How to Sources Funds for your Business Idea – My thought & Experiences

Written by

Nicholas Alifa

May 12, 2020

You might have heard that you don’t need money to start a business. I think the better way to put it is – you don’t require capital to start working on your business idea.

Every business at any stage requires capital – to start, to run or even to expand. No business can out-grow the need for external funding. Let me put it in a better way; no business is too big or too small to ask for more money.

The focus of my thoughts on this matter will be on two things. First, what to do before you ask for (more) money and second, where to look for money. Join me on this ride.

Four things to do before you ask for (more) money

  • Move past the idea stage.
  • Know what you want
  • Use your own money
  • Horn your communication Skills

Let’s take a look at each of them one after the other.

1. Move past the idea stage

One day I was in my business mentors office, and a young man (let’s call him Nemi) came asking for money to fund what I called a very brilliant business idea. That idea was so bright that when I heard it, I was like wow! I will invest in this idea if I have the money. But after listening to Nemi with rapt attention for like 20 minutes, my mentor simply asks, “How much do you need?”

Nemi replied with a very ridiculously low amount?  He smiled and asked again, “What did you need the money for?”

“To start the business”, Nemi responded.

“What precisely”, my mentor propped further.

Nemi man could no longer answer.

He simply asked Nemi to go and bring his business plan.

After Nemi has gone, my mentor turned to me and said, “Nick, you see that young man, he is not returning to me again. The best way to turn down young entrepreneurs who don’t know what they are doing is to ask them to bring a business plan. They will never return.

That was three years ago. Since then, I have learned never to ask anybody for money until I have done real work on my idea. I mean real work.

They are five stages of business growth – the idea, startup, growth, expansion and maturity stages.

The idea stage is the stage of conceptualisation. You just got this excellent business idea that is going to among Fortune 500 in the next five years. You have everything figure out in your head, you want to start tomorrow, and you need the money now.

Well, I will say, calm down. It doesn’t happen that way. Only a few funders fund ideas, but no one who can, will resist investing in a startup that has proven sustainability and scalability. So before you ask for money, do some work about your idea?

Carry out a feasibility study, identify your target customers, validate your users and be sure that they will love to pay to use your solution. Do your financial analysis and have figures at your fingertips. All this information will lead you to write a “killable” business plan or business proposal.

A powerful tool that can simplify this for you is called “The Business Model Canvas (BMC)”. Maybe one these days we will look deep into it.

2. Know What You Want

From our little story above, the significance of knowing what you want, when it comes to getting funding for your business is apparent. Nobody, including your friends and family, will take you seriously if you do not know what you want. Run your figures to understand what you want, how much you need and how much is for what. You can even go-ahead to run the financial projection of your profit.

Find out your break-even points, break-even revenue or even break-even unit. You can learn this calculation online. Seek for an assistant if you need to. If you can memorise your figures and have them handy, it will be super awesome. It shows you know what you are doing.

3. Use your own money

You are the first investor in your business. If you can’t put your money into your idea, don’t expect others to do so. No matter how little it is, put your money in your business. It also helps to show others that you are serious-minded.

4. Horn your business Communication Skills

When you have done your underground work, ran your figures and even invested your money in your business idea, there is still a high possibility that you will not get the fund if you don’t know how to pitch your business idea correctly.

When pitching your idea, the first thing you should take note of is your target audience. Different things attract different sets of funders.

The investors are more concern with the scalability and sustainability of your idea, especially in the long term. Thus net profit (bottom line) and break-even analysis ( how long it takes you to generate them)  is fundamental to them.

The bank is interested in your cash flow and ability to pay to pack the principal and the interest. They are less concern with your bottom line (net profit), unlike the investors.

Most grant donors are more interested in the social impact of your business. They gave out money for a course and achieving that course is very important to them. If it is to create more jobs, they will be interested in your number of employees.  They always are concern with your environmental sustainability and social impact on the community or the less privilege and venerable.

