop their ideas into successful businesses in Ghana, there is evidence that they fail to start due to ignorance. I must admit, our unemployed university graduates, in fact, in most of the cases want to do something any way, to change their predicament. However, due to lopsided education, they always go to tackle different problems rather than tackling the real issues that prevent them from going into self-employment.
Undeniably, the initial capital for business is always blamed for being high, difficult to come by and our graduates seem to use it to convincingly justify their reason for staying unemployed. Almost every unemployed person uses it as an alibi across the country. The questions I have are: Does one necessarily need a lump sum to start a business if they do not have any source to access it? Must it take ten years after university to be employed by someone after acquiring a university qualification? Do university students in Ghana know that they can start their own businesses while on campus or right after national service and will not have to sit down and wait for interviews or white-collar jobs that never come? It is intriguing to note that even with recent development in research in entrepreneurship and business development, university students and graduates in Ghana do not still know the types of capital needed to start a successful business. In earnest, our understanding of initial capital for business is obsolete therefore needs a cross examination to be put into perspective as a factor of production in our modern day concept of entrepreneurship.
To start with emphasis, it is not financial capital that one needs to think about when one wants to start a business. Thus; a lump sum is not a pre-requisite in starting a business. It is knowledge capital that must come first and that includes intellectual property. It is any form of knowledge or skills that invokes the imaginative faculties of the mind leading to a definite purpose through practical plans, and for it to be beneficial it has to be highly organised and intelligently directed. Hence, to start a business as a beginner, your search for knowledge capital will offer you the understanding of what a business venture is and how to identify risk, manage it and avoid failures. Knowledge capital will reveal to you how to identify real business ideas or opportunities. It is from this one will gain some skills and exposure to the world of business. Students need to educate themselves on these and not come out of universities with only theories, concepts and general knowledge which now have very little place in the 21st Century industry. Moreover, this will give an individual some industry knowledge and make one speak and understand industry language and terminologies to convince stakeholders, attract investment later, gain the right partners and also face competition to be able to sustain their business. With knowledge capital, one will understand industry dynamics and the product or service to offer, the target market, the price potential customers will be willing to pay for the product, the place one can get them, and finally reach out to them.
People around you can support
Also, social capital is another resource needed to start a business and made up of the relationship one has with others members of society. People you know, relate with and discuss to solve social problems remain a vital resource on your way to market. The relationships here constitute a form of capital ready to be used to start and grow your business. More so, from social capital, one can get most of what one needs to start a business and can even build a customer base with the same social capital. In actual fact, there has never been a generation so lucky like ours; in that we are fortunate to belong to a generation when technology and the era of social media have brought us so close to markets and in such a way that no one knows the size and number of markets they have access to. You just need to generate a new idea, create value and the world will reward you for your effort. The principle of social capital requires that you get just enough people what they want in life and you also get rewarded with what you want in life.
Your connections counts
Another is network capital, which is the connection one has with other people as a social entity. Truly, everyone has links with so many people for some reasons and that links are a form of resource for business development and costs nothing to maintain. Any links established at any time and with any one command and exert some form of influence that can be used for personal gains in business. Knowing one or two persons sets up a network of people and a form of web that provides a strategic marketing channel for value creation. I do not need to mention the potential social media groups have for businesses.
Invite available hands and brains
To add to the above, human capital is also crucial and constitutes lots of people available to everyone to be engaged to do anything humanly possible for profit and wealth creation. Both educated and non-educated people in every community form a resource and a form of capital to use to start a business. Starting from close relatives, friends and community members will personally contribute by way of offering suggestions, free accommodation, free transport, mentorship, experiences, make some movements for the business to start and even some petty cash, however small.
Customarily, as Ghanaians, there are a lot of other resources one can obtain from these forms of capital available to us. For instance, we do so much for family members and friends and one only needs to request a helping hand and a hundred willing hands will come. Above all, no one in Ghana doubts the size and quality of our human capital and anyone who comes up with a brilliant business idea will pick and choose from several hands that will be willing to offer their services for free to get the ideas work. Example, one’s brother or sister will be willing to help develop an idea into a business plan if they happen to know how to. Another will offer a computer for a short period and someone from friends can help prepare your financial statement. In fact, at the time of writing this article, I was involved in the establishment of a security company belonging to a friend and no charge was attached, which was nothing but the benefit of social capital being used to start the business.
Money should not stop you
Of course, financial capital, which in some cases needs no attention at all when one wants to start a business venture is cash needed to be injected into a business venture to take care of initial expenses until revenue is accrued. It is indeed unavoidable in starting a business and yet not a pre-requisite, I must reiterate. Starting a business is not the time one starts to invest and make money from selling a product, rather business start at the time when one conceives an idea to venture into the process of buying and selling to make profit. This is why the Ghana Revenue Authority requires that an intention to do business in Ghana be duly registered even three month before it hits the market. For instance, hitting the road to learn business skills does not need a lump sum, contacting people already in the business do not need a lump sum, helping someone to gain experience and industry knowledge does not need a lump sum. For example, an apprentice is a person in business though they do not make money, the training form part of the initial stages of a start-up.
