This article contains information on 9 Ways on how to raise capital for a startup business.
Everybody desires to be an entrepreneur for various reasons which revolve around not wanting to be answerable to a Boss and making profits. This makes the idea of starting up a business very exciting but the truth is, in reality, it sucks, especially at the startup phase.
Thinking of starting a business is a wise decision but the question is, are you ready to face the challenges to be encountered?
Reading the success stories of business tycoons makes the journey appear so easy but the fact is, starting up a business is a bittersweet experience, especially when faced with the problem of capital.
Whatever the case may be, the start-up phase of a business can be very challenging, more failures are expected than Success but regardless, have it in mind that there can never be a success without failures. Success is a journey that requires consistency, determination, diligence and hard work.
Several individuals have good business ideas but have the challenge of getting capital. Are you in this situation and do not know how to go about it? Do not let lack of capital truncate your beautiful dreams of becoming an entrepreneur.
WAYS ON HOW TO RAISE CAPITAL FOR A STARTUP BUSINESS
Below are some ways of raising capital to startup your business.
1. Prepare a Business Plan
Were you expecting to see “get a loan” as the first option? Don’t get confused yet.
Preparing a business plan should come first, it gives you a laydown of what the business encompasses. It includes the goals of the business, financial requirements, market surveys, risk analysis, profitability etc. Be it financial institutions or individuals, nobody would want to release money anyhow without seeing a business plan.
This is why it is important to prepare a business plan.
2. Personal Savings
There is no laid down rule that startup capital must come from bank loans. Having a personal saving even if it’s half of the required capital to start up, is a great motivation.
This means of raising capital has it Pros and Cons but if you are financially capable of starting a business using personal savings, it is very much advisable. You don’t have to break your head thinking of ways to pay interests, in a situation where the business doesn’t not give the anticipated returns, which is bound to occur at the initial stage of the business.
3. Seek the Assistance of Family and Friends
When starting up a business, don’t be scared of seeking financial assistance from friends and family. These are people who should have your interest at heart and believe in you when others don’t.
We all indeed have individual problems but you can never know who will offer assistance until you speak up. Don’t just bottle it up, speak out.
Talk to your parents, your siblings, your friends or even that right h uncle and aunty in your family. The good thing about this is that in most cases, you may be lucky to get an interest free loan and in other cases, you may get the financial support as a gift. This is what I call “the awoof means of raising startup capital”.
This is another smart means of raising startup capital without fear of interest rates.
Social media and technology has made this very easy for growing entrepreneurs, not to say that big Organizations do not go through this means, they do. To raise capital through this avenue, all that is required is to pitch a business idea in a social media platform of funders and investors. While doing this, ensure the prospects and growth potentials of the business are not left out.
Have it in mind that using crowdfunding platforms may not be a win-win outcome because there is always a high level of competition.
Other entrepreneurs want capital to start up their businesses too. This is why you must pitch your business idea so well, to beat other competitors. If your business idea is bought by those in these platforms, pledges and donations will be made to help you start-up the business.
What a cool way of raising capital.
Thinking of using crowd funders to raise capital for your business? Here are lists of sites to checkout;
So take advantage of such online opportunities.
5. Angel Investors/Venture Capitalists
Oftentimes, Angel Investors are interchanged for Venture Capitalists. Both are interested in investing into the business, provide mentorship, business advice and help the Business to grow to get returns for their investment, but be careful on the option to go for.
If you want to source for capital through Venture Capitalists, be prepared to sell off a portion of your business, else, stick with the use of Angel Investors.
While some businesses have grown through this means, others have equally crashed.
Get a strategic partner. This helps to reduce the burden of solely raising the start-up capital. The partner also helps to bring ideas to propel the business. In partnership, whatever profit is made is shared equally.
If you must consider this, ensure the partner is trustworthy.
7. Grants from Government/NGOs
Government and NGOs have made the issue of raising start-up capital very easy for entrepreneurs. Sometimes, all that is required is to present a well-structured business plan and if approved after a series of scrutiny, be sure of getting enough capital to start your business.
It is a great avenue to raise capital but in most cases, the time frame between going through the plan, numerous scrutiny, approval of the fund and disbursement, can be very frustrating except you’re willing to be patient. After all, a patient dog eats the fattest bone.
8. Asset Sales
Capital for a startup business can be raised through sales of high finance yielding assets. This can be selling of landed properties, vehicles, machines etc.
9. Bank Loans
This can be done in two ways. Capital for start-up business can be gotten through banks, either by visiting banks, preferably a personal bank used by the entrepreneur for normal transactions or through online banks.
There are numerous online banks now.
The chances to get a loan is higher by going through a local bank. This way, you can easily speak to those in charge of loans, on a one on one basis and in most cases, you are required to present your business plan.
I carefully left this option as the last because I don’t advise entrepreneurs to source for start-up capital through bank loans but it seems to be the only way out for most entrepreneurs. This is because bank loans come with high-interest rates, not to mention presentation of collaterals.
The disadvantage of this is the chances of losing one’s property if unable to repay at the agreed time.
Now that you have an idea on ways to raise capital to start up your business, I believe there is nothing else to hold you back from bringing that business idea into reality. I know that starting up a business can be overwhelming especially when there’s no capital and there is no idea on how to raise one.
Consider any of these options and you will be surprised at the amazing outcome.