Mr Emmanuel Tarfa addressing a section of participants at the workshop
A business consultant, Mr Emmanuel Tarfa, has stated that for there to be a meaningful boost in health care financing in Nigeria, there is need to re-orientate health entrepreneurs on new and progressive methods of business management.
Tarfa, who was addressing a group of health practitioners on the topic, “Health care Entrepreneurship: Business Financing and Cash Management”, in a recent workshop organised by Pharmanews Limited in Lagos, highlighted some reasons health-related businesses encounter difficulties in accessing loans. These, according to him, include: too many bad examples, poor communication of business pitches, key-man risk, lack of business traction, among several others.
Explaining business financing, the business expert said it is a means of sourcing capital to fund a business start-up, operation or expansion, which could be done through debt or equity, depending on which seems handier at the specific time.
To achieve the goal of funding their businesses, the consultant counselled practitioners to build a team of people who have faith in their visions and who can lend support at any time to the business. He equally advised them to acquire knowledge and skills in their area of concentration, as well as get professional assistance in drawing up clear-cut business plans.
“Raising money is a difficult task and sometimes a very long process. You must be patient with your prospects and display that calmness always”, Tarfa explained.
The workshop facilitator also urged health entrepreneurs to always resolve a fundamental issue of whether a loan is needed or not before embarking on the acquisition of such fund. This, he said would help to forestall future challenges.
“Cogent indications that a business needs funding include: one, when you have identified a clear opportunity and have the business case to back it up, especially for start-ups; and two, when an existing business cannot meet demands and when a business is undercapitalised and could acquire more market share, if given more money”, Tarfa stated.
On the necessity of a solid business plan, Tarfa noted that the idea, concept or actual business must have a clear value proposition, a target audience and a clear connection between the entity and audience.
According to the expert, other prerequisites in establishing and managing an enterprise effectively include: “knowing the difference between the market and industry and determining intricacies of both; identification of size, growth, structure, consumer trends; having a detailed list of risks and plans on how to deal with such threats; as well as knowledge of capital requirement (the projection of financial statement – income, cash flow and balance sheet).”
Tarfa equally dwelt on the issue of cash management, defining it as a broad area of finance involving the collection, handling, and usage of cash. He explained that businesses could keep cash for speculative or compensation motives.
Clarifying further, he said that by speculative motive, an enterprise may want to take advantage of an opportunity, outside the normal course of business; while compensation motive involves compensating banks for providing certain services or loans.
He added that whatever may be the reason for a business to be in possession of cash, it must maintain a minimum balance of cash at the bank which it cannot readily use.