7 easy ways to raise capital to start a business

Putting your money where your mouth is important, this article will give different means of raising capital to start a  business.

Many people always have ideas. They all seem to be great, but very few put their ideas into practice by coming up with a business. To the many left out brilliant ideas the excuse is always lack of capital to start up a business. Here are ways that one can make capital to start a business.

1) Personal Assets

Mostly belongings you can do without. It all goes down to how much ones can sacrifice. The hope here is always to get better versions of your assets once your business brings profit. It depends with one’s risk appetite. As much as it looks logical to sacrifice, not everyone find it easy to let go of their assets. Hence, people may opt to offer their assets as security to bank loans.

2) Savings

It is always good to do it yourself. Put together an amount of money from your income. It may add up to the capital you need to establish a business. At times your savings may not be enough but it helps to attract more capital since it will be easy to convince family, friends, the bank and other ventures that the money you have and what you need to top up for your business.

3) Crowd funding

It goes back to self. How far can one go in terms of networking, sensitization and convincing crowds of people? With the help of social media one can channel money from social media, open forums can also be a source of acquiring cash. This method helps the entrepreneur to get small money from different sources. An example would be how the activist Boniface Mwangi is using social media to fund his campaigns for a political seat in Starehe constituency in the coming elections.

4) Partnership

One can get a partner who has money to contribute to the business, or come together with a partnership where you all contribute on skills and money needed to start the business. “Billionaires never have a business called ‘mine’. Are you in cooperation with others such that you can get out and that business will run smoothly? Great minds don’t compete, great minds pull together,” says Architect John Kithaka, CEO and founding member of the Fountain Enterprise Programme (FEP) Group of Companies.

5) Small business grants and loans

Looking for capital to fund your business can be a full time job on its own. At times running to the bank with your business plan may not guarantee that you will get a loan. However, all is not lost for Kenyan entrepreneurs. There are options like: M-Shwari from Safaricom, Uwezo Youth Fund, Vision Fund Kenya among others that offer financial support. Do not let  opportunities like these by pass. However, it is good to know the difference between grants and loans. Grants do not attract interest and are not to be repaid Loans attract interest and are to be repaid within the stipulated time.

6) Family and friends

Your family and friends will determine the future of your business since they have a strong influence over you. Those close to you are more likely to believe in your vision and listen to you, and be willing to offer financial support and see your business grow. It could be a gift, a loan or an equity investment in the business. Each have pluses and minuses, and each should be recorded in writing. In many cases, a legal document. An example is Eric Muthoni, founder of Stawi Foods Kenya.When he started his business, Stawi Foods, he was only 25 years old and fresh out of university. He didn’t even have any money to start a business so he borrowed from his family.

7) Angel investor

An Angel investor is usually a former entrepreneur or professional who provides starting or growth capital in promising ventures, and helps also with advice and contacts. Unlike venture capitalists, angel investors usually operate alone (or in very small groups) and play only an indirect role as advisers in the operations of the investee firm. They are deemed to be ‘angels’ in comparison with grasping investors who are termed ‘vulture capitalists.’ Also called business angel.

KCB’s Lions Den simplifies to entrepreneurs how angel investors work. They get a link for entrepreneurs to apply, present their business plans to their panel (which is full of professionals from different careers – most of them are CEOs of their companies) and they get their business sponsored on an appealing business idea. To attract an angel investor, have an attractive business plan, unique business service, and work with your close networks.

One may use either path or all of the ventures to get capital the goal is always to see your business grow.

Photo by: NerdWallet

 

 

 

 

 

 

7 replies
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