2022

2020 Honda CR-V. Black Edition. Full Option. Tear-rubber, as they call it. I wasn’t even driving that fast on the motorway. Well, it is the motorway after all but I was driving at about 50mph. Not sure how or why it happened; all I heard was a big bang and my rear mirror was smashed to pieces. The boot and bumper were damaged and in one blink, the value of the car probably got cut in half. This was about a year ago. And no I hadn’t got around to comprehensive insurance. It’s one of those things I assigned to one of my staff and ended up costing me the proverbial arm and a leg. With the proper insurance cover, I would have spent far far less getting Bambi back into shape. Yes, I named the car Bambi. That’s how much I loved it. LIFE is uncertain. The business environment is just as uncertain; anything can be expected at any stage. So, it’s your choice to remain exposed to the many risks that exist or provide yourself with some cover via insurance. Insurance is designed to provide cover for anything that can go wrong. However, you have to pay a certain premium to get coverage. The idea of insurance is based on the probability of happening. If the risk of incidence is higher, you are expected to pay a higher premium and vice versa. For instance, if you are getting insurance coverage on your car, the premium to be paid is different if the car is of higher value and different if the car is valued lower. In some cases, the premium to be paid is different if the car is parked inside your home and different if the car is parked outside your home. The concept is simple, the probability of an incident with your car parked outside is more than with your car parked inside your home. Hence, there is a difference in premium. Overall, if you are covered in the insurance, you write off (purchase) policy, pay a premium, and get a promise to be compensated if anything goes wrong within the covered area. What’s covered in the insurance? Insurance companies cover a range of risks, including your life to loss of the asset. Generally, risk coverage includes health, life, disability, chronic illness, hospitalization, medical care, property damage, loss on business assets, long-term care, child plans, auto insurance, and anything covered in the insurance policy. Basically, it gives you peace of mind in terms of survival and continuity, of you yourself and your business. Although insurance is a cost, it saves you from a greater loss like in my case with Bambi. Hence, insurance comes with various advantages. Advantages of insurance coverage Advantages of insurance include but are not limited to the following. Disadvantages of insurance coverage Disadvantages of insurance include the following. How do insurance companies make money? An insurance policy provides cover for the potential of the loss in exchange for the premium. The company collects premium (revenue) from multiple clients. It means they have massive credit (incoming) of the revenue against the promise to pay the claim (compensation) if anything goes wrong in the covered insurance area.  However, not all policies receive a claim. In fact, 90% of the life insurance policies cost nothing to the companies against the premium received as these policies get lapse (Scott, 2012). When you fail to pay your insurance premiums on time or after the grace period, the benefits to the policyholder gets terminated, or in technical terms, gets “lapsed”. Furthermore, the premium is collected by the insurance companies from time to time. So, they invest the same in equity and debt instruments to earn a return on the investment. That’s an additional source of income for insurance companies.  Overall, there are three types of cash inflows for insurance companies. These cash flows include the income for policy write-off, the periodic premium for the cover, and the return generated on the investment. The insurance claims and administrative expenses are paid from the revenue, and the remaining amount is just profit for the insurance companies.  Statistics show that 2020 was a blessing for insurance companies selling auto insurance. Their profit during the year amounted to $30 billion globally (Consumerfed, 2021). This was due to pandemic related measures taken by Governments that led to a significant drop in traffic and claims for motor accidents.  Somehow, there was a surprising increase in the profit of health insurance companies during the pandemic as well. Health insurance companies made almost twice as much profit in 2020 than the year before. Shocking, right? It was due to a sharp decline in elective care during the pandemic that led to a sharp decline in health care expenditure (Caroline F. Plott, Allen B. Kachalia, & Joshua M. Sharfstein, 2020). Simply put, imagine you paid healthcare premiums but due to the immense pressure on healthcare systems from the pandemic, you did not have access to healthcare including hospitals, emergency services and medical physicians. This means the insurance companies got fewer claims and therefore made massive profits. Is insurance all about big businesses and wealthy individuals? It is a myth that insurance is all about big businesses and wealthy individuals. That is just not true; in fact, microinsurance is all about low risk, low premiums, and low amounts of claims (KAGAN, 2021). So, it’s about coverage of risk for low-income people. The risk may fall in the areas of injury, illness, death, and damage to low-valued assets.  The basic working mechanism for microinsurance is the same as main insurance. However, the difference lies in areas of the risk volume. So, the microinsurance companies target low-income households and businesses with a low footing of assets. Hence, it’s a promissory tool of protection for the people with a lower source of income. However, people’s lower subscription of the voluntary cover has been shedding doubts on the viability of microinsurance being an effective tool to manage the risk. (Dror, 2014) The main aspects of the doubts root

