Starting a business later in life

Starting a business later in life

Even if retirement is still a world away from you, the time will eventually come when you will wind down your career and retire.  As retirement approaches, the question of what to do with all the time and money that would soon be at your disposal cannot be ignored.

Is it too late to follow your dreams? Can you survive a life different from the very structured one you have lived over the last few decades? What about rest, family and the jolly good time that should come after years of dedicated service? How long can you comfortably live on your retirement benefits? Several thoughts run through your mind.

While many find that they might not be able to pursue the dreams they had as youths, lots of retirees discover businesses they can do to keep busy and maintain an income stream. Regardless of your age or interests, opportunities abound for you to tap into post retirement. You might however want to tread cautiously as you are no longer as young and agile as you once were. Since you cannot risk losing your capital, your retirement benefits should be invested in a venture that is guaranteed to bring consistent returns. Low risk should be the watch-word.

Before you make that all-important decision of what business to venture into, consider the points highlighted below;

What lifestyle changes are you willing to take on?

There are certain lifestyle habits you have built over the years that might be hard to drop. Such should be considered in the choice of a business venture. If for instance your job is one that entails a lot of travel, would you be comfortable leading a business that keeps you in one place? Are you looking forward to relaxed mornings post retirement or would you rather a business that allows you keep up the early morning schedule you have run for years? Do you want a business that occupies you every day or one that allows you leisure and travel time as often as you desire? All these and more should inform your decision.

What does it cost to run your household?

Do you still have dependents or are you an empty-nester with only yourself and your spouse to look after? Whatever business venture you settle for must be one that can conveniently cater to your needs and your household’s. While you may not be able to maintain the same lifestyle you enjoyed while in service, the plunge shouldn’t be too deep. You and your family should still be able to enjoy your life together.

Do you have adequate capital for starting a business?

It is often unsafe to just assume what it will cost to start a business. It is wise to research extensively and make projections based on adequate information. You might find that you do not have enough to properly float the idea that has been dancing in your head. Perhaps you could consider another business line or a less costly but efficient way to execute the idea on your mind.

What about a Franchise?

Have you considered buying a franchise instead of starting afresh? A franchise allows you tap into the goodwill enjoyed by an already established business. It also eliminates the trouble, time requirement and cost of registration, building corporate culture and identity, etc. It could also guarantee that you have a ready market for your business. Buying a franchise can greatly reduce the risk you are exposed to.

Large or small scale?

Do you plan to launch out big or you just want something to keep body and soul together? While a shop in front of your house or even a home office might suffice for something targeted at subsistence, a larger scale business would require logistics such as location, staff, online presence, among others. It is good to pre-determine all these in relation to your health status and available resources.

Bringing it all together, a detailed financial plan is required to set off on the right foot and starting a business. A financial plan will clearly define the resources available to you vis-à-vis the resources you need, thus enabling you to make apt projections and draw up an actionable plan.

Let’s help you get things started, contact us today for a plan that is tailor made for you and investment opportunities you can explore.

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Source: Blog

POLICY AND REFORMS: Getting down to brass tacks

POLICY AND REFORMS: Getting down to brass tacks

Power Sector: On Pins and Needles

In H1 2017, though power generation improved from end of December by 20% to 4150MW, reflecting increase in gas supply to gas-fired power plants (+39% to 547mmscf/d), the sector continues to grapple with myriad of challenges that has resulted in financial distress for sector players.

Infrastructure challenges stemming from gas supply constraints as well as inadequate electricity transmission and distributions mechanism has hampered loss reduction by Discos, and inherent cash shortfall and deficit that has bewildered the sector. Pertinently, out of circa 14,000MW installed generation capacity, just about 31% has been dispatched on average in the last two years.

To start with, the Multi-Year Tariff Order (MYTO), a tariff model to set cost-reflective tariffs has failed to keep to its path. Basically, the MYTO provides a 15-year tariff path with limited reviews each year in the light of changes in certain parameters (inflation, interest rates, exchange rates and generation capacity) and major review every 5 years. However, despite significant spikes in key parameters, inflation and exchange rate, tariff has remained sticky and has thus driven significant accumulation of cash deficit across the value chain. To emphasize the magnitude of the deficit, our analysis indicates current tariff of N28.8/kWh is about 43% discount to our estimated current cost reflective tariff of N50.5/kWh.

According to NERC, between the period of February 2015 and December 2015, the tariff shortfall1 and market shortfall are estimated at N460billion ($1.4billion) and N470billion ($1.5billion) respectively. The foregoing has led to under-performance by the DisCos and the rest of the sector. Aggregate Technical and Commercial Collection Losses (ATC&C) as reported by the DisCos have increased to 54% in 2016 (2015: 52%), a 22pps variance from the 32% in the MYTO estimates.

Consequently, DisCos collection rate and DisCos settlement to NBET declined 4pps and 24pps to 57% (2015: 61%) and 29% (2015: 53%) respectively in 2016. Furthermore, the sector has had to grapple with the debt profile of Ministries, Department, and Agencies (MDAs) in aggregate. NERC estimates aggregate debt owed to the electricity industry by the MDAs at N65billion ($206million) as at end of 2016 which contributes about 7% of the accumulated cash deficit.

More so, currency concerns relating to debt repayment and expansion in debt have stifled profitability of power firms—largely due to currency mismatch and associated risks—from NGN denominated revenues to service a dollar-denominated loan facility. Total power sector loans following the sale of assets in 2013 stood at N219.7 billon (DisCos) and N287 billion (GenCos). However, the ~ 80% devaluation of the NGN from 2013 till date majorly expanded the debt profile by about one-fold—implying significant FX losses on financials.

Given the Economic and Recovery Growth Plan (ERGP), which recognizes the role of power to the development of all sectors of the economy, the FG sees power as one of its top priorities and aims to expand power sector infrastructure, increase power generation, address gas supply issues, optimize the existing installed capacity available for generation, and improve the commercial viability of the GenCos and DisCos.

On this basis, the FG just recently designed a recovery program for the power sector, which in our view, cause for some optimism given a better understanding of the challenges, in contrast to prior plans, as well as a greater political will to save the sector.

 

View full Nigeria Strategy Report here

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Source: Blog