Real Estate Investment in Nigeria

I would like to welcome the readers of this column to 2010 officially. I know that it is a little belated but then courtesy demands that I say happy, new, year in arrears. I want to believe that you have started to have a bite of the year already; seeing that the first month is virtually gone.

However, if I may ask; how has it been for you? I hope your hopes for 2010 are already materializing? I want to believe that we’ve all done our budgets; we’ve done our projections for the year and one would wish and hope that we are getting there or the figures are looking like we had thought they would look; otherwise, I would advise that you take the advice I want to give in this particular article to heart.

Before I go on to do that however, I would like to acknowledge the fact that the face of Prime Assets Plus has changed. It is now on-line. Suffice to say that we are no longer going to be having it in print as we used to and of course, in the world of business you know that change is the only thing that is constant. We reviewed our positions in the previous year and realized that we would be better of reaching our target market with somebody like you via this on-line approach and that is why we’ve simply taken this step. I court your feedback to know whether this is a better option as far as you are concerned or not. It is still going to be circulating free and so you don’t have any reason to worry about anything.

Once again I say, welcome to 2010 and welcome to the new face of Prime Assets Plus. Back to our topic; “Watch your cash flow in 2010” Why did I say so? If you really sit down to study the projections for 2010, most forecasters said that we shouldn’t expect anything significantly different from what we witnessed in 2009, especially within the first quarter or first half of the year. Some even said that instead of things to  improve, they may have to go the other way. If we are in, we want to protect ourselves and our investments and that is why I strongly believe that the position to take is that of watching your cash flow.

Now, how can  you watch your cash flow? You can watch your cash flow by;

First of all make sure that your budget is realistic. It should be something that is achievable. Of course, there must still be that element of risk there; that element of daring; that element of target; that element that would motivate you to achieve more otherwise, it may not be fun to run such a budget.

However, I would like to say that you must do everything humanly possible to make sure that your cash flow projections end up every month on the positive side of things because in an economy where cash crunch is expected to continue, illiquidity is expected to continue, the banks are expected not to just throw up their windows and start borrowing until probably the second quarter of the year. An economy where everybody is still going to be very cautious of what they spend and expend their resources on, you want to guard yours jealously. You want to be able to know that you are utilizing your resources the best way possible and you want to be putting your resources in things that would come back to you in good time – short time. Nobody wants to tie money down these days on long gestation period investments.

If you have shortfalls in your cash flow projection, fill it! Put a mechanism in place to address that, either by looking at the element of your budget, especially the outflow side that you can cut down so that the net position can be positive or you look for how to probably put an OD(overdraft)  line with your banker if you can. You don’t want to be in the middle of the sea to realize that you need a life boat that you forgot at the shore. So I would advise you that while you are starting to sail now, ensure that your life boat is in your ship so that in case, you need to call for it, you won’t have to fret over anything. So that is to say; court your bankers, get the OD in place. If you are not the type that can get an OD or anything, just make sure that the type of investments that you are putting your money in are the types that as you projected in your cash flow and keep to terms as much as possible. The cycle of your transactions matter now, the shorter the cycles the better. Quick turnover transactions would be the delight of entrepreneurs at times like this.

That is why I expect that a lot of real estate transactions will be happening at the bottom of the pyramid this year because that is where money changes hands quickly and faster. Though they are little sums the aggregate of it all becomes very significant. Remember, the cash in your business is the blood of your business. If cash leaves your business, life, in a way, would have left your business, no matter how profitable it is, it may be on it way to the grave. No matter how healthy somebody looks, if he continues to lose blood, he would soon die. So he needs to stop the bleeding, if he is losing blood before he begins to even think of any other thing to do. So, it is as simple as that. If somebody is in an emergency and he is bleeding, the first thing the medical team would have to look at is how to stop the bleeding because if they continue to carry out any form of treatment without stopping the bleeding, whatever they are doing would amount to nothing.

So you need to look at those little, little areas in your business where there are holes through which your money leaks.

You need to look at your cost profile; you need to review your businesses and ask yourself this question again; “Do I need to spend this much to get what I’m getting or can I spend less to get the same thing I’m getting or  even get more? How can you optimize your cash? That is the question here. Optimization will be your watch word in 2010. You need to device ways by which you can optimize your cash.

I hope that I’ve been able to point to you the direction that would significantly impact on your business in 2010. I look forward to a very great year as far as I am concerned and I hope that we would all be there together. Now, Prime Asset Plus on-line would be coming out once every month. We are coming out late in January but the precise time we would be coming out is the first work day of the month so you expect another edition on the first work day of February. It would be up-loaded. I want to encourage you to tell your friends, to send it as an e-mail to them, to encourage them to log on to this project because I believe that it would be a source of inspiration, a source of business ideas, a source of encouragement, learning and sharing for all of us. See you at the top. That’s where you belong.

To your success.