“A people will grow when their elders start planting trees whose shade they will never enjoy” some old saying goes something like that. The word “Sustainability” could refer to the ability of an organization, a business, a person, a people, to continue over a longer period. It’s highly relevant in the context of setting strategic policies within the immediate setting, choosing operational priorities and ensuring a balance between economic, social, and environmental aspects of the entity. The word “Sustainability” could also mean not to compromise on social and environmental aspects to make a profit and financial fortune alone/only. This can be done by when the entity includes ”Strategic Balance” as a priority in the decision-making process. “Strategic Balance” in this sense means to take care of economic, social, and environmental aspects of the everyday activities of the entity.  This article will briefly touch on different sustainability models, an African perspective and investors’ influence in setting positive sustainability development choices. These choices should lie in areas of highest resource utilization with enhanced ability to recycle/reuse the products, or process before sale. These choices should also be about rethinking how to bring a social and environmentally friendly change. And one of the options can be to gain this strategic competence via a circular economy. Circular economy – this economy is about using resources to add continuous value. Product/waste is not thrown away but used repeatedly to protect the environment. Sustainability models  The universal concept of sustainability is linked with the three aspects of human evolution. These aspects are: Economic sustainability Economic sustainability refers to the effective utilization of financial resources. It’s about profitable operations. Without earning profits, a business, an organization, a country, is not expected to survive in the long-term. So our institutions need to remain profitable. For instance, phones are not recycled in the environment when we are done with them which leads to economic loss. This loss is globally estimated to be $4.5 Trillion. (weforum, n.d.) As per the report from United Nations Populations funds, there are over 200 million people between the age of 15 and 24 years in Africa. Further, demographic trends suggest that this strength is expected to be double in the next 25 years (weforum, n.d.). This demographic strength of the continent can be used to earn profit in terms of strong, competent workers and strategic competence to earn a financial fortune. Actually, the youth can be an exceptional resource if certain things are controlled and directed in that specific direction. In addition, Africa’s largely entrepreneurial youth are expected to benefit from the African Continent Free Trade Agreement, a revolutionary step to promote trade and bring financial prosperity to the region as this agreement comes with the potential to unlock a market of 1.3 billion people. All these show that the African region is of higher expectations in terms of product innovation and market creation. (UNDP, n.d.) Social sustainability Implementation of Corporate Social Responsibility (CSR) has become one of the core strategic competencies worldwide. There is increasing awareness of social sustainability among entrepreneurs and business policymakers. It is important to note that social consideration in the business has massive potential to impact its stakeholder relations. For instance, operational aspects of a business’ performance include but are not limited to fair labour practices, health and safety of the staff, work-life balance, quality, empowerment, volunteerism, community engagement, philanthropy, human rights and living standards. From an African perspective, the region’s culture is diverse and vibrant with a rich heritage and increasing economy that increasingly supports the culture of business and trade. However, overall productivity is limited because of the region’s enduring poverty and social inequality. This leads to the underutilization of natural resources like agricultural land and resource degradation (ISPI, n.d.). Hence, a strict approach to bring social reforms and connect society is expected to bring massive profits and prosperity for the region.  Environmental/ecological sustainability As per reports from United Nations Environment Protection Agency, if 10,000 tonnes of goods are put in the land, six jobs are created, recycling creates 36 jobs, and reuse is expected to create 296 jobs. Hence, steps taken to recycle a massive quantity of goods can be a welcoming aspect from an economic and environmental point of view. (weforum, n.d.) Suppose goods are reused in the economy in the form of recycling. In that case, such an economy is termed a circular economy, and it’s expected to protect organic life on the planet. There has been an increasing awareness in terms of protecting the environment with green efforts. For instance, recently, giant organizations and companies like UNICEF and giant telecommunication companies have called for innovative ideas to bring green innovation in the region. (Forbes, n.d.) Interconnection of “Sustainability” to “Development” and “Model” Today, we live in a dynamic world where consumers better understand the products and services. So, consumers have a clear preference for selecting business partners that take care of the environment. A recent survey conducted by Harvard Business Review reveals that 65% of consumers want to purchase products from companies that take account of social and ecological sustainability (HBR, n.d.).  This is the reason that companies have been advertising their sustainability efforts to their target customers. So, if the company is well known to comply with social and environmental aspects, more and more customers are expected to do business with them. Hence, it’s highly logical to expect enhanced market share, customer loyalty, and higher turnover from organisations that adopt sustainable business policies and models. (HBR, n.d.) Business Model and Sustainability perspective The business model (BM) is a formal description of organizational activities that are used to generate and deliver value for the stakeholders. BM is considered an essential document used in pitching your business idea to raise finance. However, it’s important to note that the business model is not complete without comprehensive aspects of sustainability. It’s because investors prefer to invest in an idea committed to society’s social and environmental aspects.  Further studies have proven that environmental and social values in one’s business model have massive potential to add value and enhance

