by Lizl Naude

Woman, stop being emotional about your business! If you are a woman in business, you might feel offended by this! How can you say that Lizl? Well, as tough as it is to say…it’s time to put the emotions away! And believe me, I am preaching to myself!

As I was cooking in the kitchen over the weekend, I was lost in thought. I thought about my business and considered the last few years. As some of you also, I have built my business from nothing and humble beginnings. I have nursed this baby from infancy to toddler-hood now. While I was cooking, my hubby was binging on Lion’s Den, the TV show where budding entrepreneurs can pitch their ideas and business to a panel of accomplished investors. It is extremely educational and informative. But I noticed one common thread throughout the pitches. Each entrepreneur spoke of so much passion about their enterprise. Being so emotionally vested, it sometimes made some of them come across as oblivious to the hard truth. It made them lose sight of the numbers and the reality of the status of their business.

They speak with so much passion of what they have started from nothing! And it should be commended! But the experienced investors would regularly interrogate them and ask them all those uncomfortable questions most of us shy away from! I could totally relate, and some of these pitches made me think about my own business and my inability to sometimes think objectively about it.

I saw a few types of businesses and owners (This is just how I perceived them, and solely my own opinion. These are just examples)

1. The educated professional who grew bored and tired of the corporate world and decided to make a drastic change and start a business. He/she is extremely calculated in their approach.

2. The self-starter, who began as a youth and have run several businesses through the years. He/she knows how to make money and is open to risk-taking.

3. The delusional entrepreneur who has an idea or business but did not think it through thoroughly. He/she has idealistic views on the world.

4. The part-time entrepreneur who does not yet have the guts or means to quit and run their business full-time. This could be off-putting to the investors who require hundred percent commitment from the owner to make the business work and show return on their investment.

5. The extremely gifted entrepreneur who has a great idea or existing business and ticks all the boxes. His/her business shows profit and potential to grow and they just require investment to scale and further grow the business.

6. The entrepreneur who was possibly pressured to start a business to make ends meet. They do not have any business experience, and learn as they go. They have heart and show commitment, but because of lack of resources is growing at a very slow pace and the enterprise shows potential, but is not yet profitable.

Safe to say many leave the den empty-handed, without investment and possible shattered dreams. Some go back and make the changes as advised by the investors. Some ignore their advice, and still make a success through other interventions. Then there are those who leave satisfied and accomplished as they were able to secure the investment through their brilliant pitches and knowledge of the industries. There are many more examples, but it is quite clear that many entrepreneurs have an idealized view of their business, which might cloud their perspective of reality. Some of us have so much conviction that our businesses will succeed, and rightly so! We pour our hearts and souls into it, and in many instances our families feel the brunt with us, as we grind to make it a success. BUT…sometimes our enterprises need urgent intervention. Sometimes it might just need a cash injection, other times it might require a pivot, and in some instances, after all has been tried, we might have to close doors. 🙁

I think it can be quite traumatic to navigate and face these tough realities. Then on the flip side, through the right breakthrough or big deal, our ideas and businesses might just be the next big thing and bring us much success. The point I am trying to make is that we shouldn’t be afraid to interrogate ourselves and our business concepts. After reading through some of my examples, which one do you relate to? What is the status of your business? Are you willing to put away the emotions and face the realities of the position of your enterprise as much as it might shatter your ambitions or prosper it?

by Lionesses of Africa Operations Dept

We saw a fascinating statistic recently regarding job applications and the differing actions of women vs men. In job applications according to an original study by Hewlett Packard and discussed by the Harvard Business Review (‘HBR’) back in 2014 (here) and continually confirmed in more recent studies such as from LinkedIn here, men will apply to jobs if they feel they match 60% of the requirements on the job application. Women? They will apparently agonize for ages over the last 5% on the way to 100% certainty.

As the Harvard Business Review concluded “What held them [women] back from applying was not a mistaken perception about themselves, but a mistaken perception about the hiring process.”  Yet what could be the worst that could happen? The potential employer says No? All you will have lost is a small amount of time – but if you don’t ask you never get, or to put it another way – the only way to guarantee that you will never win the lottery is to never buy a ticket!

We have also seen this in applications for finance, both Equity and Debt, a mistaken perception of the application process and a need for 100% certainty – no wonder the ‘No’ is so disappointing for women, given they will have invested so much extra internal discussion with themselves in the process. This obviously lessens the chance of further applications – “We have just given up!” is often the cry we hear, yet as with job descriptions, so loan applications. Yes there are certain boxes that simply have to be ticked, certain financial ratios that have to be in line, but there is also a large grey area that is still open to the investors understanding and belief in your story.

