Dear Motherland Mogul, anyone who said starting a business is fun and easy told a fat lie and worst still, have never started a business.
One of the biggest hurdles an entrepreneur in Africa (or anywhere in the world) has to cross is the hurdle of financing their business. It’s the reason why many fabulous and potential million dollar ideas die every day or remain mere ideas.
Like it or not, money is everything in an entrepreneurs world. Without it, ideas are buried and passions are watered down while frustrations set in, making even the strongest of personalities call it quits and go back to their corporate jobs.
I’ve come up with 8 innovative ideas you can use to fund your startup without necessarily borrowing money. Depending on your situation and kind of business, you’ll find at least one or two you can apply immediately to get your business running.
1. Sell your valuables
Yes! You saw that right. If you’ve been struggling with acquiring funds to finance your startup and nothing seem to be working, maybe it’s time then to look inwards.
Search your house thoroughly for any valuable item that could fetch you a fortune when you sell…that gold wristwatch, expensive jewelry, MacBook, or iPod, whatever.
It’s time to let them go for the bigger stuff. If you aren’t ready to get rid of these precious items to make your ideas work, then it doesn’t matter what you say, you are not ready for business! Or better still, you are not convinced about your ideas.
Entrepreneurs are people that can give everything including their lives for something they believe in. That is one skill you need to survive in this overcrowded business space.
2. Dip into your savings
This is what your savings are meant for: to invest in opportunities and ideas that can transform your life and change your world. Your savings are not meant for spending, fixing urgent situations or paying debts.
You can have separate savings for that but primarily we save to invest. Just in case you don’t have any savings, you might want to take some time making some money at first. So try to get a job where you could work for some time and save before starting your business.
3. Your Rich Friends
What big money is to you is nothing to some of your rich friends. You know this is true. Instead of dying in silence and wondering if they will be willing to help you, swallow your ego, take the bold step and pitch your ideas to them.
You’ll never know if they’ll support you unless you ask. If one rich friend says no, walk up to another until all of them have said no and at that point, you know something else is wrong. Maybe something that has to do with your approach or the feasibility of your ideas.
Your friends should be willing to help you make your dreams come true especially when they can. After all, what are friends for?
4. Crowdfunding from family and close relatives
Crowdfunding is a good fundraising alternative for entrepreneurs. It involves raising a small amount of money from a large number of people. Crowdfunding can be done through online platforms.
The best people to start fundraising from are your family and relatives. You can start by listing down all those who can potentially fund you and write down how much you think they can conveniently donate.
Once you’ve located your potential donors, go reach out to them. Pitch your ideas so that they know what you’re capable of doing. For some other family members, you can ask to instead borrow money and then pay as your business yields profits.
5. Leverage on funding opportunities
Governments, NGOs and other private and public bodies are providing support to entrepreneurs all over Africa. Since more people are participating in entrepreneurship, these bodies come up with initiatives and CSR projects to provide financial support to budding entrepreneurs. Be sure to leverage these opportunities when they show up.
Other funding opportunities include idea-pitching events. For example, the upcoming SLA Accelerator gives entrepreneurs an opportunity to pitch their ideas. Then the top selected ideas get to win large sums of money, partnerships, and mentorship.
Such events provide you an opportunity to not just fund your business when you win, but also learn from your mistakes if you lose. In the end, it’s a win-win situation where you get to build on your ideas either way.
Regardless of the kind business you run, a partnership is a smart way of funding your startup. Strategic partnerships will not only afford you funds, but also help you leverage the experience, expertise, resources, and network of the other party.
Just make sure you go about it the right away and involve a legal personnel in all your dealings and agreements.
7. Microloans and peer-to-peer lending
While I always discourage small businesses from starting up with loans, at times, that might appear to be the wisest step to take. Microloans are small business loans offered by microlenders to help small or relatively new businesses finance their business.
As a new business, you might not qualify for a bank loan because of the collateral requirements and others. But with microloans, you can get your business started without acquiring too many debts or paying high-interest charges.
Similarly, peer-to-peer lending is a new debt financing method that provides a platform where lenders are connected to borrowers. You don’t need a financial institution for a p2p lending. The interest rates are also at an all-time low and less risky and safer than other methods.
8. Angel and seed investors
Angel/seed investors are wealthy and affluent individuals who provide a business startup with capital or funds usually for a convertible debt or ownership equity in return.
Most small business owners don’t buy into this idea of business funding. This is because it involves sharing their business ownership with another business even if it’s a small percentage. However, you will consider this option when you think of the bigger advantage, to you as an individual and to your business as an entity.
No amount of funds will cover up for your incompetence, ignorance or poor products and services. At the same time, nobody will be willing to invest their money in a business you’ve not invested adequate time and effort into.
Test your ideas. Hone your craft. Know your industry. Understand your target market. Study your competitors. Identify trends. Research. The goal isn’t 100% perfection but at least do so much background work that anybody will want to invest in your idea. Life is not a dress rehearsal, neither is running a business.
So before you go about looking for funds to finance your business. Ask yourself one very vital question? “Is your idea worth investing on?”
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