Obtaining a second source of income all starts with an idea, one of the most potent forms of power that exists. I learnt from a TED-Ed that “power is the ability to have others do what you would have them do”. Is that not what all businesspeople want: the ability to make others buy what they want them to buy? How do we achieve that? How do we get the power to make people purchase our services and products? Getting the business community to take actions in your favour can happen in a variety of ways. Here are some examples in line with the 6 forms of power that exists: What you need, is a strong idea. I asked my team at Maxwell Investments Group (MIG) what their version of a strong business idea for passive income is. Dr Abigail T. D. Anyomi, President of MIG, wrote on our group platform, and I quote: “As the days go by, it becomes increasingly clear that having one source of income is highly insufficient to survive in today’s economic climate. Regular 9 to 5 jobs are simply not going to cut it if you want to live a comfortable life, not to even mention a luxurious one. The second source of income is not a second job. Passive income, which is when your money is basically working for you without you necessarily having to move a muscle, is the way to go to achieve financial freedom. And the more streams you have, the more money you earn and the more freedom you will have to live your dreams, be it a vacation to the Caribbean or a weekend away at a luxury hotel.” So, how do you get started on having another income stream? What avenues can we explore? The aim is to fully maximise and utilise the resources available to you. Here are some pointers to consider when determining what should qualify as a second source of income.  The best side-hustles almost always becomes the new 9 to 5, only that you start working 24hours on it because you begin to enjoy yourself. That is why it is important to ideate properly. It is important to sift through the many ideas that flood in and execute the one that has the highest chance of success, to choose a strong business idea. Rya G. Kuewor, the CEO of The RIO Corporation, also wrote on our MIG group platform, and I quote:  “The answer isn’t predominantly straightforward, unfortunately. More often than not, an idea, especially a business or a technological one, for instance, is only as good as its patronisers.  We can colour the grey areas by understanding that Facebook’s (or Meta’s) idea of connecting people would never have worked if the people had no desires of being connected to each other, or understanding that Adinkra Pie would not have been successful if Ghanaians had immovable resolutions about eating breakfast they hadn’t made themselves.  Knowing this, we can surmise that a good idea needs to be well-timed, culture or context-appropriate, simple enough that it does not feel like a chore, and appealing enough that it isn’t boring. We can use this formula and practice having more good ideas”. So now we need a strong business idea. What makes a business idea “strong”? The strength of the business idea is a prime factor in attracting business investors. It’s about pitching to them how strong your business model is and how you can multiply their investment. In this article, I’ll discuss different aspects of a business idea that make it attractive for investors. These aspects include but are not limited to market size, market share, unique selling proposition, background compatibility, innovation, adequate strategic position, scalability, strong problem statement, your strategic capability, understanding of market dynamics, product position, etc.  Let’s understand the details of these aspects. Market size and market share The market size refers to the total size of transactions taking place for the product in your target market. It’s simple science; if your market size of the product is larger, you will be able to earn higher revenue and vice versa.  On the other hand, market share refers to the proportion owned by different companies in the market. Sometimes market share is fragmented, which means different companies are selling the same product as you intend to. Likewise, if market share is concentrated, it means few companies are the main players in the market. Investors prefer to invest in a market with a larger market size. It’s because of the fact that there is more potential to earn revenue/profit within larger markets. Sometimes, operational feasibility is attached to market size. For instance, if the market size is larger, the business will be able to achieve economies of scale and lead to higher profitability. Economies of scale – It’s a concept that if you produce in bulk, you will produce at a lower price. That’s because the fixed cost is split among a higher number of units, and volume discount can be claimed on the purchase of material, labour, etc. An alternate strategy can be to look for a growing market. In fact, it’s comparatively easier to capture market share as new customers are buying new products. Unique selling proposition – (USP) A unique selling proposition means why customers should buy your product. Does your product offer something different from your competitor? Investors are always looking to invest in products that offer something different. In fact, USP is one of the favourite areas of any investor, and they are always looking to invest in a business that offers something unique to the customers. Background compatibility Investors like to check your background compatibility with the business idea. It helps them in understanding your capability to run the business. For instance, if you have a degree in medical science and your business idea is about medicines, investors are more likely to invest in your business idea. It’s because of the trust in your competence and ability to run the business