12 Effective Ways You Can Raise Start-up Capital For Your Business

Share to help others

Image Credit : Niels Steeman

The major excuse many people give for not starting their dream businesses is lack of capital. Capital is usually referred to as the financial resources that a business needs to get the business started to deliver products and services to the consumers, clients or customers.  Many good business ideas do not become a reality because of lack of funds to execute them. It can be very frustrating to have business ideas and not have the capital to execute them. Every entrepreneur must settle the issue of a capital source in their business plan.

Below are 12 sources of start-up capital that you can use to get your business off the ground. Take a critical look at each of them and determine the best option available to you. Start with the most available and easiest option which suits your kind of business and environment.

1. Begin with your personal savings

How much cash do I have at hand? This is the first question you should ask yourself when you think of starting a business.  I usually advise people to always start small. Most times many persons are looking for a large sum of money to start their business whereas they can start with the little money that they have as a way of testing the waters and source for more funds to grow the business as time goes on.

Almost every business can be started small. There is always a small version of every business you see. Also, most large businesses you see started small and from personal savings. Mark Zuckerberg started Facebook in his dorm room at Harvard. Steve jobs started Apple Computer from his parents’ garage.  One of the advantages of starting small is that it gives you the opportunity to make all the business mistakes would most likely make without losing large sum of money or going bankrupt.

Instead of waiting endlessly for that big loan, you can start with that little personal savings that you have. If you don’t have a personal savings, you can go and work for someone else for some time and save part of your monthly income. When you get a business idea, you may have to work for other people for some years, and save up some start-up capital.

2. Ask your family and friends

What are family and friends for? They are there to help one another to become better. I prefer friends or family members asking me for financial support to start a business than for them to ask me for a loan to meet their personal needs. I am very willing to support my friends and family members and in fact, anybody who comes to me for business support. The reason for this is that by giving financial support to others, you are empowering them to be self-dependent and this way they can meet their needs by themselves, instead of pestering you all the time for help. Consider asking your friends and family members for financial help to start your business. Many of them will be willing to give you their support.

Read Also:  When You've Got A Great Business Idea, But No Capital, Do These

3. Team up with a capable partner

You can sell your idea to someone who has the money. Both of you can partner to do the business. Many persons frown at the idea of partnership in Africa because of the inherent problems and disputes that arises from profit sharing, ownership tussle and greed. These problems need not be encountered if the terms of the partnership are spelt out in details from the beginning of the business and documented legally.

Partnership has many advantages which includes: pulling of resources together and sharing the risks and responsibility of the business.

4. Use upfront payment from potential buyers

Many customers are willing to make an upfront payment for the product they want to buy. All you need to do is to make a catalog of the products you are selling from which customers can make their choice and place their orders. With the money they pay you for their order, you can source the items and deliver to the customer. This is what many online shops do. Many of them don’t have most of the items they advertise on their website. They simply partner with the producers or distributors of the items from whom they buy the items when they get online orders.

5. Crowd funding platforms can help

This is one of the newest ways entrepreneurs are using to raise money for business. It is an online crowd financing scheme. Here many individual investors put in small amount of money each – as the case may be. This little amount of monies invested amount to large sums which is pulled together to finance good and convincing business ideas and proposals from which the investors expect to get a percentage of the profit that the business will eventually yield.

Some popular crowdfunding platforms trending include, Indiegogo, Rocket hubKickstarter, Kiva, Fundly and Kroudster. Feel free to investigate each of them in detail so as to know which of the platforms that best suit your business plans.

6. Join a cooperative society

This is one of the oldest means of raising business start-up capital. Members of a cooperative society contribute funds periodically, usually monthly. Each month a member of the society is being given money from the funds pulled together by the members of the society. For example, If I belong to a cooperative society of about 25 members, and each member contributes $200 each month, about $5000 pulled together or $3000 or any amount out of the monies raised each month can be used to fund a member’s business idea with little or no interest. I bought my first real estate property from money given to me by a cooperative society I belonged to at that time.

7. Look for willing Angel Investors

Angel investors are people who have the money and are interested in your business idea or small business and willing to invest their money into your business with a view to getting a percentage of the interest or return from the business or equity (ownership of a percentage of the business).

Angel investors are usually successful business people who are simply looking for ways of growing their wealth. They bring in their wealth of experience to the table when they invest in your business by giving useful advice as to how to make the business to succeed and to expand.

