WHY SHOULD YOU NOT USE BORROWED MONEY AS SEED CAPITAL FOR YOUR BUSINESS?

In this article, we shall be outlining to you some tangible reasons why not to engage in

loans for the sake of starting a business.

Now before I continue, let me make this very clear to the readers. I haven’t said “you should not borrow money to invest in business” but rather “Don’t borrow money to start a business.” In other word I am saying that you should start a business with money from your sweat or earnings from your efforts for nature to bless you. And again, I am talking about a long term business here (a system) not a subsistent or temporal business.

Do not use borrowed money as a Startup for the following reasons:

1. Whenever you borrow anything, whoever borrowed to you especially money belittles you for a long time in his heart until you return the dept. Don’t sell yourself short.
2. Borrowing money as a Startup is an Uncalculated risk because you are starting a venture even you do not understand and master. Business must be planned strategically. Actually it is a bet of which you might be lucky to win or not lucky. You now understand that it’s not wise betting other people’s money. For you to win big in business, it takes time to study your market, your business and your competitors. Borrowed money will only slow you or drift your focus because you’ll be working for your lender or the money to pay off the loans rather than focusing on your core Values.
3. Business takes time to fructify. Young investors don’t like the idea but it is a reality. You need both patience and resilience (stubborn persistent persuasion) to win. Your Lenders do not understand that. In a world dominated by Capitalist mindset like ours, once your grace period elapses (often very brief), you start to pay back your loan else you earn them interest.
4. Most often than not, our business plan does not tell us the way out of natural disasters like the current pandemic Covid-19, fire accidents or wars. And often, your lender doesn’t understand your predicaments. So why take such unnecessary risk when those around you aren’t your friends.
5. Money input into a startup business constitute fixed assets, which even if sold later on, can’t be equivalent to its purchase value. So in essence, it is a current liability. Often what Lenders do after the date of payment of your loan expires while you haven’t met up with the agreement, they seize your assets and own them or liquidate them.
6. We live in a continent where jealousy is a lifestyle. Not all money given to you is clean(spiritually) or with a positive fate. Business in itself is a risk, so you should be careful where else you deep your hand into. If you plant mango, you can’t harvest plum or if you plant rotten seeds, nor matter your skill or how good or how long you cultivate it, just know that you are wasting your time. If at all you are doing business, then don’t bet it with your life.

I gained this important lesson the hard way after failing in my first business in Bamenda. I borrowed 500,000frs from a credit union to start running my business Lenjval Technologies at Below Foncha street Bamenda. Our business model was intended to serve the customers with Digital services like Hardware maintenance, selling accessories for Computers, Printing and Documentation, IT consultancy, Software development and Training in Computing Related Knowledge. I used the money to buy some accessories, furnished the shop, pay some months as rent for the business premises and was literally left with nothing more to operate the business later on. Little did I know of the heat and that I’ll fail my way to success Hahaha!!!. Let me just jump straight to the dilemma.

1. The Anglophone Crises in the North west and South West Regions of Cameroon made me loss my teaching Job in Some private school of the place. Consequently, I lost the backup wish I intended to use as equity in the business and to pay off my loan as scheduled by the borrowers.
2. Since I didn’t have money to run the business, I would tax the customer and collect the money upfront for the job. When the customer was satisfied with the work, I was happy but when not, I’ll face the shock (commonly call snake). I literally will use the gains from other jobs to solve the challenges encored from the another job. Since our focus was to satisfy the Customer at all cost. We actually were working at a loss and sometime would have to borrow elsewhere to complete the job.
3. Six months after, I discovered I was owing rent of 4months. My landlord couldn’t take it and closed my shop with everything within it. I had a hard time explaining to my customers what was happening.
4. My grace period for the loan was just 1 month. So I had to start paying them. Sadly, it went delinquent for several months and yielded enoughmous interest to the credit union whereas I was failing.
5. Most of it all, I lost my integrity, dignity and pride before those who looked at me with high esteem.
6. And so on and so forth….

CONCLUSION

Though it pains me a lot to think about those sad moments but I celebrate the lesson it has thought me and I can share with others. My primary objective is to enable Africans strive and become wealthy through business and start with “the right foot in” and not to be impoverished by the Capitalist who only think about themselves and teach fragile minds what I term the wrong way to Start a business life.

Good luck dear beautiful people. 

 

ARTICLE BY LENJO VALERY L. 

DIGITAL ENTREPRENEUR CEO AT LENJVAL TECHNOLOGIES.

COMPUTER SCIENCE TEACHER AND “A” LEVEL EXAMINER FOR CAMEROON SECONDARY SCHOOLS.