The importance of building a business structure over the blind pursuit of capital by entrepreneurs and small business owners has been emphasised as the essence of capital is about building credibility, structure and strategic clarity.

At the SME Funding Conference organised by Covenant Capital, the enterprise and advisory arm of Covenant Nation, in Lagos, Board Chair, Lagos Angel Investors Network, Yemi Keri, highlighted that many entrepreneurs approach funding with misconceptions, believing that money alone will solve their growth challenges.

“Some of them do not need funding, they just believe that if I have this amount of money, I will be able to grow my business,” she said.She explained that in many cases, entrepreneurs could scale by reducing expenses or streamlining operations instead of seeking loans or equity financing.

Keri also stressed that there are multiple models of financing available, ranging from revenue-based financing to collateral-free loans from alternative banks. However, a significant number of entrepreneurs remain unaware or unprepared to access these opportunities. Keri said preparation is key for fundraising, stressing the need for credible business records, solid structure and proper incorporation.

“Your books and your records must be clean. Your financials must be there. You need to know your business. Even if you cannot afford QuickBooks or Sage, you can afford to write in Excel,” she advised.

She also urged founders to understand customer acquisition costs and be ready to justify operational decisions.

“If I ask you what the cost of acquiring a customer is, you should be able to tell me. You are selling your business, the value of your business, and who you are,” she added.

Executive Secretary of the Lagos State Employment Trust Fund (LSETF), Feyisayo Alayande, said other factors such as strategy, structure, and market understanding are challenges faced by SMEs, she however, noted that LSETF is actively creating job opportunities and providing loans at a competitive nine per cent interest rate without requiring collateral.

Chief Investment Officer, Catalyst Fund, Oluwatoyin Emmanuel-Olubake, addressed a key misconception among founders that equity investors are out to take over their businesses.