Financial Literacy
7 Tips for Financing Your New Business
If you want to start your own business but don’t have the funding, you can still get it off the ground.
As Inc. states, “Nothing is scarcer than cash (except maybe sleep) when you’re just starting out.” One of the most common questions that budding entrepreneurs ask is, “How do I find the money to start my business?” While there are a variety of ways to obtain funding for your business, there isn’t a one-size-fits-all answer.
So if you want to start your own business but don’t have the funding, you can still get it off the ground. Whether you are a millennial making your first foray into business, or a seasoned entrepreneur looking for a fresh start, here’s a number of ways to raise the funds you need to launch your venture:
Have a detailed business plan
A business blueprint is the foundation of every successful business, as it maps out the course of the enterprise for several years. Without proper business plans, investors will not see the value of investing in your business. Martin Zwilling, the veteran startup mentor, says that, “to investors, startups without business plans are just expensive hobbies.” According to the entrepreneur, “one of the quickest ways to kill your credibility and your startup is to offer a poorly written business plan, or none at all.”
If you want to secure sufficient startup funds from lenders, you must be able to show them a detailed business plan. It uncovers the opportunities you have identified in the market that will bring profits – if funded. Additionally, in the business plan, you should indicate measurable goals that will convince lenders to support your idea.
[READ MORE: How To Use Return On Assets As A Great Investment Tool]
Begin with Bootstrapping
When first getting started, many entrepreneurs use “bootstrapping,” which means financing your company by scraping together any personal funds you can find. This typically includes your savings account, credit cards, and any home equity lines you may have. In many cases, using the money you have instead of borrowing or raising is a great approach – in fact, some entrepreneurs continue to bootstrap until their business is profitable. This can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into snags along the way.
Network with the right people
You’ve probably heard it before, networking with success-oriented individuals will enable you to significantly grow your business. Professional networking is healthy for all sorts of businesses and it can help you acquire the funds to start a new enterprise. When you’ve done a solid amount of face-to-face networking, you can also take advantage of these networking skills online. You can use a crowdfunding site to raise money to start your business. Set a goal to raise a particular amount of money within a specific period and use the power of the crowd.
Get a Loan
Lending standards have gotten much easier. Platforms like Paylater, Renmoney, Kwikcash, etc afford funds for small business lending. So why not apply?
Attract an Angel Investor
You also will probably eventually need more capital to really get going – to hire people or get office space, for example. You’ll likely need to reach out to outside investors. A good place to start is angel investors, usually established business professionals with high net worths who are looking to invest in promising companies. If you find the right angel investor, you may benefit from their expert advice and management skills.
When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier.
[READ ALSO: 5 Money Mistakes You Might be Making]
Raise Money from Your Family and Friends
Asking your friends and family for money might seem like a daunting prospect but tapping those closest to you is often a good first step before getting external funding. These are the people who love you and trust you. Most importantly, they believe in you and your potential. And hey, it can never hurt to ask.
Before you ask your friends and family for money, you should have a business plan ready. This way, you can explain to them exactly what you’re selling, what you plan on charging, how you’ll make money, and whether you’re asking for a loan, an investment, or a gift (i.e., whether or not they should expect to get back any money they put into your business, and if so, how much).
Look for a strategic partner
Getting a strategic partner for your new business can help accelerate the development of your business. Your partner has a bank account as well. Between the two of you, you might have enough money saved to get your startup off the ground. If not, it’s another person to help you secure funding through the other methods outlined in this post. Partners also reduce your liability. You won’t be on the hook for as much if things go south.
Moving forward
Prioritize Expenses
Commit to spending only what you have to, which you can do when you determine what you need, want or can wait to buy.
Start Small
Maximize your budget when you start small with the bare minimum. Then upgrade slowly as you can afford it.
Do It Yourself
Until you get your business off the ground, keep your staff roster light and try to do as many tasks as possible by yourself.
