• A lesson I carry with me as an SME Financier came from many conversations, I had with one of my former bosses.
• He would always ask me this question after I have taken him through the reasons why we should finance a customer. If this was your organization, would you give this entrepreneur the money.
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Entrepreneurs of Small and Medium Enterprises (SMEs) always seem to get the short end of the stick most of the time. The funders / financiers are always accused of providing an umbrella to the SMEs when the sun is very hot, and they don’t need it. Unfortunately, as soon as it starts raining, they are accused of coming to collect their umbrella to return it just when the sun comes out. Is this true?
I bumped into this quote in the internet the other day and it caught my attention. Life’s too short to learn from your own mistakes. So, learn from others. The author is unknown. However, Eleanor Roosevelt, a former First Lady in the USA between 1933 – 1945, went further to say that we should “Learn from the mistakes of others. You can’t live long enough to make them all yourself.”
The question that I hope to respond to today is what is one thing that funders / financiers are always looking for before they invest or finance an entrepreneur running an SME. One of the key things that Funders / Financier are interested in is whether they can trust the entrepreneur with their money.
A lesson I carry with me as an SME Financier came from many conversations, I had with one of my former bosses. He would always ask me this question after I have taken him through the reasons why we should finance a customer. If this was your organization, would you give this entrepreneur the money.
If I said yes, he would go further and ask me, how much of it are you willing to lose. In the book “The backroads bosslady”, Jessi Roberts is quoted as saying “don’t risk more than you can afford to loss.” As an entrepreneur, always remember that the funder / financier is not willing to risk more that they are willing to loss and unfortunately, they are not willing to loss anything. So, each time a funder / financier is looking at your request for funding / financing, several things come to mind. One of those things is, can I trust Jane / Peter, the entrepreneur, with my money.
Will they pay me back? What is that one thing that can happen to their business and we both loss our investments / money? How do I mitigate that risk that is glaring at me? However, after the funder / financier has looked at all angles to ensure that the deal is good, they always come back and ask themselves, can I trust Jane / Peter with my money. This is normally the most difficult question that any funder / financier must answer. Looking at your past, what does it tell them. Listening to the people around you, what do they hear them saying. Listening to you talk, can they take your word.
As an entrepreneur, what can you learn from this? Remember, any funder / financier will always look at your background and therefore it is important to operate above board and correct any mistakes that you make. Don’t cover them up, they have a tendency to show up at the wrong time. Secondly, always learn from the mistakes of others as you can’t live long enough to make them all yourself.
Therefore, which end of the stick are you holding as an entrepreneur? To a good extent, it depends on you. A story is told of this university professor who was put on the spot by a young man. The young man was holding a butterfly in his hand. He wanted to prove to the professor that he didn’t know everything. He then spread both of his hands in front and told the professor, “I am holding a butterfly in my hands, is the butterfly dead or alive.” To the amazement of the young man, the professor said, it depends on you. If I say dead, you will let it go and If I say alive, you will squeeze it to dead. So, it all depends on you. Which end of the stick are you holding as an entrepreneur, the short end or the long end? It depends on you.
Muthengi is the country manager for Business Partners International