How To Raise Capital For Business In Nigeria- One way to be financially free and be wealthy is to have a business of your own. The truth is this: no salary job is designed to make you rich. Salary jobs can only sustain, they don’t make rich. So you need to get involved in a business of your own (whether as a funder or founder) if you want some financial independence.
One of the factors needed for a business to function properly is capital. The factor of capital has stopped many from having businesses of their own. Should that also stop you? No! In this article, you will learn different ways to raise capital for business. So lets move
How To Raise Capital For Business In Nigeria
This method is good for salary earners, especially those that earn very well. Cut down your expenses and tone down on your lifestyle. If you apply enough discipline, you can save enough to raise capital for business in Nigeria.
2. Gift from family and friends
If you find yourself in a network of generous family and friends, you can leverage on that. Don’t be shy to walk up to them for assistance with capital for business in Nigeria. Once your business plan is good enough and realistic, you will surely find someone to help you out.
You can also partner with someone that has the financial resources to raise capital for business in Nigeria. You have the business idea, and he has the money, that is a good combo, don’t you think so. But caution is needed here, so you don’t get into trouble in the future when the business starts booming. From the very first day of partnership, let there be a well-spelt out/ clear legal agreement/ understanding between the two of you (you should involve a lawyer), well-documented and duly signed. How profits and responsibilities would be shared should be discussed from the very first day of collaboration.
4. Start with what you have
You can start with what you have. If you really think deep, you will see that there is something you have that can generate some funds for you. It could be a second car in your garage, a laptop lying fallow. Such can be put together to raise some capital for business in Nigeria. The extra car could be used for car hire or Uber, etc. If you learn some digital skills in 6months, you can put the laptop to good use.
5. Angel Investors
You can search for angel investors to raise capital for business in Nigeria. Angel investors are individuals (who are successful entrepreneurs or top executives) or groups who invest their funds in what they perceive as opportunities that could yield high returns in the nearest future. However, you should have a good business plan if you would win the heart of an angel investor.
6. Get advanced funds from customers
This method is good for existing businesses that intend to scale up. If you have gained enough trust and credibility with your customers, you can actually woo them into giving you funds in advance for goods and services. For instance, you can say, “If they pay in advance, they get some discount”. Your loyal customers can jump at such offers. With advance payment, you can go ahead with production and still make some nice profits for yourself.
7. Use your excess asset
If you just look around, you would see one or two assets that are lying fallow, it could be a landed property, a second car in your garage, an old generator (not use but in good condition), an expensive jewelry, etc. You could sell or lease any of such to raise a capital for your business or better still, you could use such as collateral to obtain loan from bank.
8. Apply for business grants/ win a business competition
There are a number of foundations/ NGOS that helps new or young business with capital. You can apply for such, but you have must have a good and sensible plan. Examples of such is the Tony Elumelu foundation, YOUWIN (Youth Enterprise With Innovation In Nigeria) etc. Some of these grants can be as much as 1 million naira to help fund your business. The beauty of this grant is that you don’t have to worry about paying back.
9. Soft loan
You can get soft loan from family and friends to start up or scale up your business in Nigeria. Such loans do not require payment of interest and repayment schedule is usually flexible.
10. Bank Loan
You can approach your bank with your business plan for business loan. If they think you qualify, you will be given the loan. But you will be asked to present some collateral and also be charged some interest on the loan with a fixed date for repayment.
This method of raising capital for business in Nigeria is last on the list because it is not advisable especially for a new business. Reasons being that interest rates are usually high and if you default when its repayment time, it can cause some financial stress for you. The longer you default, the more your interest accumulates and the more money you will have to pay back.
3 Crucial Mistakes To Avoid When Starting A Business
1. Never quit your job to start a business
If you have a job, but have it in mind to start a business, it’s a good one because it implies increased sources of income. However, it is usually not advisable to quit your job to start a business. This is because in the early days of a business (one that would last), you may not make any profit. At those times, the business is still in the early stage of growth and will still require a lot of input from your end. The business needs sustenance and you also as the business owner. Quitting your salary job can make you put a lot of undue pressure financially on the business which can eventually kill the business.
2. Never take a loan to start a business
It is not advisable to take a loan to start a business except if its an existing business that you are trying to scale up. A new business may not yield any tangible profit in the first 12 months. The only kind of loan you could take (if you must) is soft loan from family and friends that doesn’t require any interest. Taking loans especially ones with crazy interest rates can put undue pressure on you and the business.
3. Never put a stranger in total control of your business
What I mean by total stranger is someone that doesn’t share your vision. As much as possible, you should be available to monitor your business. Except if it’s a partnership and the other partner is fully available to run the business. You shouldn’t put your employee in total charge of the business. That stranger because he/she doesn’t carry your vision/passion can run down the business whether deliberately or ignorantly.
What To Do While Waiting For Capital For Business In Nigeria
It can really be frustrating if you have a business idea and what is left is capital to execute it. But Chill! Don’t out of desperation throw your ideas to dogs that would trample it or a robber that would steal it. There are somethings you could do while waiting for funds to start out. Understand that it is a blessing to have some good business idea. Some people have the finances to fund a business but no tangible business idea. So every year, they keep making stupid mistakes and losing money on vague business ideas. Since you have good business ideas, you can do the following while waiting for capital:
1. Pick up some jobs
If you are currently not employed, you can pick up some small jobs around to do while waiting. The income you get can be used to take care of your personal needs and you can also save some for your business. You should not become miserable because you have ideas without funds.
2. Pick up a new skill
This may sound awkward and out of place, but it’s a wise one. Take a look at your business plan (of course you should have one) critically, there are some of the business processes that you could actually do yourself at the start if you are skilled at such. This would reduce your operational cost and automatically reduce the capital needed for the business.
3. Don’t give up
The fact that there is no capital to fund a business does not imply that you throw the business idea into the trash can, keep hoping, be expectant. Search continually for opportunities that can yield capital for you. If you don’t stop, help will surely come through someday
Now you don’t have the excuse of : “No capital” not to start that business. You have seen from this article different ways to raise capital for business in Nigeria. So don’t wait any further to start up your journey to financial freedom by starting up your business today.
Frequently Asked Questions
What is the easiest way to raise capital for business in Nigeria
Government grants or loans is one of the easiest method to get capital for business in Nigeria. This is because the amount you will get is quite reasonable and a number of times, you dont have to pay back
Can I do a business without capital in Nigeria
Yes. There are some businesses you can do in Nigeria that do not require capital. A good example is dropshipping business
- www. smallstarter. com – 10 Guaranteed ways to raise money for a business (with inspiring examples)
- www. rivervalleyk. state. edu- Seven community capitals- River valley