Read Also:  Looking For A Business Partner? Here Are 15 Qualities Anyone You Choose Should Have

They are mostly interested in investing in the formative stage of a business.

Many wealthy people around you are potential angel investors. The mistake we make most times is that we go to borrow money from them or ask them for financial help instead of presenting a detailed and convincing business plan to them and letting them know that you are willing to let them own a stake in the business if they can invest into it.

8. Look for willing Venture Capitalists

Venture Capitalists are similar to Angel investors, but Venture Capitalists are usually investment companies that are on the look-out for promising small businesses or business ideas whose owners doesn’t have as much money required to fund the business and make it big. They usually have enough money required to make the business big and profitable. But the small businesses or business plans must meet their criteria for selection and it must be very convincing and have good potential for profits.

Since Venture Capitalists are willing to inject large funds into your business, they are also interested in having a say in how the business would be run and the direction of the business all in a bid to make it more profitable and grow.

9. Consider putting up your asset for sale

This is really a personal decision. I don’t usually subscribe to selling off assets for no good reasons. However, I think you can consider this idea if you have started the business and it is profitable and you need more funds to grow it. I don’t advise selling an asset in order to start up a business but to grow an existing profitable small business.

If you have assessed your small business and you are convinced that it will grow and get more profitable if more funds are injected into it, then you can consider selling your car, land or any other asset and use the money realized to fund your business instead of going to the bank to collect loan at a very high interest rate. You can even buy the asset again later when your business has expanded and is yield more profits.

10. You can contest for business and entrepreneurship grant competition

There are several NGOs that give start-up and existing business grants to winners of an entrepreneurship or business ideas/plans competition that they organize.  The Tony Elumelu Entrepreneurial Program, TEEP have been giving business grants to winners of their annual entrepreneurship contest in Africa to fund their start-up or existing businesses. I know one of the winners the TEEP who had no money to fund his start-up business, but today his company is worth thousands of dollars – and is still growing – by investing the money he won from TEEP. Shell live wire also run a similar program.

If you believe that your business idea is convincing and has good potential for profit making and growth, why not register for a business grant contest. Who knows? You could will and get extra money to fund your business dreams.

Read Also:  Top Five Ways You Can Start Making Money Online On Slourish

11. Try purchase order financing

This applies basically to businesses that are into supplies. Here the company that you are to deliver the supplies gives you a purchase order, P.O.  indicating that your payment for the supplies has been approved and in several companies, you should receive payment for your supplies within one to three months after the P.O. is issued.  Therefore, if you can show the approved P.O. document to Purchase Order Financiers – who are usually individuals or companies that finance the execution of a Purchase Order for an interest- they would give you the money you need to execute that project or deliver the supplies. You make your profit and pay the P.O. financier an agreed percentage of the money given to you as interest.

12. Approach Micro-finance Banks for a business loan.

Micro-finance banks are mainly interested in financing small and medium scale enterprises, SMEs and without mandatorily asking for collateral. Isn’t that great? Most commercial banks will most likely say NO to your request for loans and their interest rates is usually on the high side if they agree to give you and they always ask for collateral.

However, microfinance banks are willing to give SMEs business loans at a considerable interest rate. In Nigeria, a popular microfinance bank that has been helping SMEs is LAPO Microfinance bank. You can approach them for your business growth loans.

I must say that your chances of getting business loans from banks will be high if your business is already in existence. Most banks are reluctant to finance a business idea that only exist on paper. They prefer to see that you have put structures on ground, no matter how small it is. They believe that you may not use the money they give you for the business if you have not started the business. They don ’t want to incur bad debt.

Try any of the above sources of capital for your start-up business and achieve your business dreams. Cheers! I wish you good luck!

What are your views about this article? Let us know using the comment section below. If this article was of help to you, kindly share with friends using any of the social media platforms at the top or bottom of the article.

Do well to join our Telegram group to relate with hundreds of like-minded people about investment, business and money matters. Just click our Telegram group link after installing the telegram app on your mobile device.

You can also follow us on Facebook,  Twitter or  Instagram for frequent updates with vital information on entrepreneurship, business, investing, inspiration and wealth creation from time to time.

Share to help others


  1. I might be mistaken but these “cooperative societies” sound a bit like those Egyptian structure-shaped schemes you might have heard a thing or two about.

Leave a Reply

Your email address will not be published. Required fields are marked *