If you are planning to start a business but you are worried about getting cash to implement your business plan, this article highlights ways you can raise capital for your business.
Without mincing word, capital is key to enterprising. It’s one of the biggest things you need to have, to have your hands in so many businesses, even though it is not just everything you need to do well as a business person – others being entrepreneurial attributes like risk-taking ability, good decision-making traits, and of course the personal strengths that align with every business.
There is a motivational thought often used in public spaces, that money is not the first thing to start a business but knowledge and interest. Yes, it is true but still very debatable. Money sometimes defines many things, and he who has capital has one of the greatest tools for business success, hence the general saying in Yoruba that (Olówó ló lòwò) – meaning, “He who has money owns the business world”.
To buttress the above proverb, Let me quickly tell you a real life story I experienced in Lagos. Few years ago, a man who needs money to process his traveling overseas, went to meet a car seller to buy at a cheap price. The car seller with rich car selling skills placed the car in his auto sales shop for days without seeing buyer. The owner needs money badly. He is getting impatient, time isn’t on his side, so he approached a rich guy on his street. “I’m selling my Toyota Camry car that I bought last year at 500k, because I need the money badly. Can you buy it pls?’. The rich guy saw the opportunity. He paid immediately and own possession, Of course he knows the car very well.
The second day, the autoseller said he saw a buyer at 600k and he adds his own 50k. The seller told him someone else already bought it and will come pick it up in days.. The seller contacted the new buyer and they agreed on new selling terms. 600k was transferred to the rich guy without seeing the car he bought. A second buyer paid 650k and took away the ride. The auto seller took his service charge of 50k while the original car owner left the country in days.
The lesson I learnt therein is that with money, you can make more Money and grow quickly in business and without money, a business gets starved of development and growth in time.
Now that we have all seen the essence of capital, how then can we easily get it sourced out? Well, here are five possible ways.
1. Family supports:
Unarguably, from my studies as a business management student back then, sourcing fund from your families is the easiest way to kickstart your business. Families are big supportive pillar upon which we can rely on sometimes, and are one that can rally round you, especially when your success is key to them. From your parents to grown and successful siblings, to relations, you can seek for support if you are sincere with your intentions.
You all must have heard of how the richest black man, Aliko Dangote sourced his first business capital from – a sum of #500,000 equivalent of $3000 then, which became a fruitful seed. At the age of 21, Aliko Dangote borrowed $3,000 from his uncle to import and sell agricultural commodities in Nigeria, his native country. His business venture quickly became a success, and as a result, he managed to repay the entire loan within three months of starting operations.
The business story of Chief Rasaq Okoya, the successful Lagos business magnate is no difference. He saw an opportunity to import some products to Nigeria from Japan for resell, and it will cost him $70. With 20 dollars with him, he decided to seek a loan from his mother to make up for his capital. And the rest of the business story is history.
You know why family support should not be shoved away? Because they know you more than outsiders and will realize an investment in you is like ploughing into their own life as well, which might pay-off someday.
Walk up to your parents, uncles and families, tell them your plan and convince them that they can borrow you to pay back, but be sincere with your promise. And I can assure you assistance will come somehow.
If you have a very rich network of friends, it is also a good way to raise capital for your business. Some are already well to do, and if they can support just an ordinary person that comes around, then being a friend will be a good advantage.
First – that you are seeking a business support means you are seeking a financial independent and you don’t have to keep coming every time for them to help you with your life’s financial demands.
Secondly, they can trust you more than any random persons, especially if they are investing in you. The Idea of friends coming together to help one another is also growing through little individual contributions that sums up to become capital. This is what give rise to what is known as Ajo or Esusu in Nigeria, today. Ajo started from friends circle.
You can create a good relationship and talk to your friends about an Ajo idea. If you contribute N10,000 in the circle of 10 friends, that’s N100,000 business capital you can use to start something and return back 10,000 monthlies for 10months to help others too at no interest. It’s a good way to start. You can team up with your friends that have a growing business already or have good paying jobs. It’s a saving platform for them. If you don’t know little businesses you can do, then . It should help.
3. Selling your Assets:
While seeking admission, I sold my fine Samsung phone at N7,000 to raise capital for a Pre-degree application form and it paid off. You can’t be having very expensive assets at your disposal and be crying for financial support for your dream business. That car could be put up for sale to start something. Or what’s the essence of a car you can’t easily buy fuel inside or repair when spoiled just because you are not too capable to do so?
People buy investment properties, not because they just want to throw money away but because it is a good way to easily raise capital in the future. You can sell your land to start your business and even that your big fanciful iPhone. You will buy another one if your business thrives or even buy a better one.
Recently, an elderly man in his bit to eulogize the good business sense of the Igbos in Nigeria told me how his neighbor, an Igbo man sold his pathfinder jeep to buy stocks into his patent medicine store and started using one old rickety Datsun. And when he makes good money again, he buys another vintage car and uses it till he needs money again. By so doing, he doesn’t borrow money from anyone for his business. You can convert your belongings to money too by using what you have to get what you need.
Having a good saving culture will always bail you out when you need quick raise capital, especially for business purpose. As you make Money, endeavour not to spend all. Save for the raining day when you can’t go out to make money.
If you have a business plan, another easy way to raise fund is to discipline yourself to secure the future. Whether you are in paid Job or you make little money from your skills, you can take the pain to keep a good chunk of your income to start that your business.
Even as a student that your parents throw you between 20k to 30k monthly, you can start saving between 5k to 10k to start a good business on campus by cutting your spending.
Logically, there is a saving culture that I believe in, that 20-30% of your monthly income should be saved, especially if you have no pressing use for money. This would help you someday not only for a business startup but for other things like buying things of interest.
5. Get a loan:
This is the most popular road or means that many would be entrepreneurs want to tread. They just want easy cash out even though the interest rate can be killing. If you find anyone with good interest rate that seems good for your business, then you can key in.
But most often, financial support providers assist those already in business more than new start up for credit facilities, because they already know how the business works and the risk is worth taking with them.
However, new entrepreneurs especially those in skilled businesses can also approach financial providing firms which are growing in Nigeria today. Some can even lend you money without collateral. Go online and make more findings.
For established businesses, they can raise capital through support agencies like Bank of Agriculture, Bank of Industries, etc. They are set up for them to take advantage of. More to that, there are also microcredit support groups like thrift & Cooperative societies.
You can also raise capital through the microfinance banks are also scattered around towns, though with big interest, but then if you are sure of getting their money back, they are worth trying. Remember you need good capital to thrive well. Keep trying.