There are businesses that a lot of people have ventured into with little. One of the challenges we are having is that we believe that we need high capital before we can start any business. But there is not the case as most young successful entrepreneurs ranging from interior decorators, printing press, cake baking, event planning, wardrobe management, event photography started with little capital. In this article, we will list few ways to raise capital for business in Nigeria.
Starting a business is one of the aspects that entrepreneurs find most daunting is how to raise capital for business. Today, entrepreneurs are much more likely to dive into their own pockets and hunker down for a battle to startup and stay alive.
Start your capital search with a good business plan that shows investors and lenders your company’s potential. Follow that up with a thorough knowledge of the resources available and determination to make your business a reality, and you should be on your way to uncovering a source that fits your new business cash needs. There are so many ways one can raise capital for business in Nigeria. Below is a list of ways one can raise capital to start a business in Nigeria.
Ways to Raise Capital for Business in Nigeria
- Personal saving
This is the best source of capital for a new business. 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 a startup, cutting down your expenses to save for the business is a good strategy of raising at least the initial capital. Most people wait to start saving when 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 propose that the business will start up. But, it is not necessary that you have to wait till 2 years 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. it is one of the old means to Raise capital for business.
- Relatives and families
Your relatives and family members are the second best source of capital for new business. Apart from your personal saving, another way of raising a substantial fund for your business is through family and relatives whom you have earned their trust. It may difficult for you 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.
- 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; creditworthy 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.
Banks are the straightforward source of funds. Many offer small business loans if you have already started your business. You will need a business plan and perhaps a personal guarantee.
Government through bodies like the bank of industry, the ministry of commerce, the ministry of finance and others helps in providing funds for people to start up their businesses.
- Friends and well-wishers
Outside of 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 of them. Present your business idea and a good design business plan no matter how small the business will be; they will likely be willing to support you financially. Begin with your closest friends; you can promise to give them something in return as the business turns up.
- Co-operatives societies
By joining cooperative and saving a 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 your turn. Once the, you receive your own turn of funds which can substantial enough to a startup business, use it to start up the business. However, you must plan a way to pay at the due time.
A partnership works very well when you meet someone that has similar business idea and core values with you. Two of you will pool funds together to start up the business together. A partnership is not necessary for 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 a partnership. Partnership business has many great advantages over sole proprietorship business. it is also a good means to raise capital for business
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