The subject of this story works with small businesses. But before this, he tried to build two businesses from the ground up. The first one landed him in debt. The second one ended with some more dire consequences: legal troubles and debt.



What’s your oldest memory of money?
When I was about to finish secondary school, my dad was laid off at his investment banking job. My mum was also a banker, but she had been laid off years earlier and had moved on to other things.

Do you remember how this changed things?
The driver was the first to go when my dad lost his job. My dad started saying things like, “Let’s find a bike to take you to school.” Then it became hard to afford rent. My parents were building a house already, and we moved in although a lot of work hadn’t been done. We slept on the floor for a while.

My dad never found another job, so it was all on my mum. And she managed it well because the lack wasn’t evident from the outside.

What was the first thing you ever did for money?
ASUU went on strike when I was in 100 level in 2009, and I returned home. Unfortunately, it was one of those long ones. After spending a couple months at home, I grew restless and wanted to do something. The house help had left, and my mum was looking to fill the position. I told her I’d do it, but we had to sign an agreement. I didn’t think she would take me seriously, but she asked me to draw up the terms. She was impressed with my proposition and agreed to pay me ₦10k every month for my work.

LMAO. You got paid for what most of us did for free?
Yup. After two months of doing this, they called off the strike. When I was returning to school, she added ₦20k to my ₦10k allowance and told me that was my salary for the months I worked for her. I was like, “Oh, I can make money from anything?”

In school, a final year student who was a friend needed money for his project. I decided to loan him ₦15k for a month at a 10% interest rate. I pitched it to him, and he agreed. He returned the money plus interest at the end of the month. I felt if I could do it for one person, I might as well do it for 10 people.

Another friend wanted to buy a phone. I loaned him ₦15k and jacked the interest to 15%. He also returned it on time. I decided to go all in. I turned my room into an office and started telling people that I operate a short-term loan business. Students always needed money, so the word started spreading.

Mad oh.
There was a challenge though.

What was that?
Answering the risk question. The chance of students defaulting on loans was very high. But I made everyone who wanted a loan submit the original copy of their school receipt, and I held on to it until they returned my money. My client base started to grow. Now I needed to figure out how to get more capital, so I started putting my monthly ₦10k allowance into the business. Omo, I drank garri ehn.

Haha. But it picked up?
Yes, more than I expected. My model was referral based, and I only dealt with people who were recommended by someone I knew and still had at least one year to spend in school. By 300 level, I’d built some structure and started paying myself ₦5k as salary every month.

Haha.
But I also knew it wouldn’t be sustainable in the long run, especially since I was running everything with my personal resources. I split the business into two and started funding students who had small businesses. I gave them working capital, and at the end of an agreed period of time, we split the profits.

How did it work out?
Great! Before the end of my third year, I had disbursed over ₦100k to people and small businesses. Because I was running two businesses, I brought in someone as my partner to monitor the small businesses and ensure that I got all my money back.

People were noticing what I was doing, and my clout shot through the roof. The rich kids on campus started hitting me up and going, “I have this ₦200k I’m not using. What can you do with it?” I started investing money for people and giving them their capital and returns at the end of the semester. I did that until I left uni in 2013.

Continue: https://www.zikoko.com/money/naira-life/the-nairalife-of-crippling-debt/