We have often discussed Equity applications in these articles but it has been very rare for us to touch on the subject of Debt. Debt, as with Equity investment, involves a large queue for a finite resource (cash) and so women are yet again placed firmly at a disadvantage! Think that we are over emphasizing this? We have mentioned on numerous occasions (so won’t go into detail again) the Harvard research into the differing styles of questions asked of men vs women by VC, PE and other investors (here), but in addition, when it comes to debt, the World Bank itself state that the average amount of collateral required is currently running at slightly over 200% for Africa. Note that this is the average across Africa on a continent where historically collateral (land, housing, other assets) has been firmly in male hands. All of this before we even agonize as to if we are truly reaching 100% the ‘requirements’! You do the maths…

This perhaps is why too often as we expand we think we have to sell equity rather than turn to debt. But selling equity and especially too much equity at an early stage is highly dangerous, not least because when you come to the next round of financing if your original investor has no wish to exit or ‘water down’ their large holding, this leaves little for any new investor. Plus, as always, we must consider the ‘Exit’! As a minority shareholder there is usually only one other buyer around – the other shareholder who will be able to control the price! Nasty!

In addition, raising PE or VC money costs in time, energy and ‘creative energy’ (given this was written on the day that the BIG4 Audit Firm EY were fined US$100 million for allowing their employees to cheat on an Ethics exam (no we are not making that up – see here), we should make clear that we are not talking accounting creativity here, but design of pitch decks etc – just in case anyone was wondering!)…

As the Harvard Business Review say in their interesting article ‘Everything You (Don’t) Want to Know About Raising Capital’ (here):

“The process is stressful and can drag on for months as interested investors engage in “due diligence”…Getting a yes can easily take six months; a no can take up to a year…emotional and physical drain leaves little energy for running the business, and cash is flowing out rather than in…Performance invariably suffers. Customers sense neglect…employees and managers get less attention…small problems are overlooked…sales flatten or drop off, cash collections slow, and profits dwindle.”

Sounds fun doesn’t it? So don’t ignore Debt, it does have a central place in business – if nothing else, what’s the worst that can happen – you get a No? Well, at least the ‘No’ is quicker!

As we speak to various Lionesses we have become struck by certain misunderstandings concerning debt and so vowed to address this head on, so here goes!

The first misunderstanding is that there is only one kind of debt (outside of the overdraft), straight up Bank Loans (200% collateral) and probably a number of other conditions. Please don’t believe all that talk about bankers being in the risk game. When it comes to lending to companies, especially SMEs, they nail risk down hard. As the saying goes, a Banker will lend you an Umbrella when the Sun is shinning, however the moment the rain clouds appear – not a chance, that Umbrella will be firmly locked away in their office.

One of the Bankers’ major Key Performance Indicators (KPI) is low NPLs (Non-Performing Loans). Search on their annual report and you will see that it is indeed very low. To be fair, many Development Financial Institutions (DFIs) have NPL ratios not much different. They too have shareholders in the form of the nation’s taxpayers and politicians they have to report to – ‘tough audience’ as our local comedy club would say. Plus they tend to lend a great deal of their cash through international banks who then on lend into local banks, who in turn on lend to smaller local banks and Microfinance institutions. So by the time the money arrives ready be lent to the final SME in a small village outside Nairobi or Lagos, it has had many hands on it and will have had many fees taken from it. This also means that it is also very difficult to see just how much of the money is flowing to SMEs or even Gender support as the working paper (here) from Publish What You Fund (here), the global campaign for aid and development transparency show:

“Lending to, or investing in, financial intermediaries has become an increasingly important aspect of DFI activity in recent years. For some DFIs it represents over half of their total investment portfolio. A lack of transparency means that it is unclear where a great deal of this development finance ends up, the development impacts that it has, and the environment and social risks that it holds for project affected communities.”

So for all the US$billions pouring into the developing world, it seems difficult to know just how much is actually reaching the places where it is most needed. Sadly the general conditions of finance in Africa is not going to get any better. Not only do we have increased interest rates across the western world, which is dragging yield searching finance back to the US, but as the OECD confirm (here): “While bank financing will continue to be crucial for the SME sector, there is a broad concern that credit constraints will simply become “the new normal” for SMEs and entrepreneurs.” Translation: Banks are being squeezed so hard on one side by regulations such as Basle III (which hits minimum capital requirements hard) and Anti-Money Laundering; and shareholder expectations of low NPLs, that by the time any cash makes it out the other side, all juice has been removed. Note ‘credit constraints’. So let’s take our personal ‘credit’ out of the equation and took to lean on something else…

Cash needs to be lent on something – if it is not your credit worthiness (think 200% collateral), then it has to be backed by something else, and this is where Asset Backed Lending and the various forms of Trade Finance arrive to the party.

