Indisputably, most people wish to venture into the business stage. This is without even minding starting on a low scale. Unfortunately, majority share a similar and overwhelming challenge — funding. Despite that, so many argue that funding isn’t necessarily the major prerequisite in commencing a business, the fact is always obvious. The need for it comes at some point in time. This is a part that many entrepreneurs get stuck at.
The good news is, there is a way to circumvent this funding dilemma. Not that funding challenges won’t be perceived at all, but there is assurance that it won’t be so effective as to halt a business that hasn’t even begun. It is called starting small.
Evidently, most successful businesses started at the lowest rung of the ladder. This is why the reason behind the haste of many entrepreneurs to suddenly build a million dollar business from the onset is puzzling and mind agitating. Albeit, it is advisable to begin little, and gradually scale up. Then, funding wouldn’t be a threat you have to wrestle as a business owner.
This brings us to ways to raise initial funding for your business. Let’s dig into them.
This remains the safest and best initial funding source for a new business. One quality — probably the most important — of a good entrepreneur is the ability to saving. The lack of savings prowess is the start of business doom. To make savings easier, piggy banks — which could easily be assessed — has metamorphosed into real banks. Hence, the idea of stacking case miles away from the eyes eases the temptation of dipping hands into budgeted funds.
That established, everyone willing to start a business, must be open to dipping into their own pockets first. This shows the seriousness and the zeal to really start something. Asides those, the value of initial funding, put in by you indirectly commands the trust of people who might have originally taken your ideas for granted.
Friends and family
Till date — or probably forever –, friends and families remain our closest allies. There are cases where it seems the whole world is against your business idea. Fortunately, some friends and family members might still believe in you even if they do not necessarily understand what you are up to. A few of them might even decide to contribute to your new venture, as a sort of encouragement or motivation. However, bear in mind that whatever reasons they have for supporting you financially does not really matter. What matters is, they believed in you to support your dreams. Asides this, they end up being the first customers to patronise your venture and provide sincere feedbacks. In a nutshell, they watch out for your betterment. Hence, they should not be overlooked.
In worst case scenario, most budding entrepreneurs resort to taking loans to run their businesses. While the haste to start a venture is quite understandable, starting a business on loan would be an ill-advice. Most banks do not go easy on SMEs for this. That the business is a small one does not arouse their compassion to lower loan granting standards. These standards, of course, usually involves the deposit of equivalent/worthy collaterals (many of which are difficult to come by for SMEs). Asides the request for collaterals, long bureaucratic processes and unnecessary documentations could pose as dream killers.
Fortunately, there is a way around this. If after thorough researched after due diligence, you still believe and can prove beyond all reasonable doubts that your business is worth the risk of taking a loan, then a credit/thrift society is your preferable/best bet.
In addition to the fact that they have less strenuous documentation processes, most banks demand no collateral. In Nigeria, some thrift societies allow entrepreneurs to get twice or thrice their savings with them. This implies that upon signing up as a member of a cooperative society, you save a certain amount with them on monthly basis. This savings duration usually spans from 3 – 4 months. At the end of the given, you are entitled to loans worth twice or thrice (as the case may be) your savings with them. This soft loan is repayable instalmentally and mostly conveniently.
Another conspicuous benefit is that, when you have completed your instalment payments, you can get back your initial savings, or even opt for another loan. As mentioned earlier, commencing a new venture on loan isn’t a bright idea. However, should SWOT analysis validate the business as a worthy venture, then a credit/thrift society remains the safe option.
Are they other stress-free ways you would recommend for an entrepreneur to raise initial funding? Let your voice be heard in the comment section.