Businesses across the globe are often times plagued with the hard decisions bordering on expansion, customer’s passion and avoiding financial stagnation. These decisions for business owners in entertainment may be more profound as issues other than running cost and meeting deliverables compete with showing up, showbiz and looking good to negatively impact bottom lines of entertainers. This source of worry necessitated the maiden edition of a roundtable discussion to educate the Women in Nigeria’s Entertainment Industry (WINE) by First Bank Nigeria Limited ADESOLA AFOLABI brings excerpts from roundtable where Ibukun Abiodun Awosika, chairman of First Bank and Omotola Jalade- Ekeinde fielded questions from participants.
I am a film producer from Toron- to, Canada and I face a lot of the challenges you face here as well. I can hardly track my profit and I will like to know, how can I build my savings with a fluctuating income, and an income that is not regular?
Awosika: First is through records. The only reason you don’t see how much profit you make from what you earn is that you never put your entire income and your expenses down. Once you are spending as you are receiving in trickles, everything is standing alone and you will never know what you are worth. That is why every human being is a millionaire, but many die penniless. 90 percent of the wealth of the world is owned by one percent of the population. Because when every other person in spending, that one percent has a system to trap it. How do you determine what is available to you to spend if you are not fully aware on what you earn. If you have a certain amount that comes in from a job, you can estimate for how long you may need to wait till the next job comes along. The income you have earned can now be shared across the time you have to wait till the next job comes along. If you divide the income across time and realise the value per time is not enough for you, then you should know that everything you want to do is not everything you can afford to do. If I have only two pairs of shoes I will wear them well and I will not be ashamed, because I don’t seek to impress anybody. I know what I want but I know I cannot afford
it yet. For me, it wasn’t easy to deprive myself, I could afford a car in quantum of cash, but in terms of my visions and ambitions, in order to accomplish my dreams and aspirations, which was to build my factory, because I had no access to loans at the time and season I was building my factory.
I had to internally generate money from my business.
Even if you have all the money in the world, if you have not developed the habits of living within certain rules, you will still go broke. This is why footballers, basket ballers and athletes earn and accumulate millions of dollars but still go broke, few years after they retire.
Whatever it is, plan for what you can see, don’t plan on what you are expecting.
Once you find that discipline, when the excess comes you will be able to manage it better and because your earnings are cyclical it is absolutely important that whatever you earn you split it over an expected time. So it is really facing the reality of what you earn. A time will come when you will have more than enough. This is when you have molded your block and sand can be made available to you.
I started as a businesswoman, and I’ve grown in the industry. Having saved and accumulated wealth for over 12- 15 years, which I have used in further growing my business. I then needed to do something big but I didn’t get the support of my bank because of reasons bordering on knowing guarantors.
Awosika: I apologise for what you have had to go through with any of our officers, but I am sure with the kind of track record you say you have, speaking to any of our officials from the bank on is a walk through.
I run a dance company and other things around entertainment and dance, and a lot of funds come through. Although I will like to expand, I can’t save from my profit because there is always a great idea to plunge money for expansion. Trying to know how to make my profit work for me without worrying about chasing my tail is a huge challenge.
Awosika: There are two things here, you are creative people, but you are also creative entrepreneurs. You must learn that you are two separate entities and if your company goes broke, you as a person shouldn’t necessarily go broke. Whatever income you are earning as a business must fix a sustainable salary for you.
That salary must be one that the business can afford not the salary that you feel you need for your lifestyle. So you can decide to have a personal savings plan from your own income.
For the business in itself, there is a point where you can overgrow and stretch the business into inefficiency. So if you are doing two, three things and they are giving you a margin of about 30-50 percent, and an idea comes up, just because you can implement this idea doesn’t make it a good business.
Sometimes it is because you are using assets you already have to have an increased income, but you must first understand the value of money and determine if taking what the returns on investment is. You must learn to grow in stages because businesses can be starved of cash much needed in areas that will return with the highest profit if a proper allocation is not carried out.
In a multi-segment business, you must determine the profitability on each segment of the work you do. This will help determine the assets you throw at it and the returns you get eventually. Some ideas that look good are not extremely profitable.
How can you save and still be able to maintain that lifestyle of a celebrity?
Most of us are investors and creative minds and one thing is synonymous with us all, we live the life. Cutting down on some certain expenses is like cutting out our skin. But speaking personally, a lot of people notice I don’t go out much, the realistic reason is that I can’t afford it. I can’t afford the time. I can afford the expenses. I can’t buy a dress for an event knowing I can only wear it once. For showing up at any public gathering, we have to hire a stylist, get makeup done and a lot of other things. When an actor appears and we ask to pay for appearance, these are the reasons. But the way you can make that valuable as an actor is not to appear in too many places.
Nevertheless, savings and investments have been a struggle and we need something especially for the creative industry because it is a complex business and practicalising savings is complex in our industry. When others are strug- gling with just paying bills. We are struggling with paying bills and showing up.
Awosika: Remember Princess Kate Middleton, before her, prin- cesses don’t wear clothes twice. But Kate came on the scene with self-confidence and self-assured goals and decided first that, high street was good enough. It did not have to be couture, and second, it was okay to wear it more than once. Find yourself in a way that you are self-assured and comfortable in your own skin. Don’t forget what your long-term goals are. Don’t let others define you. If my car breaks down on the road, I will get down and I will walk. I know it’s tough and it’s difficult when people consistently judge you but if you impress them and end up broke they will still laugh at you. So, let them laugh at you while you build your wealth. But when you get to the point when your block has been moulded you will buy one clothe per day and nobody will be able to stop you. Have a heart for a season and a time, define the odds and expectations of your goal and do what you need to do for you and not for anybody else.
I started a shoestring budget as an entrepreneur with my husband and I understand savings and being able to grow my business significantly, but I want to grow personal wealth, if I take up the first gem, when I grow my money what will first gem do with it for me?
Awosika: Personal wealth is for you to make a deliberate effort to save for yourself. The benefit of FirstGEM is that when you have a project you need to raise additional funds for, after that project on its own has been appraised, the good thing about your savings is that it can stand as an equity in your business. As you save it builds credibility for that business, because it shows you have a skill in the bone, and your approach to financials for funding support ends up being a win-win situation.
Having, separated your business from personal savings, you can decide to bring equity into your business from your personal savings. The money you save is your strategic investment. When a business wants to grow people start from zero but when the business makes income, save a percent of it so that it gives you a starting pool of capital when you want to expand, this the bank can now support.