Starting a business is really expensive in any country...Getting capital to start a business can be the end of any business, even before you start. The thing that makes starting a business more frustrating is that your initial estimate of your capital requirement is usually much lower than what your business really needs when you get started.
The fact of the matter is that getting funding for early stage business in Nigeria is incredibly hard. Funding options are limited.
What are the limited options to get your hand on cool Naira for your business? Well, follow on and I will tell you.
Self-Financing: In any early entrepreneurial scenario in any country, your first source of funding is personal. Yes, your personal bank account should be the first place you look for funding for your capital. The logic is simple. If you as a business owner are not willing to take the risk of investing in your business, why should any one else? The problem with this scenario is that it creates problems of it own. A lot of people who could benefit from starting up a new venture, e.g. the unemployed or under-educated, don’t have the deep pocket required to fund their own business. So, if your bank account is closer to null than a billion, where do you go?
Family: When your bank account is dry, let’s hope you have people close to you to supply naira or dollar or whatever their preferred currency is. The people closest to you are your family. In many cases, not just in Nigeria, the first set of external funding comes from the family. Parents who are quick to believe in their children’s ability are one of the most popular sources of funding. Now, if your family refuses to fund you, that is a red-flag to others. However, if your family is unable to fund you because they don’t have millions in their bank account, all is not lost.
Friends: Friends are invaluable; I think most of us can agree on that. They cheer us up on our worst days. They hold the stories of our lives. They can also be the key to getting your business off the ground. There is a caveat to getting money from friends: you have to be careful. Money can be a huge disruptor to relationships, even familial ones. When borrowing money from friends, be clear on their conditions. If need be, put things down in writing so that both of you are clear on what is required during this financial transaction. The thing about getting capital from friends is that even if your immediate friend is unable to help, they might know someone in their network who could be of help to you. And if the network is not wide enough or rich enough to help, well…
Formal Institutions: If your personal network is unable to fund you, then you may have to turn to an institution. You will notice that I did not say bank. Banks are one type of financial institution to provide capital for your new business. However, believe it or not, there are other institutions in Nigeria that will be able to fund your project if you are able to proof the validity of your business idea. The hard part of getting funding from these sources is not presenting your idea, it is finding the right organization to provide the funds. So, get looking already!
If you own a business in Nigeria already, let us know in the comments section how you got funding for your business!
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