Raising starting capital for your business
How to get money to kickstart your business idea
Starting and growing any business will need more than just your extra cash. The great thing about starting a business is however that you can start out small, as small as you like. In order to secure the right funding or start out with little funds, you need to pivot your business. One way to go about this is by using services to generate cash flow to fund your business if you’re a product-based business. Service-oriented businesses are easier to start, because they essentially entail providing a service, then receiving payment for the services. On the other hand, product-oriented businesses require some upfront investment to get up and running. So, consider selling services to generate income and capital for your business.
Take, for example, a software company that needs funds to push its product that integrates two software. In order to get funds, here’s what they did: They approached company A that they knew would need the integration and asked to build the integration for them. This way, turning their product into a service. Company A then paid for this service and the product was built. It was then repackaged and sold to others. Essentially, instead of raising money and building software, they were able to turn it around and build the product through Company A.
Another way to go about this is to assess the business’ needs and figure out the things that can be done with little to no cost or alternative ways to save cost. It’s easy to come up with the impediments stopping you from launching your business. But what about the opportunities? Identify ways that you can save costs now and scale up later. Undoubtedly, there are a lot of free resources available on the internet
Lily’s Bakeshop is just starting out and they only have three items on their cake list. However, she is looking to have a custom-built website and this will cost her more than she can presently afford. Instead, she opted to create an Instagram page to showcase her products for sale. In addition, since her bank gives her a shareable link for payments, she uses that link for the checkout process. Designs for her Instagram account? Rather than hiring the services of a graphic designer, she learnt to use Canva to design her creatives. All of these are done to minimize costs in order to launch the business. Plans for a website will be put in motion when the business scales up and generates enough income.
While using your savings to fund your business’ expenses isn’t the ideal situation, it’s one that is very common with entrepreneurs. As you are designing your business plan, make sure to ask real questions that help you determine how long until your business is profitable. Then factoring that in, save up at least six month’s worth of expenses.
Alternatively, you can also ask your friends and family for extra funds. It is important to note that you’re not asking them to give you money for free. You’re asking them to help fund a viable business that will reap profits. You also have a solid business plan that is also detailed and answers any questions asked. Be sure to have everything in writing and have a specific date for repayment.
You can also apply for a small business loan. Banks and online lenders specifically offer different kinds of small business loans at various interest rates for businesses looking for investment opportunities. Consider a business line of credit if you’re looking for money that comes in regularly on an as-needed basis. They’re like credit cards for your business and you can use it to make payments for little things that help with the day-to-day running of the business.
Finally, there are also small business grants and local funding opportunities. In all honesty, these are not easy to find at first but become more readily available when your business has been launched and is making some progress. Grants generally have prerequisites so be sure you are eligible before entering your business.
Here’s a shortlist of some available resources:
- The Tony Elumelu Entrepreneurship Programme (TEEP)
- The Bank of Industry (BOI) Youth Entrepreneurship Support (YES) Programme
- GroFin Fund
- Africa’s Young Entrepreneurs (A.Y.E)
- Lagos State Employment Trust Fund (LSETF)
- Use related services to generate income for your business
- Find alternative ways that help save cost
- Use personal savings
- Ask for funding from friends and family
- Get small business loans from banks
- Get small business grants