You can hardly listen to a motivational speech without hearing the topic of entrepreneurship or owning a business being discussed.
We can’t deny the fact that Nigeria youths have great business ideas that can move the world but the issue of finance is what has held them down. The issue could either be how to raise funds to finance the business idea or how to manage the finance at every stage of its growth. The four stages of growth every business passes through are the start-up stage, the growth stage, the maturity stage and the declining stage. For each stage, a different approach is needed in financing your business.
Here are some ways you can fund your business at each stage:
At this stage, your business idea is just being conceptualized and the idea is being developed. The risk of a business failure is quite high and this is the reason most commercial banks won’t offer you a loan.
You could use any of the options below while financing your business at the start-up stage:
– Personal savings – you should be the first financer of your business. Even as you plan that big business idea of yours, start saving towards it.
– Family and friends – You can get your friends and family members to invest into your business. One way to convince them that your business is a profitable one is to gain their trust by having a business plan that shows not just the idea but how the business will yield profits. There is a 60% chance of your friends and family members to invest in that business idea of yours especially if you can prove its profitability
– Grants – Grants are non-refundable funds or products given to individuals or corporations to assist in funding their business. There are quite a number of grants you can apply for in Nigeria to start up your business. For example, you can apply for Grant to Bank of Industry, Tony Elumelu Entrepreneurship Programme, Lagos State Entrepreneurs Trust Fund and a whole lot more
– Angel Investors: An angel investor provides the capital needed for starting up your business. Basically, you provide the idea, the business plan, and they provide the capital needed and receive an interest in return
At the growth stage, you should experience a growth in sales and revenue. You can finance your business at this stage with these options:
– Profits – a percentage of the profits made can be re-invested into the business to finance the business.
– Loans from banks – Banks are willing to provide loans to individuals or firms that they know will pay back. As far as you can prove to the banks you will pay back the loans given to you, you can be sure to get your capital
– Grants and Angel Visitors are also one sure bet at this stage
At this stage, sales growth will reach its peak and there will be a growth in revenue. However, sales will begin to decline at a point. In financing this form o. In addition to the forms of financing mentioned in the growth stage, you can finance your business at this stage by buying your raw materials on credit, this is not advisable but if there is the need to, you should have a strategy plan on how the payment plan will work out while still earning your own profit. Also, at this stage, you can have a plan to have more shareholders who will provide funds while owning a part of the company
At this stage, sales growth declines and profit itself declines while costs will keep building. One best way to finance your business is to fall back to your former profits (the importance of saving).
However, one way to drive revenue at the declining stage is to rebrand your product or provide a different product which could help to drive sales.