The first business challenge- lack of capital

Let us establish as an example of a business photography. The formation of photography business requires very many things. You are expected to take certain steps and fulfil certain technical, material and legal, requirement to bring to birth a photography business. 

You would need basic photography equipments like Camera, Computer, Printer. And broadly, you require other photography equipments. You could choose to operate on a small scale, without using a studio to perform you operations. You can keep simple equipments like Camera, printer and computer at home, and use them to produce photographs for your customer. But if you want to do photography professionally and in a large scale, you are expected to build a studio and install other photography equipments in it, which you would use in operation. You could choose to build a studio or rent one. When you build or rent one, you would install those equipments and make operations in it. The studio would be the place of contact between you and your customers. They would always go there and locate you for your services. It is as an office to you. But when you finish installing those equipments you wouldn't simply start operation. You cannot start a business in any country without registration. Registration simply means getting the approval, and recognition of the government for running a business. This is achieved by filling for some forms and obtaining documents from appropriate authorities. 

Now let stop there. We did not fully exhaust the requirements for starting photography business. But we are sure that the things we mentioned are necessary for starting a photography business. Photographers surely need Cameras for taking photographs. They certainly need Computers for editing and storing photographs they snap. They surely need a printer for printing photos that they snap. Purchasing those equipments requires money. The money which would be used for the purchase of all that is needed to start a photography business including payment of registration fees is what we would call capital.

But why would we call it capital? It is simply because capital by definition refers to the original funds, wealth and money used to start a business. Established capital definitions by experts put the definition that way. And so we must base our judgement on that definition.

                           A NECESSITY 

That Capital is defined as the money used to start a business suggests that business formation requires capital. And yes we think so. We can use the example of the photography business to illustrate our claim. All the material requirements for starting photography business, including Cameras and Printer, requires money to be purchased. Without money they cannot be purchased. And if they are not purchased the business cannot be established. Capital is what is used to drive all the business formation steps. At every stage of the steps money is required to accomplish the step. When you get to the point where you have to contract people to build your studio you would pay them money. When you get to the point where you have to register business you would accomplish it with money. So everything that is done, all the activities are carried out with money. Without which they cannot be performed, and formation cannot take place. 

Their essentialllity makes them a necessity. If we can start a business without capital it is no necessary at all. But because it cannot be achieved without capital it must be taken as a necessity. A necessity in the context of business formation is that which we cannot do without to forge it. 

For a long time people have been forming business. The attitude of people towards capital, really indicates that they consider it a necessity.

A man who wants to start business usually takes the step to acquire money which he would use to start the business. Some go extra miles to source for capital from loaners. They include it in their business plan how to secure money for bu, implying that they know they require it.

And all the business that we know, were started with money. The starters usually channel money into the formation. The activities and purchase of the items needed to run their companies usually involved money. The claim came from experienced people, those who have started business, so we can or question them.

And here is the greatest evidence that business requires capital to start. The claim came from experts and scholars, those whom are considered business authorities. 

A physician is to the sick person an authority. His vast knowledge, experience, expertise and record puts him in a position of authority. When he prescribes a cure, the sick are not in doubt as to weather it would work. When he recommend a drug, we would consider it efficacious. They would not have, if the advise came from lawyer. He is never an authority.

Just as the sick considers the doctor an authority, so do we consider the experts of business an authority. They have to a reasonable degree demonstrated that the formation of a business requires capital.

You have the knowledge that a business requires capital to achieve. You might have learnt the teaching from your teacher at school. Or maybe you wanted to start a business and you consulted a counselor who prescribed certain amount of capital to you. 

Knowing that you need it would motivate you to want to get it. Infact you really want to, for you want to start a business. Anyone desiring to start a business can relate with you. But then, achieving this dream of yours- sourcing a capital may seem easy. But when you sat down to calculate just how much you need to start a business you realized that the money is just too much. Infact it is more than all the money that you have in possession. All the money in your account does not reach that amount. You wished that it is just a small amount so that you could deduct it from your account and start a business. But it is not. It is a necessity so you must have to find a way to achieve it.

But now that you have not acquired it, you are constrained or prevented from starting a business by your inadequacy.

This is one of the major challenge that those who want to start a business encounter. They have the will and desire to start a business. Infact they are eager a d cannot wait to, but they lack the capital to start a business. 

But how do we know this? I was able to make a research to draw information from a certain organization that is involved with giving loans to those who want to start a business in which those desiring to obtain must apply to them for loan. According to them, more than 3 thousand people applied to them for loan. Now that was just in a particular place, not an entire country. Imagine then, how many people within that country are sourcing for loan for business start-up. That they are applying for it, is evidence that they lack it. 

Infact they would, for capital required to start most business is usually a large sum of money, which many lack. Many in the world are poor, not rich. So many would lack capital.

Some who had good business plan and desire were interviewed on why they were not able to start business. And most of them attributed it to lack of capital. If you desire to start a business, know that this is one of the challenges that you may encounter. No one knows your financial capabilities. We do not know how much you have in your account, but then, when you discover how much is needed to start your business you may find it to be very large, if you are of little means. The cost of raw materials have increased. The cost of production equipments have increased. The cost of registration is more than it was a long time ago, the increase would surely affect the amount of capital you require to start business. 

When you lack capital logically you can draw it from other sources. Capital is money, and you can draw if from your friends. Their are examples of people who received money which they used to start business from others, proving that you can source capital from others. But this does not always come. Only few people receive capital for business from others. People are not willing to beat the burden of others which would increase their own. Even when they are willing to give your they attach a demand. Some times loaners attach a high interest to loan. If you must receive loan from them you must accept to give them that interest. The interests is usually bulky and difficult to raise as you are not guaranteed automatic success in business when you start it. Some have collected loans with collateral and had it seized when they were unable to pay for it. Even when many apply for a loan, only very few receive loan. 

The difficulty I'm acquiring capital through loan, makes it difficult for business aspirants to start a business. Just when you apply for a loan, you are expected to go through many forms, fill them and submit. When you submit you are liable to be rejected. They would want to be sure that you are capable of repaying. They sometimes have to investigate you to know if you are capable. If you must, you must give them a collateral, something that would compensate for the loan in the even of inadequacy on your part, and you risk losing your collateral if you are unable to pay. And even if you are qualified, only few receive loan, as most loaners don't have money to loan all that applied to them.

All of this may make those who want to draw loan to find it challenging. Some run away from collecting loan, and therefore become unable to start business. 

The challenges of capital in business, are mainly lack of it, difficulties and inability to secure it from those who possess it.

               WHY IT IS IMPORTANT 

You have just learned that you may lack capital to start a business. And the reason given, motivated you to accept this claim as fact. Why then is it important for you to know? As an aspirant it is important for you to know the challenges you would encounter, so that you would figure out how you could tackle it before going into business, so that it does not overwhelm you. They say that to know is to be forearmed. When you know not the challenge that you would encounter. It would come as a challenge to you. Unprepared you may not be able to tackle them. But when prepared, when you have the antidotes with you, you can easily solve the problem. Then, it would not interfer with your business start up dream. And your dream would be achieved. 

It is also a build up to the knowledge that you already possess. Now that you have learnt this matter, you have increased your knowledge. As knowledge enhances understanding you would certainly have more understanding on this affair. You can be able to be impactful when discussions on the matter are made. You can be able to teach someone in lack of knowledge. Knowledge is never a waste.