So ask yourself – Why do I need this cash injection?

Often there will be a better way to finance this ‘need’ than just selling part of your company. Once you work out what it is, you will know where to look and who to approach – this is simply because different lenders have their particular areas of interest. If it is something tangible, something with a value, then there will probably be a group willing to finance this (note – no guarantees on pricing!). We say ‘probably’, because if you aim to buy machinery from Europe, or USA and have to pay in Euro or US$ whilst earning an African currency through local sales – then it will be extremely difficult to find a friendly financier. Put simply, if today I lend you $1million for machinery that you purchase in the US and bring back home to Nigeria, you need to find ₦415million to repay this loan. If your local currency then drops by 20% against the US$ (yeah – don’t we know it!), you somehow need to find that extra ₦83 million to repay – that’s enough to make anyone choke over their morning Cornflakes and financiers are no different, the doors on their Exit shutting fast.

When you go in front of your banker or fund that specializes in trade or asset finance, think of this Exit – if this deal goes horrible wrong, how can they get their money back? If you are having to source machinery abroad because there is no industry in your own country and you are wanting to be the pathfinder, there will be little or no second hand market, irrespective of any currency drop. This is going to be very tough for any investor. Often the machinery manufacturer will have contacts in their own country’s Export/Import Bank or Export Credit Agency who may (just) have a solution to your local currency problem. Worth asking the question of the manufacturer – they have the connections. What’s the worst that can happen? They say No?

If you are requiring help on your Cash Flow selling your produce abroad, think Trade Finance, if local to local, think Invoice Finance. If you have a large warehouse that moves quite regularly there is Warehouse Finance. As always think of the Lenders Exit – if your debtor’s book has ever growing days-overdue, that suggests the lender will need a great deal of patience and probably have to spend on a debt collector. Likewise if your inventory is just gathering dust, rather than fit and moving like trained Athlete, you are going to struggle. Remember that umbrella? These are both cloudy conditions.

Have no connections with such funding teams, or have no idea where to start looking? Ask all your connections, someone will have had experience of this and possible connections who play in that space.

Of course if you do have an external shareholder who owns a large chunk of your company, then why not approach them? They have no doubt agreed your expansion plans, understand your cash flow and it is in their interests that you don’t spend months searching for a friendly lender rather than driving the company and their investment forward. Plus why would they want profits to be paid on Bank interest when any debt deal you do with them can be structured in a similar way with them receiving the interest.

What’s the worst that could happen? They say No?

Stay safe.

Impact Partner Content / Absa / by Janeal Haskins Head: Forex Sales and International Banking

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact and the widespread insistence that they were obvious in hindsight. The term was popularized by the book, The Black Swan, by Nassim Nicholas Taleb.

This term best describes the current constrained economic landscape and the myriad of disasters that we’ve had to navigate as South Africa. These catastrophic events have not made doing business any easier for many small, developed and struggling businesses over this period.

Since the first event of 2020, namely the COVID-19 pandemic, many businesses and households globally were impacted by the sudden onslaught of lockdown restrictions, health concerns, rising death tolls, national healthcare facility constraints, job losses, business closures and just all-round panic and chaos. Little did we know that this would only be the start of many more equivalent and unpredictable events. In 2021, South Africa had to deal with a sudden eruption of civil unrest countrywide, looting of already crippled businesses and impact to an already struggling economy, and if that wasn’t enough, KZN experienced the never-before-seen floods of devastation wreaking havoc after the looting that caused such mass destruction. Then the world wakes up to a full-on Russia/Ukraine war and the world tumbles again amid rising fuel prices, food and general shortages, The devastating effect of lives being lost as the rest of the world watches on in total despair and disbelief, and j to add to the gloomy state of these unforeseen and catastrophic events, Eskom exasperates the situation even further with the constant rollout of load shedding.

As many businesses await the geopolitical climate to shift, they’re spending less on capital goods, and not making any buying decisions.  Many are dealing with supply chain disruption caused by issues at harbours, increased cost and shortage in containers, harbours closed due to floods, and scarcity of goods because of lockdowns in countries such as China and Japan from which they are sourced. That is why, at Absa, we believe in partnership and will go beyond managing your cross-border trade requirements by acting as your trusted business partner. We will walk this unpredictable journey with you and help navigate the world of global uncertainty and help manage those supplier relationships affected by these challenges.