Your friends and family will want to know if you will be able to pay back them their money back. Or that you will use the funds appropriately and expand your business. Some of your uncles will think you should not be asking them for money any longer because he has empowered you.

The summary is, you should know what your funder wants and design your pitch to amplify it.

A business pitch can be writing or oral. Whatever means you are using or you are required to use, always try to be clear, concise and straightforward. You wouldn’t want to bore your audience with unnecessary jargons or unfamiliar business terminology.

Now, where can you source your business funds?

 

Nicholas Alifa

Nicholas Alifa

Author

Nicholas Alifa is an entrepreneur, a coach, and an Agribusiness expert. He is committed to helping individuals and businesses grow to their full potential by focusing on Faith, Finance, and Life. He has spoken on several platforms and trained thousands of people on capacity development, entrepreneurship, finance, investment, and academic excellence.
0 Comments

0 Comments

Submit a Comment

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

Related Articles

The emotional cost of being an entrepreneur

The emotional cost of being an entrepreneur

Hey! I know you have decided to go into entrepreneurship and make it really big, and nothing will stop you. But it will interest you to know that you need more than financial and business intelligence to succeed as an entrepreneur. You might have heard this statement...

JUST WHAT YOU NEED TO KNOW ABOUT INCOME

JUST WHAT YOU NEED TO KNOW ABOUT INCOME

What if I tell you that COVID did some good! Yes, you read that right, the Global pandemic that turned the world upside down and brought it to a standstill did not do us only wrong but some good, as well! The one good thing was to expose our weaknesses or areas of...

ENTREPRENEUR Versus HUSTLER?

ENTREPRENEUR Versus HUSTLER?

Yes, you read the title right! There's a difference between an entrepreneur and a hustler, just like a wholesaler and retailer are different people. Follow me, let me tell you a story. I was privileged to work with two bosses (at different times, though). I will tag...

8 REASONS YOU NEED TO BE ORIGINAL

8 REASONS YOU NEED TO BE ORIGINAL

A few days back, I enrolled in a writing class, and we were given a template for the introduction. Our tutor said we could use hers as a guideline, with a strong instruction not to copy the template verbatim. The assignment was to be submitted before the end of the...

THE “WITCHCRAFT” TAG

THE “WITCHCRAFT” TAG

We were told countless times not to go out and play with Anita, although they did not give us any concrete reason. So, I always disobeyed my mother's order. Anita was a lively girl who loved playing rough as I did, and we would talk for hours when we didn't feel like...

Simple hacks to a cheerful life

Simple hacks to a cheerful life

Global chaos or not, while we may exert our wishes on the world, we can’t control how the world, including other people, will treat us and only control our responses to our environment. Being upset about how things are is focusing on what’s wrong, but with a quick change in focus, you see the same situation but focus on what’s right.

Achor’s research found that every single business outcome improves when a person’s brain is “a positive.” A person is 31% more productive, 37% better at sales, and doctors are 19% faster and more accurate when their brains are positive rather than negative, neutral, or stressed. The question is, how can we be positive and stay positive?

I would be sharing a few sets of actions that rewire the brain and say, hacks to living a happy life:

How Sensitive are you?

How Sensitive are you?

Some weeks ago, I was on a 'bike' with the headlight in broad daylight ON, and the rider and I didn't know. Surprisingly, we had a lot of persons, and no one called our attention to it. We kept moving happily, not until someone eventually motioned to us that the...

When God Doesn’t Make sense

When God Doesn’t Make sense

Imagine your country is at war with an enemy, say, Nigeria with Bokoharam. Then suddenly, a self-acclaimed Prophet rises and declares that he has gotten a message from God. " Surrender to Bokoharam, or the entire country will be destroyed," Thus says the Lord. Will...

Stay Up to Date With The Latest News & Updates

Let's help you grow

Growth may not be easy sometimes but it can really be fun when you have people holding your hands through the process.

Join Our Newsletter

We pursue opportunity whenever it can be found. Be the first to know about it.

Follow Me

I will love to connect with you. Knowing you better allow me to help you grow. Let's get to know each other.