The difference between a seed of orange and a grain of maize; A conversation with Bayo Adeyeye on the power of perception in finances

May we know you?

My name is Bayo Adeyeye.

Tell us more about Mr. Adeyeye.

I teach the savings culture and offer financial advisory services to businesses. First to fund their business through OPM (Other People’s Money) then to take bank financing if needed.

Do you do this in a business of your own or under the employ of another business?

I do this at Diamond Bank Nigeria Plc as an employee, but I volunteer to speak on other platforms too.

The savings culture seems to be missing in our society, to what would you attribute this? Poverty?

Absolutely not! On the contrary we have poverty because we lack the savings culture. Truth is, savings versus poverty can be likened to the tale of the hen and the egg, which came first? The egg must be hatched to get a hen but only a hen could have laid the egg. Most would argue that the fact that the per capita income is low, it becomes unreasonable to save, when you never belle-full. In fact economists define savings as the excess of income over expenditure: Y=I-C where Y=savings, I=income & C=consumption. From my experience, you are not going to save a penny if you believe that formula, the reason being that your consumption will most certainly catch up with your income and in fact overtake it in most cases. In which instance a deficit occurs, which is why many people go into debt. I decided to change the subject of the formula to be C=I-Y. the implication is that savings must precede consumption, that way it is achievable. The individual or household would determine what percentage of their income they want to save, it could be 5%, 10% or more, but 10% is usually most convenient and would still bring the desired result.

WOW! This is really an eye-opener for me personally, and it’s the kind of information that many don’t have.

Thanks my brother, however it takes strong determination to achieve it.

In a nutshell, what you are saying is that we are poor because we don’t save and not that we do not save because we are poor?

Yes it’s the point. A man who earns as low as N10,000 has a brighter chance for a secure future if they save a fraction of their income than a person who earns 100,000 but hopes to save a lump sum in future.

How do we inculcate this information in the younger generation? They seem worst hit with this bug.

The younger generation must be taught the theorem of delayed gratification; they must learn to wait to have the full value. The example I teach is quite simple. The difference between a seed of orange and a grain of maize; the maize is planted and it germinates after three days, it brings out a cob and it is harvested after three months and could be earlier with improved seeds and technology. But the seed of orange when planted does not germinate in the first week, it does not bring forth fruits in the first three months, not six months nor one year. It probably shows signs of fruition in the second year, then bears fruits in the third year, it also bears fruit in the 4^th, 5^th, 6^th, 10^th, 13^th,16^th, 20^th, 30^th, it continues to bear fruit every year.

Wow! Quite simple but powerful.

That is the power of delayed gratification, if we can show the youths this picture and can make them believe it, then it becomes possible to have the savings culture revived.

What advantages exist for a youth who saves over one who doesn’t?

The youth who saves will end up rich, it’s a matter of time, the one who doesn’t, will end up broke only in a matter of time. This is definite.

Talking about OPM what are some avenues through which a start up can access this funding option?

Let’s take a restaurant for instance, even a local restaurant. They can collect firewood and pay later, collect drinks from sales reps, meat from butchers and pay later. All these are examples of OPMs.

In our society today the biggest obstacle many people claim is a lack of capital, how do we change people’s mentality in terms of the way we view capital?

There are many means of raising capital, they are spelt out in elementary economics, but most people opt for bank financing. It is why most companies eventually fail. Personal savings, contribution, donation, borrowing from family and friends etc. other sources are sale of unused assets, invitation of business angels, partnerships etc.

Many of our young business people usually think of bank financing or government grants when thinking capital.

Truth, but those are last resorts.

So instead of waiting for mega bucks, we should focus on proving workability of our business ideas on meager resources right?

You are on point.

I also get to see a lot of businesses that make a lot of money, but find it difficult to meet obligations and even go out of business. What factors are responsible for this irony?

Most businesses are unprepared for growth they encounter, they begin to confuse turnover for profit. They see a good cash flow and change their lifestyle. They change their cars, build a new house in a hurry, spending their capital in the belief that it is profit. It’s the beginning of failure.

What is the antidote to this syndrome? At what point is it right to take money out of my business?

Proper bookkeeping. Many businesses do not keep their books. Sales must be tracked, purchases must be recorded and expenditures must be noted too. There is need for high level discipline to resist the urge to spend from the company’s till. Instead the business owner should assume a wage/salary for his/herself & learn to spend that. Periodic review of the books should help to tell if the business is doing well or not. That way the warning signals(red flags) would be spotted early enough and tackled.

Do I need a degree in accounting, ACCA, ICAN or ANAN to be able to keep proper books for my small business?

No please! A basic training would do. There are several outfits that offer one week training in accounting or bookkeeping and the knowledge acquired would be sufficient to start the process.

What is the most important skill for an aspiring entrepreneur?

Character is the simple most important trait that an aspiring entrepreneur must have. It is why the enterprise would succeed or fail.

What is the place of mentoring in societal development?

It is sacrosanct! It offers the mentee an opportunity to unlearn the wrong things and learn the right things by borrowing from the experience of a mentor.

Can we say poor mentorship is responsible for where we are compared with where we ought to be?

Lack of mentorship slows down the pace of development. The mentor would have helped the mentee go through the teething period with fewer mistakes. The implication therefore is that, without a mentor chances are that the mentee would make same mistakes as were made by people in the past, that is not wisdom.

Thanks a lot sir.

My pleasure brother.