Raising business capital

Raising business Capital

There are several ways by which you can raise business capital for your venture, as an entrepreneur, you have to be creative about how you go about it. Business finance has been a big issue for start up entrepreneurs and this simple guide will open your eyes to some basic ways by which you can go about it. Some of these you already know but taking the first step has been a challenge. You must know today that not doing anything will result in not getting any result, therefore zero effort will equal to zero result. Find below various ways of raising business capital.

1. Your own savings- The first place you can get capital for your business is the popular old idea, your personal savings, before you approach a second or third party to raise capital for your business, they will be interested in knowing how much you have been able to raise for yourself. So your own personal savings should be your first contribution to your business. If you’ve got no savings, then you might consider letting go of some of your assets to raise capital. Stuffs that are not essential and can be got later or that the business in view will be able to buy, such as casr, phones, other equipment. You can also think of reducing some of your liabilities, for example moving from a big rented apartment in a high profile area to a small apartment in a middle class area so as to make your business kickstart. These may seem difficult to do but it may be the key to building your own private estate in the future.

2.Families and Friends- If you’ve got relatives that believe in you, they can be a support in providing your start up capital. I do not advice such funds to be loans but should be a contribution because if it is a loan, a lot of pressure can be on you if the business does not eventually go well, but if it’s very necessary and you can take the risk, you can accept a loan but make sure you are given a good rate, not like the banks and also get a moratorium and a good time to pay back. I love to keep relationship alive and not allow money issue to make it go sour.

3. Partnership- Some businesses may need you to bring in partners to pull funds together to run the business. There must be a well written out agreement plan and business plan that will state out the terms of the partnership, how the business will run, the contribution of all partners and how the partnership can be amicably dissolved should the business needs to be closed down. You must be careful to look for a partner who not only has the funds but also must be interested in the running and success of the business.

4. Limited Liability Company- This form of business entity is where you invite people to come and be a part of the company by buying shares in the company. For example if you have a $100,000 business, you can sell 100,000 shares and allocate 10000 shares at $1 per share to each director and offer it to 9 other people who will pick up the shares, so each partner will contribute $10,000 to the business and each partner will become shareholders in the business. You can also decide to keep a larger share of the company by only releasing 50,000shares up for sale and raise personally the remaining $50,000, this makes you the biggest stakeholder in your company. You can be lucky to get just 2 people buying up the remaining shares making you just 3 shareholders. This is just a layman’s explanation. Also here, make sure those buying into the company are those that can also bring their expertise, ideas and strenghts to the success of the business.

5. Bank Loan & Overdraft- Well this is my least recommended as i will rate the ones above more than this. But with a winning business idea with a business plan, you can get a loan fron the bank and make sure all the terms of the loan are understood by you. Also, make sure you have a good rapport with your banking officer and let them help in the financial management of your business because this is actually the work of the bank, to help people manage their money and business finance but most bankers today run after deposit. Work closely with your banker and as the business progress or otherwise, they can advice you accordingly.

6. Venture Capitalist- These are rich individuals seeking to invest their money in a good business idea, these one mainly love to come in as major shareholder and will expect returns from the business. The advantage of these is that, the money you need can be readily available if you know your onions but the downside is, the venture capitalist is more interested in your ROI (return on investment), what is in it for them. They won’t really care about how the business is running. So, approach these people with care and be sure you have a winning idea.

7. Leasing- Leasing companies rather than give you money to start a business, they will give you equipment to start a business, these equipment are given to you for you to pay back interests or as the business generates income. You can use the equipment as long as you are paying something monthly to the company. The company will be responsible for replacing the equipment, fixing fault at no cost to use, you are to use the equipment and pay them agreed amount monthly.

8. Hire Purchase- Unlike Leasing, you are giving the equipment on credit and you will have a payment plan until the equipment is completely paid for and the equipments then belongs to you.

9. Cooperative- If you belong to a cooperative, you can have access to a low interest loan that can help you kickstart your business. These types of interest are nothing compared to that the bank will charge you. It’s a good source of raising business finance.

10. Work for free – Funny, isn’t it, for some types of service businesses, you can work for free for high profile individuals and ask for refferals, for example give samples of your product or render your service for free for top government official, high place influencial people and ak them for refferals and recommendation. This is a top and hidden secret to lauching out some big businesses.

I hope this has really added to your knowledge. I will appreciate your comment and contribution, just add your comment below.
To your success
Odofin Caleb