Welcome to another week of financial learning. We will be discussing one of the major talking points for many entrepreneurs in Ghana today, which is capital.

The Business Dictionary defines Entrepreneurship as the “the capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit.

It goes on to explain that the most obvious example of entrepreneurship is the starting of new businesses.”.

From this operational definition, we see four key factors worthy of discussion as we find out how entrepreneurs can solve the capital headache.


The desire to start a business on your own first of all comes with your capacity and willingness to withstand whatever reaction that comes your way.

Your ability to create a business plan alone is not a panacea for business success. You need to establish the capacity to do the work which includes capital and the needed know-how.

I find many graduate from the University who have brilliant business ideas.

However, many of them lack CAPACITY!! In most cases, when you decide to probe further with regards to their business plan, what you will find is not really a lack of capital but the needed skills.


The next factor that is needed for the success of any business is how well one can bring all the factors of production i.e land, labor, and capital.

Entrepreneurs become the linkage between the aforementioned factors.

Successful entrepreneurs know to effectively manage the goals of staff in line with that of the organization.

They work so hard when they want fresh capital either through business partners or financial institutions.


This is perhaps the factor that scares many people away from Entrepreneurship.

In my earlier write, I gave the example of Com Mirza of Mirza Holding.

He started and failed in his first eight businesses. He only succeeded with his ninth attempt.

In his book, he mentioned that he stopped blaming the government policies, environmental factors, family etc and took responsibility for the failures.

He then learned lessons from all the eight failures and now runs a business of over 600 employees.

Starting a business is a huge risk. There are only two possible outcomes.

Your business either succeeds or fails. With technology and research materials available, entrepreneurs of today have an array of experiences to learn from so similar mistakes are not repeated.


The reason why an Entrepreneur will sleep late at night and wake up very early in the morning should be about Profit.

The bottom line of a good business idea is all about making a profit.

This mindset, therefore, drives your promotional campaign, pricing, product, etc. Profitability does not happen by chance.

Entrepreneurs need to work at it consistently.

With Entrepreneurship explained, I want to zoom to my focus for today. CAPITAL!

Angel Investment networks explains “start-up capital is the money that is required to start up a new business.

Start-up capital can be raised in several ways, from using your own money to invest in your business venture, to borrowing money from a bank or using third party investment to help you get your business running.

Sometimes start-up capital is also referred to as ‘seed capital’.

Capital is a major concern for almost every entrepreneur in Ghana.

For young entrepreneurs, it is about getting money to establish their business plan from scratch.

Experienced Entrepreneurs also need capital to expand their business or operation. Others also need capital to diversify their business.

Capital can also be used to revive a dying business.

All in all, capital can be said to be the bloodline of every business.

Why is it, therefore, difficult to get capital if the above reasons are tangible?

In my little experience, Entrepreneurs struggle in getting capital due to the following reasons;

  1. Lack of Savings Pattern
  2. Financial Mismanagement and Indiscipline
  3. Improper succession planning
  4. Poor organization structure
  5. Sins of older Entrepreneurs

Entrepreneurship as defined above comes with capacity and willingness.

The capital needed for your business should be the shared responsibility of you and others.

No matter how solid your business idea is if you do not come to the negotiation table with something in your hand, others buying into your idea becomes very difficult.

Capital for entrepreneurs is mostly through their own savings and investments, partnership funds, support from financial institutions and crowdfunding.

The first three form the situation in Ghana.

As an entrepreneur or someone who has plans of starting his own business, you need to remember that your initial quota to the capital needed for the business should not be less than 30%.

The question now becomes, how do I get the 30% when I just completed the University?

If you plan to start a business after the University then you have to start preparing early. That includes how you save pocket money on campus, little buying and selling on and off campus to raise funds, etc.

Folding your arms waiting for some magical capital after school will not work.

You need to push yourself now for the glory tomorrow.

Alternatively, you can strive to get employment in the meantime to raise your quota of the capital.

That offers you experiences that will be needed in the business.

In the definition of entrepreneurship, we mentioned organization and management.

The best acquisition avenue is when you work for others.

Beyond your personal savings, one may also need an external top-up.

The second avenue will be through partnerships and investors.

Entrepreneurs who are looking to get their business started by attracting investors it is important to have a clear understanding as to how much money you require to launch your business.

Knowing how much is needed will tell you the kind of partnerships you need to enter into.

Partners will come on board based on how lucrative the business plan is.

As investors will want a clear picture of how you are going to spend their money, you must spend a lot of time ensuring that the preparatory stage is defined proficiently.

These partners can be friends, work colleagues, senior business associates, etc.

I will advise you to do full disclosure of your business plan if and only if trust.

I have seen and heard of potential business partners “stealing” business ideas even before the partnership contracts were signed.

Every agreement should be discussed and signed on paper before actions.

Profits are normally shared in the same ratio as capital provided.

The thirdly and perhaps very difficult source of capital for young entrepreneurs is the financial institutions.

Let me start by saying that, financial institutions act as an intermediary between those who have excess funds(depositors) and those who need those excess funds(the creditor).

Financial institutions, therefore, take deposits from customers who want safe havens for their funds.

They sometimes depositors the safety of their funds in addition to compensation for how long they keep the funds with them in the form of interest.

Financial institutions will then go out to look for credible customers who also need the excess funds for their business.

Based on trust, they give out them a part of the depositor’s money to these credible customers.

Again, an agreement is reached between the two parties to make payment at an agreed date or dates.

A delay in the payment of the money to the creditor has an impact on the ability of the financial institution to meet the earlier promise of safety to the depositor.

Based on the aforementioned narrative, financial institutions will always want to be convinced beyond a reasonable doubt that the business they are about to finance can pay back the money.

The factors they look at to determine this surety stems from a history of the business i.e credit history and cash flow, the capacity of the business and fall back security in case projections are not met.

Most entrepreneurs meet the capacity and collateral factors.

However, they have no credit or business history. Thus, most banks turn them away. This is a delicate situation.

On one hand, the entrepreneurs need the start-up capital to grow and expand.

On the other hand, the financial institutions are scared to lend to someone without any history or ability to verify their character.

Some government agencies seek to support young entrepreneurs with capital and skill development.

It is a good step! However, the complains I get from these young entrepreneurs is that the availed money to them is very small and inadequate.

Half a loaf is better than none. We need to learn how to always come to the business discussion with our own form of capital through financial discipline and savings culture.

All successful businessmen knew when to save a portion of their profits for future capital injection. Do not spend all your profit today and run to banks tomorrow for capital support.

Reinvest your profit into the business.

I wish everyone a wonderful and memorable week!


Patrick Baah is a chartered banker with over 5 years experience in main stream banking having worked in various capacities. He is currently at the Branch Manager Position of his institution. He has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013. He also holds EMBA and BA from Kwame Nkrumah University of Science, Technology, and the University of Ghana respectively. Patrick is the originator of the daily epistle dubbed “Savings Tip of the Day” which has been running for over a year on WhatsApp and Facebook. Patrick has also been teaching on the Topics Savings, Investment and Financial Independence for over 2 years and a research fellow for ILAPI Ghana. He runs a financial channel on Youtube by name “Patrick TV Gh” and has appeared a couple of times on the business segment of TV3 News 360. Patrick is into youth facilitation and counselling. I can be contacted via baasco2006@gmail.com and or 0243984492.


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