Money is the lifeblood of any business, and while looking for ways to make money, entrepreneurs have to proactively look for ways to prevent losses too. Chinazom Arinze Founder of Autogirl NG, an auto rental service company based in Nigeria, narrates how she narrowly saved her company from making a 70 million naira loss.
“As a lot of you know, I am the founder of Autogirl and also have a legal background. A company reached out to me that they need a lot of vehicles for a certain period of time. That was cool money and we were set to enter an agreement, but they said that they would only pay after 30 days of the services. I was worried, but because it is a big company and it is ‘assured money’, I said why not.
“But then I was doing my due diligence on the contract agreement they sent and guess what I found. I found something catchy on the first page and on their name. They mismatched the name of the duly registered company to a name that never existed. Guess what that means. That would have made sure the document could never be enforced in any court of law if they defaulted.
“So whatever agreement I was having with them for 30 days, I cannot enforce it if they decide not to pay after 30 days. I would have had to look for 30 million naira to pay my suppliers. What a huge loss that would have been for us.”
Read Also: 5 Options for Small Business Owners Who Cannot Afford A Lawyer
Read Also: 7 things Investors want to see in Your Pitch Deck / Presentation
Advice
The devil is in the details they say, but how much of these details can the naked eye see?
“My fellow entrepreneurs, you cannot afford to joke with legal due diligence when entering into any agreement. Even if you cannot afford an in-house lawyer, get a legal consultant for such purposes especially when you have big contracts. Don’t just read and sign, and think that you are literate and you can do it for yourself.
“Get a lawyer. There are certain things that you would not see that a lawyer would see. There is no way a layman would have thought that there would be such an irregularity when you have been to the company yourself, met the procurement officer and other relevant players.”
No matter the size of the company, a loss of N30 million in revenue would have left a significant dent in the financial statement, or even send some out of business.
