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Small Business Funding – 9 Ways To Fund Your Small Business In Nigeria

9 Ways To Fund

You have this great business idea that won’t let you sleep and you are super excited about it. But, in the midst of this excitement, you realise you don’t have the fund to make the idea a reality. Actually, this can be discouraging, and sadly, this is the case for many people. Small business funding opportunities have always been a challenge for entrepreneurs in Nigeria but the good news is that there are several ways you can fund your small business without breaking a bank.

That being said, we have compiled nine effective ways to get small business funding for your start-up. We trust that one will definitely work for you.

See Also: 10 business funding sources for business owners in Nigeria

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

1. Small Business Funding Through Bootstrapping

One of the most effective and fastest ways to fund your start-up is by bootstrapping. You can as well call it “self-funding”. As a matter of fact, some investors only fund businesses that are up and running. In like manner, some funding schemes only accept applications from businesses that have started operation.

Basically, you can bootstrap your business with your savings and by reinvesting profits back into the business. If you indeed believe in your business idea, there’s no harm in investing your money into it. Thereafter, getting other funding opportunities will be easy because you have enough facts and figures to back up your claim.

See Also: 9 Business funding opportunities for women-owned business in Nigeria

2. Small Business Funding Through Family and Friends

Another common and fast way to fund your business is through family and friends. However, when sourcing funds from people you have a personal relationship with, it is important to have a solid and workable agreement in place. This will help you avert potentially harmful issues that may crop up when your business picks up.

Also, ensure you pull through with whatever you received the fund for, to avoid ruining your relationship with them. And, you don’t want them feeling like you scammed them. As much as you can, be very transparent.

See Also: 35 Booming business ideas and step-by-step guides to starting them; a strategic and financial breakdown of the most lucrative businesses in Nigeria.

3. Angel Investors

There are angel investors who are willing to invest in your business provided they find your idea interesting and profitable. Angel investors can be your family member or a neutral person. As the name implies, investors commit their money to your business and they expect returns. So it’s a win-win relationship.

To attract an angel investor, you must have hands-on knowledge of your business and must be able to convince the investors. You convince them by showing them how they can make a return on their investment. You do this with real figures clearly shown in your pitch or business plan.

Don’t get angry when an investor comes into your office unannounced or demands every detail about the business. Every investor love to protect their investments and it is your responsibility to give them a return on their investment.

See Also: Top 10 Accounting software for small and medium enterprises in Nigeria.

4. Small Business Loans

Generally speaking, start-ups find it difficult to access bank loans due to the requirements involved. Actually, banks are in business to make money so they are careful in giving out loans to businesses that are just starting out. Because there is little guarantee that they will make their money back.

Nevertheless, the good news is that, there are companies whose sole purpose of existence is providing loan for small businesses. Some of these companies include Kiakia.co, Lydia.co, Quickcheck, Carbon and many more.

See Also: What nobody tells you about entrepreneurship

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

5. Small Business Funding Through Grants

Nowadays, there are several grant platforms available for small business owners to explore. In fact, there’s hardly a year without a grant for grabs. A business owner must therefore be on the lookout for available grant opportunities.

To get a grant, you must have a concrete business plan, a registered business, a good financial projection, and a mind-blowing pitch in place. This will prepare you ahead of time. If possible, get your business registered with the relevant bodies as this is sometimes, a requirement.

See Also: Small Business Grants for women owned businesses in Nigeria

6. Crowdfunding Sites

Crowdfunding sites bridges the gap between fundraisers and investors/donors. Usually, this is done online. There are numerous crowdfunding sites that allow individuals to raise funds from a lot of people who are interested in their project/business ideas. The return on investment can be a reward, equity, or debt-based.

Nevertheless, every crowdfunding site have their criteria and the type of project or business ideas they support. But, there is definitely one that will suit your need.

7. Small Business Funding Through Partnership

Getting someone onboard as partner to contribute to the startup capital is also a good way to generate fund for your business.  The partner may not necessarily be an active partner in the business but, that depends on the agreement between both party.

See Also: How to write a business plan step by step in Nigeria

8. Venture Capital

If you are in need of huge capital to finance your business, you can consider venture capital. Venture capitalists provide early-stage funding to high growth potential start-ups.

However, they demand a large stake in the company. Most times, they expect two-three times their original investment. Usually, in 5-7 years of operation.

Most venture capitalists pull their funds together and open a venture capital firm through which they fund many startups. Usually, these firms have a specific type of ventures they fund and they mostly fund companies that are incubated in business incubation hubs. Most co-working spaces run incubation or acceleration programs that attract venture capitalists.

9. Small Business Funding With A Well Paying Job

Have you heard of the word “side hustle”? Yes, you can start your business as a side hustle while maintaining a well-paying job. That way, you can have a stable source of income in place and your business isn’t suffering. However, there are some jobs that frown at being committed to another cause while working in the organisation.

But, if your job permits it, give it a shot. Actually, a large number of entrepreneurs started this way. Another advantage you have is that you have the opportunity to test run your business model.

See Also: Business plan samples for small business owners to follow.

In conclusion, to get small business funding from any source, you need to do your homework first. Basically, your business plan must be in order. Your financial projection should not be whack and you must be clear about how the business will make a profit. When this foundation is sorted, the hardest part of the job is done.

I must also mention that you should never get discouraged when you try applying for these business funding opportunities and fail. Learn from your mistakes, apply the lessons learned when another opportunity presents itself.

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