The biggest challenge any would be Entrepreneur in Nigeria or elsewhere would face is how to raise money for business. It doesn’t matter how profitable you think the proposed business is, doesn’t matter how little the money you needed to start is – once you’re not able to raise money to start the business, the business can never be started.
To raise money for business is the biggest achievement any aspiring Entrepreneur could make. Once you have the start up capital, every other thing falls into place easily and that is only when your business idea begin to make sense.
I’ve seen great business ideas die from conception due to inability of the Entrepreneur to raise money for the business. How do we then proceed to solve this seemingly biggest challenge facing business start ups in Nigeria and Africa? Here are the top 5 ways to raise money for business — that any smart Entrepreneur should explore fast.
1. Personal Savings
The best person to give you money is yourself… If you plan to start a business soon, start saving for it now. Open a savings account in any bank and start saving bit by bit, spread your savings over the period of time you intend to kick start your business and make it a target to save certain amount periodically.
To be able to achieve this, you’ll need to be resolute and disciplined. Cash demanding Problems may come along the way, look for other means to solve them — ask yourself ‘what if there is no savings what would you have done? Go with whatever answer you get and use it to solve the problems instead of using the saved fund. With this, you will be able to raise money for business through personal savings.
2. Family and Friends
The oldest and sometimes, the easiest and most efficient way to raise money for business or any project by Nigerians over the years has been through family and friends. To give out money requires plenty of trust and no one knows and trusts you better than your friends and family members.
Make a list of your rich friends and family members and divide the total needed amount by the number of people in your list to make it smaller and easier for them. The biggest mistake many Entrepreneurs make is go approach only one person with the entire amount of money needed for their business, that can be overwhelming.
If you need N500,000, make a list of about 20 family and friends and divide the N500,000 by 20, that will give you N20,000. Then, approach each of the 20 persons in your list — demanding for only N20,000. In that way, it would be easier for them to consider your request.
The type we normally refers to as “Daily Contribution” It can be daily, weekly or monthly contribution — look for group of people with common interest and start the contribution with them. This is similar to personal savings, the only thing different is that others are involved.
Each time you contribute, someone among you take it — do it until it reaches your turn. When you get yours, quickly put it into the business before other expenses carries it off.
Everyone in your co-operative must be people you trust to an extent, if not someone might attempt to disappear after collecting his without fulfilling same obligation to others. It is a bit risky but sure way to raise money for business in Nigeria, especially if you are fortunate to be the number one or two in the collecting order.
4. Micro Finance Banks
Open Account with any micro finance bank or co-operative bank of your choice and start saving certain amount regularly. Once you’ve saved up to six months, you’ll quality for loan of twice your saved amount. One thing I don’t like about micro finance is the fact that you’d have to wait for six months to quality for loan and having to pay interest in the loan even though your money have stayed with them for six months with no interest accruing to you.
However, that is the price you’ll have to pay to raise money for your business and many people are finding success using it. So why not give it a trial. Look for any micro finance of your choice and start saving towards raising money for your business. Most of the major banks have their own version of micro finance — you may go with this ones for they’re more reliable.
5. Angel Investors
If you are not a control freak, if you are ready to give up some percentage of your company’s equity then go for Angel Investors. Angel Investors are business start up incubators and they are not in any particular place — your rich uncle could as well be your Angel Investor. Prepare a bankable business proposal — clearly state your business plan and objectives. If the Angel finds your proposal appealing, they will invest in it. But, prepare to give up good part of your company up to 40% in exchange for the needed capital.
If you have any question, drop it below in the comment box.