Right from utilizing personal savings, to getting funds from your friends or family members, you can definitely ensure that your business sees the light of the day. Moreover, with the norms for business lending getting tougher, exploring some other methods to finance your startup is the best foot forward.
Many people always have ideas. They all seem to be great, but very few put their ideas into practice by coming up with a business. To the many left out brilliant ideas the excuse is always lack of capital to start up a business. Here are ways that one can make capital to start a business.
Mostly belongings you can do without. It all goes down to how much ones can sacrifice. The hope here is always to get better versions of your assets once your business brings profit. It depends with one’s risk appetite. As much as it looks logical to sacrifice, not everyone find it easy to let go of their assets. Hence, people may opt to offer their assets as security to bank loans.
It is always good to do it yourself. Put together an amount of money from your income. It may add up to the capital you need to establish a business. At times your savings may not be enough but it helps to attract more capital since it will be easy to convince family, friends, the bank and other ventures that the money you have and what you need to top up for your business.
Read More: 8-things-you-shouldnt-do-on-an-empty-stomach
A plethora of community development finance initiatives, or CDFIs, have been set up around the country to help individuals, and businesses, denied credit by banks and lending companies. Cooperative societies is another example of such community schemes you can join around your community in other to get fund for your business.
4) Crowd funding
It goes back to self. How far can one go in terms of networking, sensitization and convincing crowds of people? With the help of social media one can channel money from social media, open forums can also be a source of acquiring cash. This method helps the entrepreneur to get small money from different sources. An example would be how the activist Boniface Mwangi is using social media to fund his campaigns for a political seat in Starehe constituency in the coming elections.
5) Small business grants and loans
Looking for capital to fund your business can be a full time job on its own. At times running to the bank with your business plan may not guarantee that you will get a loan. However, all is not lost for African entrepreneurs. There are options like: Tony Elumelu foundation, Business Fund for Women,Uwezo Youth Fund, Youwin among others that offer financial support. Do not let opportunities like these by pass. However, it is good to know the difference between grants and loans. Grants do not attract interest and are not to be repaid Loans attract interest and are to be repaid within the stipulated time.
An Angel investor is usually a former entrepreneur or professional who provides starting or growth capital in promising ventures, and helps also with advice and contacts. Unlike venture capitalists, angel investors usually operate alone (or in very small groups) and play only an indirect role as advisers in the operations of the investee firm. They are deemed to be ‘angels’ in comparison with grasping investors who are termed ‘vulture capitalists.’ Also called business angel.
KCB’s Lions Den simplifies to entrepreneurs how angel investors work. They get a link for entrepreneurs to apply, present their business plans to their panel (which is full of professionals from different careers – most of them are CEOs of their companies) and they get their business sponsored on an appealing business idea. To attract an angel investor, have an attractive business plan, unique business service, and work with your close networks.
7)Family loans. If you want to keep things ultra-simple, a supportive family, with money to spare, can provide a fair, willing and reliable source of loan funding. Relatives and loved ones are more likely to trust you with their money than an outsider, and they will probably demand lower interest and fewer incentives than a commercial organisation.
Any finance model or provider should be researched thoroughly before you make any commitments, to ensure this is the best solution for your business. You will find more information on some of these finance options in our Raising Finance section. We would also recommend researching specific providers or funding platforms online and speaking to other businesses which have used them.
If you only need a very small amount of money, you should think about a micro loan, which is tailored to your circumstances and can be used alongside funding from other sources. You can get micro loan from poverty alleviation organisations, NGO’s, micro finance organisations e.t.c
One can get a partner who has money to contribute to the business, or come together with a partnership where you all contribute on skills and money needed to start the business. “Billionaires never have a business called ‘mine’. Are you in coopera
10) Starting the business as part time
Consider leveraging your current day job while starting your business on the side as a means of generating revenue for your new venture. This is a very smart way to vet out your idea before having the added pressure of making it produce revenue to support itself. Many entrepreneurs choose this route before starting an online business, and essentially use their day job to fund their dream job.
This method may take a bit longer to build up, and you’ll have to juggle multiple priorities at the same time, but you will be the sole owner of your business and able to build a solid foundation from the beginning.
tion with others such that you can get out and that business will run smoothly? Great minds don’t compete, great minds pull together,” says Architect John Kithaka, CEO and founding member of the Fountain Enterprise Programme (FEP) Group of Companies.
One may use either path or all of the ventures to get capital the goal is always to see your business grow.
Give your new business the fighting chance it deserves by avoiding taking on debt in the beginning stages. You will learn to streamline your work process and focus on the true priorities while the business grows. Then you can later expand and build upon the foundation you’ve created.