We are social creatures and will always need other people’s help including their money. Hence, the concept of ‘other people’s money’ in business. I know how frustrating it can be to have a business dream that’s forestalled by the lack of money. You’re not alone.
Understand that the money to run a business doesn’t always have to come from you. And I’m not talking about going to the bank to request a loan, except you have strong credit and collateral.
Now, what’s the antidote to all these frustrations? Other people’s money (OPM) of course. Private investors are probably the best source of small-business financing. And you would be surprised by how many people you know, even on a casual basis who have the capital and are willing to invest in your small business venture. As a matter of fact, you don’t necessarily need to know someone “rich” to get into a business that requires capital investment.
If your idea has been tested, has hit the market, and has potential for growth, you will require huge capital to scale. If you do not have the funds to fund the expansion, you need other people’s money. Period.
Different Ways To Use Other People’s Money
There are different ways you can use other people’s money to fund your business and we’ll comb through them.
Grants are one of the best ways to fund your business because the funds don’t have to be paid back. And, you don’t need any form of collateral to access it. All you need is to demonstrate that you’ve got the attributes that are vital to the success of the business.
The right information at the right time is power in business, so you have to keep abreast of what is happening in the entrepreneurial space. This will help you know the organization, foundation, or group, that is issuing grants that pertain to your industry. We publish these opportunities on the “Opportunities Category” of Entrepreneurs.ng, so make sure to always check them out.
Some of these grants are industry/sector-specific. Sometimes they take different shapes and can be gender-specific. Sometimes, you have grants to support the hiring, training, and development of employees. Other grants can focus on product development, accelerating technology commercialization, support upgrades to manufacturing facilities, or facilitate exporting. And, grants can both be driven by private and government bodies.
2.) Credit From Vendors
More often than not, capital expenditures are the aspects of the business that requires money the most. Therefore, it’s not a bad idea to finance your capital expenses by vendors. This is a financing model that is mostly done in kind and not in cash. Here, vendors bear the brunt of the cash flow. This is a great way to finance your business, especially when it is highly capital intensive and involves equipment purchase.
3.) Initial Public Offering (IPO)
Initial Public Offering (IPO) is another way of using other people’s money to grow your business. This method is best approached by those who have attained some level of growth and have complete faith in their brand.
Furthermore, if your business model has some disruptive technology and appeals to the public, you can decide to ‘go public’. When you go public, the public and investors will be able to invest in your company and you’ll be listed in the stock exchange. However, this means that the investors will own a certain percent of your company, and a large number of people will share the risk and monitor the growth of your company.
4.) Venture Capitalist (VCs) And Equity Investors
Venture capitalists and equity investors are a set of investors that fund your business with their money in exchange for equity. They invest in different stages of a start-up; there’s seed funding and growth funding.
If you don’t have the funding to take your business to the next level, seek out investors. Remember, 10% of an N1 billion company is bigger than 100% of an N1 million company.
Entrepreneurs are now creative in the way they seek funding in recent times. Quite a number of startups have turned to crowdfunding as a viable means of raising capital for their businesses. More so, crowdfunding ventures have been proven to be a valuable way to court attention, create publicity, and public sympathy for your brand.
Simply, crowdfunding makes use of easy access to vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together for the sole purpose of investing in your business.
It may not be easy to decide the best option as a business owner for accessing other people’s money. Sometimes, it may take trial and extensive research to understand the best fit for you. Also, you have to carry out due diligence on the investors before you finalise with them and sign the dotted lines.
Which of these models of other people’s money have you used? Please share your choice with us in the comment section below. Also, do share this content with your audience if you found it useful.
Let’s create visibility for your brand today and put your business on the world map. Contact us today to make your brand the preferred choice among our audience of entrepreneurs and business leaders.
To keep track of our activities, follow us on Instagram.