One of the major challenges facing small businesses today is securing funding for business development. This is even more worrisome given the increasing reluctance of financial institutions to lend to the small and medium scale businesses especially startups which they consider as very risky.
As you already know, an idea without funding to realize it, will forever remain an idea. So, securing funding for your idea is necessary to bring it to reality. If you have a business that is struggling to survive because of lack of funds or an enterprise that needs funding for capacity expansion, then, beyond internal funding arrangements, you would need to source for some external funding too.
Getting an investor to invest in your business could really be an uphill task especially for startups and businesses without very good pedigree. You’ve got no credentials to convince the prospective investor that your business is the gold mine he’s been looking for. How then do you get him to ignore other equally promising if not more promising business ideas on his table in favour of yours? Thus, it might be really challenging securing funds to grow your business.
Here are three ways in which you can secure external funding for your business besides support from relatives and family members.
- Participate in business plan competitions. Entrepreneurs’ Square regularly publishes available business grants and loans opportunities. Tony Elumelu Entrepreneurship Programme (TEEP) for instance annually awards 1,000 African entrepreneurs $5,000 in grants to fund their business ideas. African Entrepreneurship Award, Diamond Bank Building Entrepreneurs Today, Youth Enterprise With Innovation in Nigeria YOUWIN etc. are similar business grant awarding programmes. Also, the Bank of Industry annually offers single digit interest loans to prospective young entrepreneurs. These among others are opportunities you must start considering. To be able to compete favourably in these, you must at all times have a bankable business plan in place. This is important because sometimes you might get the notice late especially if you don’t subscribe to updates on this website. However, even at short notice, you can still submit a well packaged entry if you already prepared it. Like they say, opportunity favours the prepared mind. Please it is important that when submitting your entry, you go over the entry guidelines once again and be sure that your entry meets these guidelines. This is important as these guidelines form the first screening conditions. Don’t jeopardize your chances of getting funding for your business by ignoring the guidelines.
- Discuss your business idea with people. Note: you’re not advised to divulge every bit of information about your business to people. But discuss the main goals, vision and prospects of your business. People often fear that by discussing their business ideas with others, they risk having other people implement these ideas before them. While that might be true if and only if you give them enough information to be able to implement the plan, the fact is that for most of the times, it turns out even a better strategy at getting your business idea to be appreciated by the guys who have the way with all to invest and make it a reality. Besides, idea implementation is driven by passion. Therefore, the other guy you fear might double cross you and implement the idea might not be courageous enough to go ahead. So, share snippets of your business idea with your friends, colleagues, benefactors and other people who you believe will benefit from the business. Remember, in business, the driving force is “what is in it for me?”
- Identify and join cooperatives. Yes, this can work out some magic. Like was mentioned before, financial institutions are growing more wary of small and medium scale businesses especially startups. However, if you identify with other businesses in your cluster or your niche and form a cooperative, these institutions will feel a bit safer to lend to such business clusters. In this case, one business serves as guarantor for another business. There are many similar programmes put in place by the federal government, like the agricultural credit guarantee scheme and the incentive based risk sharing system. So, if you’re not part of a cooperative, it’s time to identify and join one. Besides, these cooperative could be the first port of call when sourcing for funding for your business.
These 3 ways to secure funding for your business are by no means exhaustive. If you know of others, you can share them in the comment section below. Otherwise, share the post to your friends and network. Good luck!