Five ways to raise startup capital for your business
It can be thrilling, exciting, and fun to start a business. It’s exciting to feel the butterflies in your stomach because you are on your way to being a sexy title, ‘CEO. Likewise, it’s almost like a fairy tale. You are then brought back to reality. You can’t start a business with sand. Likewise, you need money. Business funding is essential.
It can be difficult to fund a business, especially if there isn’t enough savings or family income. Many business concepts didn’t see the light of day due to a lack of funding.
It is difficult to get funding for a company. It is not easy to know the right funding type for your business.
I will be listing and explaining eleven ways to fund your business. I’m sure that you will find at least one of these options that work for you.
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1. Bootstrapping/Self-funding
Self-funding refers to when individuals finance their own business. This is where you can use your savings to start your business but earn very little.
Bootstrapping is not for the weak-minded. Bootstrapping isn’t for the weak-minded.
A business plan must clearly show how you intend to be able to bootstrap your company. You will soon exhaust your savings and the money in the bank. It is important to monitor every expense related to your business.
It is important to carefully choose your team members. It is possible to save money by selecting team members with complementary skills. Furthermore, it is important to continue learning new skills. You should never hire or outsource someone who isn’t competent
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2. Bank Loans
This source of funding for businesses has existed since the beginning of time. It is the first place most companies turn to when they need funding.
Commercial bank loans shouldn’t be your first choice for financing a business. Depending on your type of business, other financing options may be available before you apply for a loan.
For a bank loan to be approved, you must first contact the institution. Not only should they offer a loan, but other banking services like current account operation or savings.
Over time, the bank will get to know you both as an entrepreneur and your business. This will allow you to access additional banking support, such as loans and overdrafts.
Commercial banks will need financial information from you as both a person and a business to be able to provide a loan. They will also need collateral to guarantee and secure the loan.
3. Startup Incubator/Accelerator
Many hubs offer incubation and accelerator programs. They offer office space, mentorship, and support for startups at all levels of development. They are there to help these companies prepare for investment by venture capitalists or angel investors.
Incubation hubs are designed to target early-stage businesses that are still developing and optimizing their MVP. CHUB is a Nigerian example. Startups are in the final stages of bringing their product to market through acceleration programs.
Acceleration and incubation can be compared to different stages of child development. An incubator aids and nurtures businesses to crawl and possibly walk, while an accelerator assists businesses to run and take big leaps.
The chances of a business being admitted to an accelerator or incubation program increase because they have access to investors as well as VCs.
4. Government Grants
Recently, the government has paid attention to entrepreneurs and small businesses by offering support. Grants are one way that they support small business owners.
A government grant is a financial aid that the government gives to small-business owners. The government is focused on the sectors that can have an impact on the country’s economic stability. Grants cannot be repaid, but they can be monitored.
There are many government grants available in Nigeria. These grants include Federal Government Grants for Agri, National Institutes of Health and Cyber Tipline grants, Bank of Industry, You win Connect Nigeria, and Federal Government Grant Application from World Bank. They also include the Social Intervention Fund of the federal government, e.t.c.
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5. Crowdfunding
Since the 1990s, businesses have used the internet to sell and market their products. The internet has also become a source of funding in the past decade. This allows you to get financing from websites that can help your business, regardless of where they may be located.
It is necessary to create a campaign, name a target amount, and offer perks to donors who pledge a certain amount. The campaign is then funded over some time. This financing method can be used on many websites, including Kickstarter, Indiegogo, and Crowdrise.