[READ FURTHER: How to plug your spending leaks]
Conclusion
Finding funding can be the hardest part of getting your business off the ground, but also the most rewarding. Once you’ve saved, gotten approved for a loan, or found other people to invest in your business, you can get back to or start your dream job! Though it can be a long road to success, finding allies along the way (whether they’re friends, angel investors, or venture capitalists) to help keep your business afloat can make all the difference in the world. Good luck!
Columnists
How MSMEs can get easy access to finance
MSMEs must take the following steps for loan readiness.
Personal Finance
5 Key habits of people who are very good at saving money
Let’s quickly highlight 5 key habits usually found in individuals who are very good at saving money.
Saving money is hard. Period. This is a well-known fact. Despite the vast amount of information on ways and techniques to save money out there, 90% of people still struggle with it.
A large percentage of the working demographic live paycheck to paycheck. A huge chunk of this percentage is swimming in an ocean of debts. Avoiding calls and burning bridges, in a bid to save face.
When it comes to personal finance and savings, there are two foremost arguments
- The Income argument
- The Individual argument
The Income school of thought argues that for you to be able to save money, you must be earning enough. This means that the art of saving is largely dependent on the income earned.
The Individual argument postulates that if you can’t manage the little you earn, there is no guarantee you will be able to save when you start earning more. This means that the art of saving has more to do with the individual involved than the income in question
Whatever side of the argument you lean on, I believe you must have come across people who are simply just good with money. it seems to come naturally to them. They have so much control over their financial life that other people confidently entrust them with their own money.
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After a little bit of research, we want to quickly highlight 5 key habits usually found in individuals who are very good at saving money. There might be other factors, but these five habits are always present.
Delayed Gratification
Money smart individuals are not impulsive when it comes to spending money. Put in simple terms, they buy because they need and not because they want. They seem to defy the general rule of marketing which believes that human beings naturally make purchases based on emotions and not logic.
They are not lured by the appeal of big brands and most times go for products that will last a long while
Individuals who are good with saving money make a lot of sacrifices for the greater good ahead. They just don’t set saving goals, they have the discipline to achieve them.
They readily sacrifice the little joys of evening shawarma to make rent at the end of the year without going broke.
Delayed gratification is one key habit that is always present in individuals who are very good with money.
Read Also: 10 ways to save and make more investments
Obsessed With Self Control
Individuals who are very good at saving money usually exhibit a high level of self-control in other areas of their life. A closer look will reveal that they portray the same meticulous approach they have with money in other areas of their lives.
Many were taught by their parents from an early stage, while some picked it up themselves while growing up.
Individuals who are good with money possess extraordinary willpower which keeps their human side in check. This helps them live below their means and always dredge up extra cash to save.
Big Record Keepers
Not many people know the exact amount they spent last month. It takes a meticulous individual who is obsessed with saving every penny to go that far.
Money smart individuals keep clear records of all their transactions. These records help them draw up a savings plan or goal.
Money smart individuals see shopping as a big occasion. They don’t trivialize the art of spending money as ordinary people do. They keep good records of all transactions made and always reflect on them.
They have a good knowledge of the numbers and can always tell when they are overspending.
Numbers are critical!
Every Penny Counts
Individuals who are good with saving money have equal respect for an N1000 note and an N20 note. To them, there is no difference between the two. They treat money as an entity and do not apportion importance based on value.
Ordinary folks see an N20 bill as easily expendable, Money smart individuals see the missing N80 to make it an N100.
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Huge Fan Of Investing
Money smart Individuals always have a knack for investing their savings. The major driving force behind their saving habits is usually the love for investing. You cant be a successful investor if you don’t have idle cash to invest.
Money smart individuals are fund of making long term bets. They enjoy the idea of watching their money yield more money. They are obsessed with it.
They are always fishing for the latest smart investment opportunities available.
Their saving ethics is usually driven by the fear of missing out on a very good investment opportunity.
There might be other contributing factors behind the reason why some people are better at saving money than others.
We believe the above reasons are the foremost
The Good news is most of these habits can be adopted by people who are eager to join the elite club of money-smart individuals.
Today is the best day to start!
