1. Personal Savings: The best way to fund your business is from your personal savings. Personal savings can be defined as, “The money an individual keeps in a bank or other financial institution for future use.” It is not only the best, but the fastest and easiest means of funding a business, as one does not need consultations or seek approvals to access the fund. Also, unlike loans, there’s no interest attached to this method of funding. As an aspiring entrepreneur, you can grow your personal savings by setting aside a little amount from your monthly take-home, say 10%. That way, you will not have funding issues when you decide it’s time to tow the entrepreneurial path.
2. Family: The second best means of getting funds for your business is from members of your family (parents, brothers, sisters, uncles, aunt and cousins). Business Administrators like myself call this method of funding Love Capital. It is so called because, family members are our loved ones. Like a friend will say, “family is everything.” These category of people can provide you with the money you need to start your business, without having to pay back or at zero interest rate.
3. Friends: Number 3 on my list of the 5 best ways to fund your business is Friends. When I say friends, I mean real friends who desire your progress. There’s a popular maxim where I come from, “a good friend is better than a bad brother.” Another saying goes, “A good friend is the god of a pauper.” The true value of friendship is invaluable. If you’re privileged to have good friends like my humble self, then funding for your business will not be a problem. Just ask, and you shall receive the funding you need. But note, to enjoy this, you must be a good friend yourself and you must be trustworthy. Funding from friends can come in the form of a gift or as a zero-interest loan.
4. Grants: One of the best means of funding a business is grants. Unfortunately, a lot of us are not aware of these grant opportunities. What are grants? They are non-repayable funds or products disbursed or given by one party, often a government department, corporation, foundation or trust, to a recipient, often a nonprofit entity, educational institution, business or an individual, as defined by Wikipedia. Tony Elumelu Foundation offers $5,000 (Approximately ₦2,000,000) grant to 1000 African entrepreneurs yearly. Learn more about TEF Foundation on their website, www.tonyelumelufoundation.org
5. Presales: The last on my list is presales, which simply is, receiving money for a product before producing or delivering it. Let me show you an illustration. Mr. P, a retired Naval personnel wants to venture into the business of supplying military hardware to the Nigerian Navy. He does not have the capital to procure and make these products available to the Navy. He writes and submits a proposal to the Chief of Naval Staff. Based on his clean service record, the CNS buys the idea and instructs the Chief of Accounts and Budget to pays him 75% of the contract amount upfront. Mr. P takes this money and orders for the products from a manufacturer in China, with a promise of balancing up at a future date. The Chinese manufacturer produces and ships the hardware directly to the Navy. The Navy pays Mr. P his balance, Mr. P settles the manufacturer and keeps the profit. In summary, Mr. P has succeeded in funding his business through presales.
I hope you are enlightened?