Unless people from rich families, a typical Ghanaian university graduate after completion is a starter in life, has no knowledge of any trade, has no collateral security for a loan and owns nothing of fiscal value but education, yet still has the courage to wait for a lump sum to start a business. Honestly, no venture capitalist or engel investor will give you money to experiment with unless you demonstrate that you have learnt enough, experimented with your money, made all the mistakes and now ready to rock. Knowing very well that one is from an average home, why will one think of getting a lump sum to start a business? Why should someone sit for ten years waiting for a lump sum as an initial capital to start a business venture?
Wrong education and expectation
Obviously, quite apart from lack of specialised education among university graduates in Ghana, the problem could be attributed to high expectations students come out with from universities, thus; with the erroneous belief that with their qualifications all will be well; sorry that was the good old days. With that, they want to start big with fat salaries or lump sums as initial capital in self-employment and will not start from the scratch like their counterparts elsewhere. To achieve these, they will wait to be eventually employed by their school mates who would have started their own businesses immediately after school.
To emphasise, starting a business must not be tired to money but to the use of the mind, ideas, creativity, imagination, innovation and the burning desire to start and run it successful. It is worth noting that a business must not be tired to a single person either; struggling to develop ideas and sell to make money but must be looked at as a collective agreement among at least three people to pull these recourses together to achieve a corporate objective.
Another major issue lacking is proper planning which our graduates do not know. They cannot differentiate between a plan and what they aim at. Unfortunately, to most graduates, a plan is what they want to achieve. For example, to establish a school and need capital to build the necessary physical structures or to set up a poultry farm and need some building and an incubator. With this, one clearly sees the ignorance and lack of understanding of planning. If this is a plan at all, then it is a plan in reverse where the long term goal is put first without the short and medium term goals. Such a plan will definitely fail before implementation, leading to persistent procrastination, a lack of decision and resultant unemployment.
Be reasonable and moderate
To arrest the problem of initial capital, we need to know the types of initial capital needed and get the priorities right from the start. Real entrepreneurs start with nothing but with SMART objectives, well designed plans with clearly defined short, medium and long range goals. Success come to those who become success conscious, therefore with strong desire, proper planning, supported by faith, self-confidence, persistence and obsession to succeed, entrepreneurs grow and expand to become industry leaders. With this, our graduates need to cut their coats according to their sizes, adhere to the fundamental principle of human growth and development; crawl, walk and run. They must start moderately with cheap available resources within our local environment. Take note, there is a difference between wishing something and being ready to receive it. To be ready as the next generation entrepreneurs, our graduates need to understudy successful people in our mist, learn from today’s industry leaders through helping for free. They must attach themselves to their role models and give their effort for free before they try to take. Through this, they will learn to speak, behave and act ideally to attract success; thus, through positive mental attitude.
Learn more through self-education
A lot more can be learnt through workshops, seminars, business skills training and mentorship under successful entrepreneurs during holidays and from small business consultants to gain well guided and directed knowledge and skills for worthy end. Factually, money needed for a start-up does not require one to sit for ten years to get into business. Such funds can come from personal savings, which requires self-discipline and everyone can do it if they really want to change their situation. It can equally be sourced or obtained as seed money at the time one is giving out for free to the successful person being understudied if one really follows and learns with entrepreneurial intent. Examples abound with this scenario in our immediate environment yet we do not see and learn from them.
What can be done?
Above all, the Government of Ghana and stakeholders have a role in this by way of intervention with a scheme to introduce entrepreneurship in all faculties of tertiary institutions/universities in the country. Our universities have special responsibility to provide specialised academic curriculum as an intervention, which must be made compulsory for the attainment of business knowledge and skills. Placement of university students in industry is another move that could be emphasised. Not just that, university-industry links for the benefit of knowledge transfer for innovation is another solution to the problem of unemployment in Ghana.
In effect, graduate unemployment should not be allowed to become one of our annual festivals to be celebrated in Ghana and must be tackled and uprooted with the desired intervention. Hopes, dreams and enthusiasm alone do not create jobs and make our graduates self-employed. It is self-development, planning and action that hold the solution. Our graduates have to take the responsibility for their own shortfalls, do something about it and not continue to blame the system and the economy, and demand that they are looked after. They should not wait for the government, NGOs and foreign assistance to change their situation. They will have to become better and smarter than the economy to improve performance and productivity and not the reverse because the economy does not get better and never will realistically be. I will encourage all students still on campus to associate themselves with their chosen industries to gain business experience while in the university before stepping out of campus.
The author is a consultant in entrepreneurship and business development, an expert in university-industry interaction and knowledge transfer for innovation. He is also a co-author for two textbooks: Financial Entrepreneurship for Economic Growth in Emerging Nations, and Innovation and Social Capital in Organisational Ecosystems. Contact: Email:firstname.lastname@example.org