As far as the topic of business is concerned, raising capital is and will continue to be one of the greatest challenges we face whether it’s a new business or an existing one that is still struggling. There are different ways you can finance your business but I am going to share with you seven (7) of the easiest and most effective options available to you. Don’t be surprised that I didn’t mention bank, government or cooperatives; they are a real “pain in the ass”.
Personal Savings: this is money that you have saved up personally whether for the purpose of your business or not, when you have a business idea or you are financially stranded at your business will be a good time to refer back to whatever savings you may have. If you are looking to start a business in the future, now will be a good time to start saving up for it. The advantage of personal savings is you are not indebted in anyway if you make use of it. Its major disadvantage is that it’s usually not sufficient for whatever business you may need it for.
Family Member: This source of finance is quite easy to obtain also, all you need do is make a list of family members that are capable and will be willing to invest in your dream. You can let them decide how much and it doesn’t necessarily have to be free. The major advantage of this source of fund is that it’s usually easy to get but its major disadvantage is that it can sometimes lead to discord within the family.
Friends: Another way to get finance for your business is to ask from friends. Usually you will have to borrow the money but the good thing is that you will probably have got enough from your business to pay back the lender at the stipulated time of return. The advantage of this source of finance is that it doesn’t require you to pay interest or provide collateral most of the time but that’s also the disadvantage, your business may not have generated enough money to pay back the money at the agreed time and it can cause real trouble since your friend doesn’t have any collateral to hold on to.
Partnership: Partnership is very good if properly executed but a lot of people run away from it. Since you have the idea but not the money, you can go into partnership with someone who has the money. All you just need to do is come up with an agreement and a legal document to ensure that it’s binding. The benefit of partnership is that there is really no limit to the amount the partner can put into it and you end up having the larger share of the profit since it’s your idea. On the other hand, if partnership is not properly managed, it can be a real mess.
Part Time Employment: This is another viable option and it’s pretty effective too. It involves you getting a part time job so you can put the salary from the job into your business. I will advise that you should get a job that is very similar to your business so that you can use the experience, ideas, methods and probably some of the people at your job. The problem with part time employment is that you rarely have enough time for your business, if you will use this source of finance, just make sure you get a job that gives you enough time to run your business without killing you.
Mentor: if you have a mentor, I will advise that you leverage on this benefit before it’s too late. Mentors like to get involved in every area of your business; they only want to see that you are serious with your life. Ensure that you give your mentor update on everything especially new developments and always give feedback to him/her on the outcome of everything he tells you to do. The major disadvantage of sourcing fund from a mentor is that some mentors can be controlling and they may want to turn your business to one of their many businesses. The key is being wise and knowing exactly who you’re dealing with.
Philanthropist: Getting money from a philanthropist is quite difficult at times as they are difficult to come by and even when you find them, they want to be certain of every fact you are presenting to them and may request that you write some sort of proposal. Asides this, it’s indeed one of the very best options available to you.
With all this pointed out, I will advise that you take a piece of paper, list all these methods and begin to write the names of people that you think can be of assistance under each category, it’s as simple as that.