RAISING CAPITAL FOR YOUR START-UP VENTURE (2) By Ayo Emakhiomhe.

We continue our discourse on raising finance for your business at start-up which we started last week.

We will be discussing on cooperative societies and using lease/rent as the fund raising avenue to support your business.

Please note that all your comments are very welcome.

1.       Co-operative Societies

A cooperative society can simply be said to be the voluntary coming together of a group of persons to meet common economic, social, financial, and cultural goals through democratic enterprise.

Cooperatives societies are based on the cooperative values of "self-help, self-responsibility, democracy and equality, equity and solidarity among members.

A cooperative society has no limit to the number of members and can be set up to meet various needs. Joining a cooperative society will provide easy access to loans, asset financing, share of information, mutual business support. Every member of cooperative has equal voting rights.

As a member of a cooperative society, one can take advantage of discounts in bulk purchases and share in micro quantities among members.

Cooperatives are easy to form and the funds raised and profits are not taxed. International aid organizations are always disposed to providing grants to well established cooperatives.

A cooperative society is usually run by selected executives/trustees who are elected by the cooperative members.

The cooperative society is usually guided by a constitution set out by the members.

Another advantage of a cooperative structure is that it encourages a saving culture amongst members and such funds are invested as agreed by members.

2.       Lease/rent

When large capital outlay is required to acquire assets for a business venture, one can lease/rent such assets instead of buying outright. This provides cash for the business while still having full ownership of the asset.

This is common in manufacturing/distributorships. Instead of putting down such large volumes of unavailable capital to acquire assets/warehouses, you can simply lease/rent such assets and have cash available to meet your other business needs.

The advantage in this arrangement is the time value of money and effective management of cash flow.

A transport company for example can lease all the vehicles required to start and pay for the vehicles over their useful lives from the income generated by the venture thereby greatly reducing the cash required to start such venture.

Lease finance is available through various leasing companies, banks and finance houses all across the country.

Even some of the companies that sell/produce this heavy-duty/expensive machinery now personally provide leases for their equipment which includes service contracts that will ensure maximum performance of such machinery over their useful lifespan.

Why do you need to buy a building when you can rent one at start up?

The author can be reached at coinboxlimited@gmail.com or 2348023526682

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