When it comes to starting a business in Nigeria; whether small scale, medium or large scale enterprise one of the hardest parts is raising of money to finance the business. This is a threat and a great challenge to many entrepreneurs and has often resulted to the fall of supposed multimillionaire business which many who had such business idea have dreamed and thought that it will come to pass. Can one now say that there no ways of raising funds for a business in Nigeria? The answer is NO.
Before I begin to show you ways to raise money for you business in Nigeria, let’s look at why people find it difficult to raise funds for their business. Some key points that you must get right if you are serious about raising money for your business are
• Your business Idea-can your business idea(s) sell?
• Vision and mission of your business-what is business vision and objectives?
• Your Business Plan and Design-do you have a good written business plan?
• Integrity and Reputation-you have earned yourself reputation and integrity?
Here, are the ways to raise funds for business in Nigeria;
Personal saving-Personal saving is one of the easiest ways of raising funds for business especially for small and medium scale business enterprise. When you have a business idea and there is no capital for startup, cutting down you expenses to save for the business is a good strategy of raising at least the initial capital. Most people wait to start saving until they have some extra money lying around-a comfortable surplus. But it doesn’t work like that. You start to save for your business at least 2 years of time you proposes for the business to begin but it is not necessary that that you have to wait till 2 year before you begin the business. Timing and the amount of money you were able to save within a given month matters a lot. You can apply 50/50 law in your personal saving. Here, you never spend more than you save. You put 50% of every income you earn into savings. If you increase your saving by N40000, you know that you’ve earn the right to raise your lifestyle by that same amount (N40000).
Learn how to start small profitable business in Nigeria
Relatives and families– apart from your personal saving, another way of raising a substantial fund for your business is through family and relatives whom you have earn their trust. It may difficult for to get money from your family and relative if they don’t believe in you. Of course, you have to trust yourself first, if you want people to trust you. You must have to earn high reputation from family and relatives; and you have to present your business idea as one that is achievable for you get money from them.
Friends and well-wishers-outside your family members, the nearest persons that can help you raise startup capital for your business are your friends and well-wishers. Again, they need to trust and believe in your ability before you get money out from them. Present your business idea and a well design business plan no matter how small the business will be; they will be willing to support you financially. Begin from your closest friends; you can promise to give them something in return as the business turns up.
Grants from philanthropic organization-another source of fund for starting up business are grants. Grants are non-repayable money or products disbursed by grant makers, often a government department, organization or trust, to a recipient, often (but not always) a nonprofit entity, educational institution, business or an individual. For you to receive a grant some form of “Grant Writing” often referred to as either a proposal or an application may be required. The type of grants that I’m suggesting that look for are grants from non- profit organization or philanthropic organization. You can easily outsource for such type of funds to get your business started but remember, most organization that gives out grants look for fresh thinking and innovative people and organizations. They also set benchmarks to measure your success and monitor business progress.
Business Angel and Angel Investors– Angel Investor is a wealthy individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership shares. Business Angel can be anybody who is willing to invest on your business. All you need is to prepare a good business plan and present it him or her. He should be able to see why he should invest in your business There are such people in your locality, he can your Uncle in Abuja, director or even your brother; look for them to help you raise fund for your business in exchange for ownership equity.
Co-operatives-by joining cooperative and saving small amount every day can help you raise money for your business. Once you join any co-operative society, you are eligible to borrow money from your cooperative and you are eligible to receive funds on you turn. Once, you receive your own turn of funds which can substantial enough to startup business, use it to start up the business.
Partnership-partnership works very well when you meet someone that has similar business idea with you. Two of you will pool funds together to start up the business together. Partnership is not necessary two people business. In partnership, Profits are shared according to individual contribution or shares of the business. So, there is equity and justice. Most multi-national and multi-international companies start from partnership. Partnership business has many great advantages over sole proprietorship business.
Sponsorship-getting interested individual, organizations or companies sponsor your business project may be in exchange to promote the organization or individual is another means of getting you business started. No organization, company or individual that will agree to sponsor project without seeing how she will benefit from the project. So, approaching any organization or individual for sponsorship you must have made sure that you have included the interest of the organization or individual sponsor.
Bank of Industry-Bank of industry provide Small, medium and large enterprises, excluding cottage industries with funds for starting their business; new or existing companies, seeking expansion, modernization or diversification; credit worthy promoters who will be required to prove their commitment to the project by contributing at least 25% of the project cost excluding land, borrowers whose management capability, financial situation (including availability of collateral and guarantee), character and reputation are incontrovertible; clients with demonstrable ability to meet loan repayments, borrowers with no record of unpaid loans to erstwhile development finance institutions and other banks. You can obtain access to Bank of Industry facilities in 3 easy steps;
Step 1: Write a formal application letter
Step 2: Completion of BOI’s Questionnaire
Step 3: Submission of Forms and Questionnaire. So, if you think you’ve meet up with the bank of Industry requirement you can comfortable visit boinigeria.com to download the appraisal form and complete their questionnaire for your business funds startup.
Banks-I decided to add banks because I still believe that bank loan serve as a means of raising fund for business start up. The only problem with Nigeria banks is they demand a lot (collateral and security) and they often turn down the request of small scale and medium scale business enterprise.
With the above 10 ways, you can actually raise funds for your business in Nigeria. Remember the key points that you must get right before outsourcing for funds for your business.
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