Very often, we have great business ideas, set-up great award winning plans and then kill that dream instantly because we feel we do not have the finance to give life to the dream. What I have found out is that more often than not, we do not even need money to run that dream, no matter how big it is or how expensive it seems to be. All it takes is careful and articulate planning and patience and strong passion for the venture coupled with serious discipline and high morals. But this does not rule out the fact that some money no matter how small should be available to start and run the business from day one.
Even if you do not have this money for day one, you can still achieve your dream without it becoming a still birth.
Below are 12 ways you can still go about raising money to start and run your dream venture.
a. Personal savings
b. Family and friends
c. Partnerships
d. Esusu/Ajo (contributory scheme)
e. Co-operative societies
f. Lease/rent
g. Contract/exchange
h. Credit lines
i. Credit card
j. Business angels
k. Venture capital funds
l. Clients/customers
m. Personal guarantees
n. Insurance
o. Private placements
p. Bank loans
1. Personal savings
This is the key source. Your personal savings stand as a major primary source to raising finance for your new venture. A new venture is considered as a very risky adventure and so a lot of financiers and supporters always shy away from going into this. But most times, if a form of commitment can be made by you in form of putting down your hard earned savings, people will be more comfortable diving in with you. With your savings too you can start and people will support your efforts (buy in), which is what will produce fruits. But if you had no savings to start the venture with, no one will even consider you serious.
It also will help you in getting leverage as banks and ventures that support start-ups and small businesses will always require an equity contribution[1] from you and your savings will make this a plus towards your goal of giving life to your business.
Personal savings can be in form of setting aside a certain percentage of your earned income as it comes. Your earned income will be in form of your net salary, profits from an ongoing venture, dividend received, profits on sale of an asset, etc.
To save successfully to start your business, you must set a realistic target amount and a date to have achieved this sum based on the current income stream you have. Also, you will need to be disciplined and watch your lifestyle, separate necessities from luxuries. If for example you change your car every 2 years even if there is nothing wrong with it. This is time to keep that car for a year or 2 longer to cut those additional costs and add to your business saving funds.
2. Family and friends
This is another good source of funding your venture at start up. You can go to family and friends to solicit for contributions to your venture either in cash or kind. They might have a small office space to borrow you for a little while till your business gets a strong footing, they might have equipment you need for your venture they can give you as contribution to your venture. They could even simply be there to mentor you as people already in that line of business to ensure you succeed. Or simply they could loan you the cash to start your business for you to pay back when the company starts to make profits or at some other stipulated time or you could simply get the cash as their contribution to your venture.
You must have a plan and target amount on hand before you go to them. If you don’t have a plan or an idea of how much you need to start that venture, you will sound very unserious and no good friend/relative will invest[2] in such a venture with you.
3. Partnerships
This in simple business terms is where 2 or more people (called partners) agree to come together to engage in a business venture. It is usually guided by a partnership deed. It can be formal or informal and the duration is as agreed by the partners.
As they say ‘2 heads are better than 1’. This arrangement is run on that setting. People come together to run a business especially in the service industry to synergise, to share the risks of the business, for technical competencies, to reduce the individual work burden. A partnership is usually easy to form and easily dissolved. Partnerships are usually formed by people after a common goal in the venture they are into; they share the same vision and passion for that line of enterprise.
When starting your venture, you might have the technical competence but no cash or equipment, or you have equipment and you want to use in another available product line, or you are a business angel[3] looking for where or who to invest your funds. All you need to do is find a person or company that has the cash and/or the equipment to partner with you and you are in business.
There are many individuals and organisations with equipment, products or cash looking for whom to partner with to run a venture. Many are online or you can even find them when you join the COINBOX ENTREPRENEUR NETWORK. This is one of the reasons why the network was set up by COINBOX LIMITED in the first place. Send an email to coinboxlimited@gmail.com for more details.
4. Esusu/Ajo (contributory scheme)
This is one of the oldest known informal modes of raising funds for various purposes and events and even savings in Nigeria. It is a scheme in which a group of people come together and agree to contribute a defined sum on a periodic (mainly monthly) monthly basis. All or most part of this sum is then given to a member of the group for that month. This continues every month until everyone has collected his equal share of the amount. It is usually based on mutual trust and integrity as there is no regulation or written mode for conducting this practice. The name Esusu or Ajo is gotten from the Yoruba speaking part of Nigeria, the Igbo’s call it Isusu or Utu, the Edo people call it Osusu and the Hausas call it Adashi.
You can get your friends or colleagues to join you and start an Esusu system and use that as a way of raising the funds you need and automatically pay back over the period of the contribution. Note that it is interest free.
To be continued……………………………..
More information on raising finance by next post.
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[1] Equity contribution is your contribution to the amount needed as capital to start the business. Some corporations require as low as 10% while others ask for as high as 30%-40%.
[2] Their contributions in form of cash, loans, time, referrals or assets are investments in your venture.
[3] This is usually an investor who has a lot of cash to spare and would look for an idea or business to invest some of the cash in.
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