Stephen GbolagadeAre you at the stage of your business where you need business funding or someone to invest in your business idea? It happens to almost all entrepreneurs and that’s a sign that you’re growing.
You have a great business idea, but you don’t have enough capital to finance it, right? Let’s talk about how entrepreneurs or business owners can get funding for their idea or startup.
Some great business ideas are dead because of inadequate funding, and some are still running at a spot with no result to show at all. The problem sometimes is not really “how” but “where” to get the fund.
On this page, I will discuss just seven (7) easiest ways to get funding for your business idea and then, briefly discuss how you can get the fund.
What is Business Funding?
Business Funding is simply the act of the resources needed to finance a project or business, in this context. The resources can be in form of anything that can finance a business.
So, when we say Business Funding, it does not always mean ‘MONEY or Capital.
Business funding includes getting team members who spend their time and effort, getting pieces of equipment, paying for some necessities such as a company or business registration, and marketing strategies. If you think about this, you will notice that everything can be achieved with “Money”.
In essence, you need money to finance and grow your business, to get the “resources” needed to make your business work the right way you envisioned. And that’s what we’re going to discuss now.
7 Ways to Get Business Funding to Finance Your Business Idea
#1 Personal Funding
The first way to get started with business funding is through your personal financial investment. Of course, it is your Startup or business idea and you should be ready to invest in it.
If your business needs $10,000 and you have more than that in your bank account, you should invest some part of, or all the $10k needed. If you’re afraid that you might lose the money, then you don’t need to continue the business because your instincts have failed you already. How do you want people to invest in your business idea if you personally don’t trust the idea?
Another thing I will like to mention about personal business funding is that some people have a great business idea but nothing to finance it personally – If you’re in this category, I’m sorry to tell you that you’re not ready to start a business yet.
What you need right now is a job or a skill to earn money, not a way to be loaded with ideas but no business funding and be stagnant.
I’m not saying you should not have a big dream to become a business owner, but an African proverb says “By crawling, a child learns to stand”. If you really want to stand and grow big, you need to crawl first, you need to start building from yourself.
ALSO READ: Top 10 Apps to Manage Your Personal Finance in Nigeria
Although sometimes, personal funding might not work especially if you’re still a student or you just lost your job. Is there any other way to get business funding? Yes!
#2 Ask Family Members & Friends
If you can or cannot finance your business yourself, then the next people you should meet for business funding are your friends and family members. Although they are close to you, when asking them for money, you should treat it as business, not as help or their obligation. It is your business, remember.
To get the funding from your family members and friends, you should have a good business plan for your business idea to get them interested in investing their money.
This part of getting business funding may not work for you, especially if your friends and family members think you’re richer than them and/or they rely on you. But try to speak to them first and see if it’ll work or not.
#3 Look for Business Grants
Another way you can get business funding to finance your business idea or startup is through grants.
What is Grant?
A business grant is a money given to business owners (or entrepreneurs) to finance or support and grow their business. These business grants are most awarded by rich philanthropists, non-governmental organizations, governments, and big companies.
Business Grant Vs Business Loan
A business grant is different from a business loan. The difference is that you must back a business loan, while you don’t pay back grants.
If you have a good business idea and plan, you should look out for funding opportunities like this, as it comes as “free money”. But not really free because those who give you the grants expect you to give back by using the funds wisely and employing people as the business grows.
So, we can frankly agree that the essence of business funding is to help small businesses grow and reduce the unemployment rate.
A good example of these business grants is the one provided by Central banks, the Ministry of Finances, the Ministry of Commerce, and other government institutions such as those who deal with Agriculture, Tech, and so on.
In Africa, there is a platform called “Tony Elumelu Foundation (TEF)” which is founded by the founder of Heirs Holdings, United Bank for Africa among others. Thousands of entrepreneurs in Africa are supported with $5,000 each year. So if you’re in Africa, you should look out for this.
#4 Consider Business Loan
Sometimes, you may not be lucky for business grants or getting assistance from your family members. But there are institutions ready to give a business loan to you as long as you have a good business plan and/or collateral.
To get this loan, all you have to do is visit your bank and meet with the manager to discuss it.
There are some people who claim they assist people with loans, you see their adverts almost everywhere. But I will advise you not to try them at all because most of them are loan sharks in disguise.
The best place to get a business loan is to visit your bank, as simple as that!
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Some people claim they help businesses with loans too, be careful before you jump into trying them.
#5 Try Crowdfunding
People are using crowdfunding to raise money for different purposes such as hospital bills, school fees, legal fees, and most important to finance a startup or business idea.
If you’re not that versatile with the world of the internet, you might want to know how crowdfunding works, right? Let me give a brief introduction to it
What is crowdfunding?
From the two words, “crowd” and “funding”, Crowdfunding is simply raising funds or money by a large number of people from different places to support or finance a particular project or bills.
These people decide how much they’re willing to contribute or in simple language, donate.
Crowdfunding is a method you can use to raise funds for your business. You’re not returning the money, it’s simply a donation. People across the world are ready to finance, support or help in one way or another, but also, people are stupid to be scammed of their hard-earned money.
That’s why you must be able to convince them why they should donate for you. If you think this method of business funding is what you would like to try, kindly check out these top crowdfunding platforms (here).
#6 Angel Investing
It’s not the regular angel you’re thinking of, but yeah, they’re like angels (God sent people) who can help fund your business. These people are called “Angel investors”.
Who is Angel Investor?
An angel investor is a wealthy individual who provides funding or capital to finance small businesses or startups in exchange for part of the company’s ownership (equity).
Like I said, angel investors, are like God’s sent. They are interested in funding your business at its early stage (when you are just starting). When other investors are not ready to give you funding, angel investors will be glad to chip in and give you that funding.
Remember that these angel investors are rich individuals, so you have to look for them. If you’re in Nigeria, you can check this blog post on top angel investors for business funding.
#7 Venture Capital Funding
Corporate Finance Institute defines venture capital funding as: “A form of financing that provides funds to early-stage, emerging companies with high growth potential, in exchange for equity or an ownership stake.”
Venture capital investors or Venture capitalists (VCs) are like angel investors but on a ‘Pro Max” level. Because VCs will provide a lot of money to fund your business or company as long as they see potential in it. Angel investors are individuals, but venture capitalists can be a company or a group of people who come together.
You’ve heard of Kuda Bank or Flutterwave raising millions of dollars to finance their business, right? Do you know that companies like Facebook, Uber, Airbnb, and other big companies in the world are once backed or supported by venture capital funding?
Venture capitalists are so rich to provide business funding for your business or company as long as it has the potential for growth and of course, the VCs will be a part of your business’ ownership.
Think Before You Decide
Before you think of hunting for business funding, you have to think and be sure if you’re ready. As I said, people believe in potential, if your business or startup lacks the potential to grow, then no one is going to invest in it, including your family members and friends.
If your startup has the potential to grow, try as much as possible to take the business out of the idea stage. I mean take action with the little you have and the people around you.
Another thing you have to prepare is a good business plan that you can always submit to those who might be interested in investing, giving you a loan, or connecting you with investors. If you’re not good at preparing business plan writing, hire someone to do that for you.
Note that some investors are taking part in your company, I mean, they’re taking part in business ownership. The more investors and funding you get, the more the chances of knocking yourself out of the business.
Just think before you decide.
That’s how to get business funding to finance your business or startup.
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Stephen Gbolagade
Stephen Olgade
