Finding the funds necessary to grow
a business is one of the greatest challenges entrepreneurs face. While startups
have to manage many costs, ongoing businesses must finance growth and working
capital. There are many ways to finance your business, as money doesn’t grow on
trees.
Insufficient funding is a major reason why many businesses fail every day. For
some, insufficient funds are just another reason to not become entrepreneurs.
Sadly, you don’t have to create your business ideas, write your business plan,
or write a business proposal. These are essential for business growth and
development. However, some people have done everything but need money to start
their business or move to the next level. The question they have is how do I
access funds to fund my business?
5 ways to raise startup funding for your business
This article will discuss 5 ways you
can raise enough money for your startup to succeed.
1.
Bootstrapping/Self-funding
Self-funding is when an individual
funds their own business. This is when you use your savings to kick-start your
business and have very little income from it.
Bootstrapping isn’t for the weak-minded. Bootstrapping is not for the
weak-minded.
You must create a business plan that clearly shows how you will be able to
bootstrap your company. Your savings (and the money you have in the bank) will
soon run out. You need to keep an eye on every expense in your business.
You must also choose the members of your team carefully. You can save money by
choosing team members who have complementary skills. You must also continue to
learn new skills; you should not hire or outsource a job that you aren’t
capable of doing.
2.
Family And Friends
You don’t need to save money for
your business or have exhausted your savings, then you should consider family
and friends. If you are trustworthy and reliable, you should consider your
family and friends. You don’t want to lose that relationship.
Most of the time, family and friends are investing in you, not in your
business, when they give you money. But you must do it correctly. Discuss your
business plan upfront with them. Allow them to understand the business venture
and any challenges.
It is important to specify whether you intend to take their money and return it
(debt financing) or to give them an equity stake (equity financing). They are
entitled to know when their money will be returned or the return on investment.
3.
Grants for small businesses
This fund is provided by the
government or another organization to support small businesses and entrepreneurs.
The Tony Elumelu Entrepreneurship Programme, Africa’s Young Entrepreneurs
Empowerment Nigeria, and the Dangote Foundation are just a few examples of
organizations that provide funding for startups. You must have a passion for
entrepreneurship, a desire to succeed, and a willingness or ability to help
others to be a part of many of these organizations.
4.
Angel Investors
Individuals or groups of angel
investors invest their money in the businesses of others. Angel investors are
distinguished by their ability to invest in companies in the early stages of
growth, and they are always on the hunt for the next opportunity to invest.
Angel investors are responsible for funding many of today’s most successful
tech companies like Google and Yahoo. Angel investors are typically people who
have been successful in a specific industry and are looking for new
opportunities in the same or related industries. Angel investors may offer
funding to help your business get off the ground. However, they might also be able
to provide guidance. To help your business, they may use their contacts in the
industry to provide access.
5.
Microfinance banks
Microfinance loans are an option for businesses
that don’t have the financial resources to obtain a commercial bank loan. Microfinance
banks provide financial services to those who do not have access to traditional
banking services.
These loans allow individuals, groups, entrepreneurs, or organizations to
access credit facilities and loans that will help them grow their businesses.
According to the terms of the contract, microfinance loans have a higher
interest rate. The loans can be repaid in smaller installments.
A Microfinance loan is not as complicated as a commercial loan. Microfinance
banks include, but are not limited, to LAPO Microfinance Bank Nigeria (AB
Microfinance Bank Nigeria), Accion Microfinance Bank Nigeria (e.t.c.)