We recognize that your ability to compete in the international trade market depends on a bank that can provide sound expertise coupled with meaningful products and services. We have invested in resources and people who can provide advice on how exchange rate risk can be adequately managed and mitigated through various forex hedging solutions. In addition, we have a full range of fully domestic and cross-border-related products such as trade loans, that can help optimize your working capital by matching your financing needs to your trade cycle, allowing you to run your business effectively by bridging the gap between payment for import goods and receipt of funds through sales.

This specialist knowledge and understanding allows Absa to provide a unique service in supporting your international business in its entirety. For more information on these products and services, visit Internationalbankingservices@absa.co.za

Lioness Weekender spoke to the passion-driven Adanne Uche to learn more about what drives her in business and as an entrepreneur who is on a mission to promote the benefits of good health and nutritious food for all.

What does your company do?

We process, package, and distribute healthy food ingredients like spices, palm oil, crayfish, and seasoning blends for consumers in Nigeria, Africa, and the world, where African dishes are appreciated. We are providing healthier, affordable cooking ingredients that have zero preservatives, zero additives, 100% herbs, spices, and vegetables for a nutritious and delicious meal for all.

What inspired you to start your company?

In the Nigerian Open market, research has shown that there are a lot of unhealthy food practices and food adulteration thereby causing adverse health challenges, malnutrition and possibly death. Consumption of nutritious foods such as fish has remained static, consumption of vegetables and pulses has declined by 7%, and consumption of sugar-sweetened beverages has increased by 39%. In Nigeria, 5 of the top 10 risk factors that drive disability and death are related to diets. All these gaps in diet quality stemming from insufficient dietary intake to micronutrient deficiencies and to overconsumption point to critical flaws within the national food system.

Why should anyone use your service or product?

We are uniquely different because we not only sell products, but from time to time we also educate our consumers on the importance of healthy lifestyles and the many benefits of certain types of nutritious foods. We are tilting towards achieving the United Nations Sustainable Development Goals 2, 3, 8 and 12 to make for a more habitable environment.

Tell us a little about your team

We are a team of 5 formidable women. One who manages the affairs of the entire team. The operations assistant who ensures we are making a profit and keeping our books. One who ensures quality control in our business, and my humble self who is the control general (LOL) plus 3 Board of Advisors members who want to see us succeed. As Advisors, we have an IT consultant who helps with ensuring that our digital presence is top-notch, and a business development expert who advises and opens us up to opportunities for growth, and an Export and Image Expert who drives our move to enter the international market.

Share a little about your entrepreneurial journey. And do you come from an entrepreneurial background?

I am a graduate of Foreign Languages and Literature with no previous knowledge in entrepreneurship. I started my first business after the birth of my first daughter, but having no entrepreneurial skills it failed after two years. I started another business after a year, it still did not work, that is until I found something I really love doing and that is food, cooking and helping people especially in the kitchen department (lol). So, I thought to myself, what about cooking food that gives me joy/fulfillment and at the same time pays me a salary. So Ady’s Food Mart came to fruition with a N30,000 loan from my brother. I remember one of the days I cooked Afang soup with almost a liter of palm oil, my soup totally went bad. I decided to solve food adulteration problems starting with Palm Oil. With the N30,000/$62, I bought the first 3 gallons of Palm oil, sold them, and made huge gains, then I knew I was in business. It then grew to other food ingredients and a world of spices and seasoning blends, where we now process, package and distribute healthy spices to families in Nigeria, UK and we have just recently entered the US market. It has been a rollercoaster since then, but something I am confident in saying is that we have scaled to become a household name, having our products in over 22 supermarkets, and serving more than 1,000 families. Winning grants and forming partnerships.

What are your future plans and aspirations for your company?

Our vision is to be the preferred choice for healthy food ingredients and spice provider in Africa while promoting good health and nutritious food for all.

What gives you the most satisfaction being an entrepreneur?

What makes me wake up every day is the satisfaction and sense of accomplishment that I can help families improve on their nutrition and well-being, create jobs, and contribute my own quota to Nigeria’s GDP.

What’s the biggest piece of advice you can give to other women looking to start-up?

Find a problem, study solutions, look for someone that has done it before you, learn from them, run with it, and be resilient. Above all, ensure to add passion because that is the only motivation to get up and do it even when you do not have the strength to.

To learn more about Ady’s Agro Processing Limited, contact Adanne and her team via email:  info@adysagro.com or visit the company’s website and social media platforms:

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