Finance, the KEY component to starting a business?

In Robert Kiyosaki's words: "There are three components to starting a business. One is the right plan; two is the right team and three is the money. Rarely do these three components come together when starting a business. It's the dusty of an entrepreneur to grab one piece and start the business, the remaining two pieces will be found along the way. Finding the two components may take a year or more than 10 years; the point is start with what you have"

While some might argue that Robert is right, I wonder if his ideas are practicable and attainable, particularly in an ambiance such as ours. In this our "obodo naija"can you actually start a business with just a good plan and without money? Or can you start with a good plan, the right team but without the necessary start-up funds?

A good plan explains key components of your business; the overview or summary, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information. the primary purpose of a business plan is to define what the business is or what it intends to be over time. Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement.

Jon Elvekrog, the CEO of 140 Proof, alludes that "forming the right team is the universal first step to building a sustainable company. You succeed or fail not on the strength of your product, but on the strength of your team. Venture Capitals fund teams, not business plans, as they know these plans can change every day as market conditions change and new opportunities present themselves..."

Finance is an integral part of starting a business if risks are to be kept at the barest minimum. I don't even need to ask my Ibo buddies who are traders what the importance of finance is in starting a business; If I did, I would definitely be the joke of the day.

So what then is the most critical component of a start-up? Is it money, the right team or a brilliant and convincing plan? There is no doubt whatsoever that the three are extremely important but just like George Orwell's famous Animal Farm quote which says "All animals are equal but some are more equal than others", maybe one component might just be crucial than the others.

Forget all those business books and their strategies, in Nigeria you have to have finance source before starting a business. Even my Nigerian MIT business buddies agree that given our socio-economic setting, one is naturally led to believe that with money you can gain access to almost any other important resource.

The big question then becomes; how does a young entrepreneur gain access to finance? From my experience, I am aware that one key challenge of young agro-entrepreneurs is accessibility to finance.

Peter is a young graduate who wants to start a fish farm. To start, he needs to buy a piece of land, acquire fingerlings from the right source, buy the right feed ingredients, employ labourers to build a pond, employ capable personnel to monitor growth and development and ensure proper sanitation. A lot of needs need to be met. Problem is, Peter's meagre savings is just enough to purchase the fingerlings necessary to start and nothing more. He turns to friends and family for support but nothing is forthcoming; times are hard they say. He hears about Venture Capitals and Business Angels and his spirit becomes lifted. He makes a long list of prospective investors and with a good business plan in hand he visits their offices. Sadly, Investors in Nigeria aren't particularly interested in start-up ventures. They say they are but in reality, they'd rather stake their worth with public traded securities, companies that have already reached certain milestones.

Finally exasperated, Peter sees a job opening online and applies, he gets the Job and his aspiration has a new focus.

Peter's story is one that is all too common in the Nigerian context. While the Nigerian government has contributed immensely towards providing finance in forms of grants and loans, not every individual can access these schemes (that's a discussion for some other time).

So I ask, why are our investors reluctant to fund start-up ideas? Granted, there is a lack of experience in most young prospective entrepreneurs but one has to start somewhere.

Personally I would love to see our country grow to a point where budding entrepreneurs can secure access to possible investment in forms of equity. After all, a quarter of an elephant is bigger than a whole chicken.

Do you think finance is the most crucial component in a start-up? Or are you of the opinion that one can start with just a right team or a good plan. 

Your views are welcome.