How To Secure Finance For Your Business
How To Secure Finance For Your Business
Without doubt, a business venture can only thrive with the availability of funds to prosecute the day-to-day running of the enterprise. Having enough capital to prosecute already existing and new business ideas presents a huge challenge some times, posing great and heavy threat to the stability and survival of the venture. Entrepreneurs that are financially handicapped find it very difficult to build their enterprises because money is major factor for investment. Needless to say, there are numerous means of securing finance to entrepreneurs so they can carry out and successfully get deals executed and have more cash to their pockets. Some of the means to getting finance for businesses are examined below.
This is the simplest source of finance for businesses as the entrepreneur is certain of the amount involved without excuses. Financing your business by yourself can be relatively easy but it comes with a big downside, if the venture fails, you bear great loses alone due to the fact that you have invested a lot of capital into it. The good thing about self-funding lies in the fact that if the enterprise turns out successful, you enjoy all the profit made alone.
One’s savings is also another major way to secure finance for business especially Small and Medium Enterprises (SMEs). Tapping into your own piggy bank is not only popular but shows that you are committed. This can easily win an entrepreneur additional funding from third parties especially potential investors. Funding your business through your own personal saving is also great proof that you are willing to generate more money and is a great motivator towards putting 100% work and zeal into ensuring the venture turns out to be a success because savings is not an easy thing to lose.
Probably the most popular way of securing finance for business, loans are greatly sought after by business men/women to help keep them in business or to seal major deals. Entrepreneurs can seek for funds through loans from friends and well wishers or commercial banks. Agricultural businesses like farming and poultry business also have agricultural banks willing to loan money to investment-willing individuals. Banks especially, offer loans to businessmen/women with collateral provided and high interest rate involved. Most people kick against securing loan from banks due to conditions attached, but when it is the only option left and the supposed business for securing the loan is certain, it is advisable. You just have to know the risk involved and be sure your business is up to the challenge.
Finance from grants issued by the government is a great means of stabilizing a business in need of capital and raising the venture to a higher level. Some of these grants are given after months of thorough training and mentorship meant to accelerate business growth. A major advantage of governmental grants is that they are not repayable, so the entrepreneur is not only equipped through business trainings, but also given enough capital to boost their businesses. Examples of such grants include the startup Nigeria program, and YouWIN Connect programmes.
Non-Governmental Organisations Support (NGOs)
Task of building a self-reliant economy is not only the responsibility of the government, non-governmental organisations equally provide finance for running businesses with great training routines to ensure the person getting access to funds distributed engage in meaningful enterprise. This is great platform for capable business owners to take giant steps towards promoting their ventures as there is ready capital to prosecute business deals. Examples of NGOs that financially support businesses include Founder Institute (world’s largest pre-seed accelerator), Tony Elumelu Entrepreneurship Programme (TEEP), and Diamond Bank Building Entrepreneurship Today (BET) programme.
Entrepreneurs from families that are willing and capable of supporting their establishment is at a great position to thrive, this is owing to the fact that finance from family most times is not meant to be repaid because it is often viewed as efforts towards the general good of the family. Thus, the success of the business entails success for the family and failure from the business is failure for the family. In case of joint family ventures, contributions from every member is seen as togetherness in pursuit of family glory, there is no need for anybody to ask for refund due to the fact that the business is collectively owned.
Further, it is easier to persuade family members to lend you money or make donations for your business because they know you better than outsiders. Stringent repayment terms are absent when funds are from family unlike banks. Not to forget, contributions for your business from your family members shows to a great extent that they believe in you, serving as a driving force towards success of your enterprise.
Sale of valuable assets
When there is no option left towards securing finance for business, sale of valuable assets and properties is the best shot at sustaining and stabilizing the enterprise. However, sale of assets involves great risk due to uncertainty surrounding the outcome of the business. Most people prefer not to sell their prized assets such as lands or houses to embark on a business venture meant to generate more capital, but it is equally needful to note that failure to take risks is great risk itself.
There are well established and wealthy businessmen looking for start ups and businesses to invest, often in exchange for an equity stake in the business. These individuals in the business world are popularly known as angel investors. If an entrepreneur fails to get enough capital through loans from banks, sale of valuable assets, or even personal savings, reaching for an angel investor is best. Most angel investors have been very successful in specific industries and are in search of new opportunities within same industry.
The interesting thing about angel investors lies in the fact that aside from offering financing to your venture, some are willing to provide guidance based on experiences garnered from years active in the industry. Contacts from them can also be leveraged upon to open new doors for your business.
This is perhaps a rather bold yet less risky way to raise money. The simple way this works is, if you believe the products and services you have is of high quality and one that is intensely needed by the market. You can simply go ahead and make a pre-service offer where the customers pay perhaps a subsided amount to get the products at a later day. If rightly done, this can help you pull enough money to fund your business and also a good way to test the readiness of the market to accept your product.
Trust this article enlightens you, if you need more help, please contact us today.
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