5 MEANS TO GET FUND FOR YOUR START-UP BUSINESS
Everyone wants to start their own business, everyone has an innovative idea, So what’s stopping everyone? Capital!, Fund!. This has always been a major issue when it comes to starting a business. And one of the biggest mistake one can make when starting a business is to do so without any source of consistent funding. Here are some means to accessing funds for your start-up.
Here are some means to get fund for your business:
Arguably, the easiest but maybe not the fastest means to raise fund for your business is to acquire and save up funds. If you have a job, don’t quit until your business is running smoothly. Find a way to balance your work with your business for the time being. This will afford you the opportunity to get some basic things done.
Registering your company, branding it and some other things can be sorted out by this fund. And also, one of the most efficient and cheap way to guarantee a positive flow of fund in your business is Bootstrapping.
Bootstrapping can be said to mean less money has to be borrowed and interest costs are reduced. Most start-ups in Nigeria started by bootstrapping. Also, if you build a product that works; it will sell itself. Bootstrapping becomes easier when you follow this rule.
Family and friends
Family and friends are important for various reasons when starting a business. You’ll need them to believe in you. They should be the first set of people who would validate your idea and support you. You can ask them for support both technical and in funds capacity. They serve as a cushion effect to get your idea actualized. Get them to believe in your idea, it prepares you in a certain way.
With them, come what may, you will have people to lean on, inspire and celebrate with you.
There are many loan structures out there that we should start searching for. The major thing to know about the proper utilization of loans is that long terms funds should be invested in long term businesses and short-term funds should be invested in a short-term business.
This is very important as it can cause lots of issues if not properly taken care of. If an asset can only pay back in 5 years, it will be a bad financing decision to raise a loan that will be repaid in 3 years to purchase it. This would mean that the money to repay the loan would come from somewhere as the asset would not generate cash enough to repay the loan in the first 3 years of its life.
In choosing among the variety of options one would also have to consider the cost of capital and of course the risk factor.
Grants are like when you are being invested into.They are a type of financial aid that do not have to be repaid. Generally, grants are for non-profit charitable organizations but things are changing these days. Grants have become one of the safest means of getting capital.
There are various types of grants out there and all you mainly need is your business plan. Start applying and you could be lucky.
Lastly, there are people around the world, even here in Nigeria willing to invest into your business. Investment is the commitment and utilization of funds in a company with the expectation that it will generate returns. Because funds and other resources are scarce and their opportunity cost very high, investment becomes one of the only options. This is so because, any decision taken in this respect, whether rightly or wrongly, has a lasting effect on the future growth of the company.
Getting investors or seed funds for your business is not a bad idea especially if you think your idea is “too big” to be bootstrapped. But you should be ready to give away some equity in return.
With these, you now have options on how to get the capital your business needs. They may not be easy but they will be worth it and moreover, it was never meant to be easy. For any question or addition, leave us a comment and we will get back to you.