Many people dream of building big multi-million dollar businesses. When asked why they haven’t started yet, the most common answer they give is “I don’t have the capital to start“.
While this could be true in some cases, I feel most people are just being plain lazy.
There are several ways to raise money for your new business without taking a loan from the bank. I share 7 of them below.
1. Your Personal Savings
Your personal savings should almost always be your first source of funds for your new business. If you believe what you are working on could be the next big thing, you should be willing to commit your own money to it.
You don’t expect anyone to give you money when you are not willing to commit your own money.
If you are in a team, you can pool money together from other team members and invest it into your business.
Also, cutting down on certain not-so-necessary expenses for a few months can help you save money for your business.
2. Family And Friends
Family and friends are another way to raise money. They are more likely to believe in your idea compared to others who don’t know you.
Many of them will be willing to help you if you ask. I had a few friends like that back in school who gave me interest-free loans for my business. So just ask. You could get help.Lack of capital is just an excuse people give for not starting their own business Click To Tweet
Crowdfunding is a hassle-free way to raise money for your business. With crowdfunding, you can post your business or project on a crowdfunding website.
People who visit the website can donate some money to it.
Crowdfunding helps you get money from a large number of people with each person contributing a relatively small amount.
It is a great way to get help from well-wishers you may not know personally.
Indiegogo is a popular crowdfunding site that you can raise money from.
In 2015 my team and I raised $1351 on Indiegogo for Project iSWEST, our summer bootcamp.
Gofundme is also another popular crowdfunding website that you can raise money from to fund your new business.
Note however that most crowdfunding websites take a small percentage of the money you raise on their sites.
4. Micro-Loans Websites
Micro-loans websites are another place where you can raise money for your business. They typically give small loans to businesses at far lower interest rates than traditional banks.
Zidisha is an online microlending community which directly connects lenders and entrepreneurs and allows people to borrow money for their businesses and other projects.
Their interests rate are just 5%, far lower than traditional bank rates. Other micro-lending sites include Kiva.
Depending on the kind of business you are running, you can make customers prepay for your services.
When I started Invent Electronics, I asked my customers to place their orders from our website and I gave them an estimated delivery date.
I gathered the monies I had collected and sent it to my supplier, got the components and distributed to my customers.
Note that this method may not work for every kind of business so use what works for you.
6. Startup and Business Pitch Competitions
Over the last few years, the number of Startup and business pitch competitions has increased astronomically. Opportunities are springing up by the day which you can take advantage of.
Stay on the lookout for these competitions and apply for the ones that are related to your business or venture.
There are many sites online which show you the latest competitions around which you can apply for. Opportunity for Africans and Opportunity Desk are two of such.
Another clever way to stay updated with the latest competitions around you is to use Google Alerts. With Google Alerts, you can set certain keywords you want to be alerted for.
When someone publishes content online containing those keywords, Google will send you an email.
If you have a really great idea, it will amaze you the amount of funding you can get from competitions alone. In 2016, my tech startup, Wires & Bytes applied for the MTN Apps Challenge.
We won the Gold Prize in the Freelance Education category and it came with some good money.
If you plan on setting up a company which could scale well, instead of just a side business to earn some cash, you can look at getting investments in the long term.
Sites like Venture Capital For Africa lets you create a company profile to help potential investors find you.
You also get access to many opportunities and competitions you can apply for.
Aside investment from venture capitalists, you can also pitch your idea to people around you who have the capacity to invest in your business.
If they believe you have a great business and they can reap rewards of their investment, you could be on your way to raising significant capital for your venture.
I believe “lack of capital” is just an excuse people give for not starting their own business.
There are several options available to raise the money you need to start your business. Find the one which works for you and build your dream business today!
Looking for business ideas?
Do you know of any other ways to raise money for a new business? Have you used another method to raise money for your business? Please share in the comments section below.
I have to support abig extended family with kids that may need my welfare support from next year yet l am pursuing my first degree at mzuzu University in Malawi. Microsoft loans can help pool me out of this mess
thanks for the write up , but please does the indiegogo works ? because am NGo and need funding inroder to expand to other parts of Ghana .
Yes. it does. But if you want to raise money for no profit purposes maybe you should try http://www.generosity.com . Generosity is also run by Indiegogo
Wow. Thanks for all this information Isaacs. I think I’m gonna subscribe
You are welcome Acquah!
Isaac thank you for giving me insightful education. I still have a problem with Google Alert. Can your keywords be in a form of sentences
You are welcome Gyan. I’m glad I could help. Sorry you are having a problem with Google Alert. Please check out this link http://www.wikihow.com/Use-Google-Alerts . It will make things clearer and help you set it up easily
Wow thank you so so much. Very interesting piece. Please explain to me further how Google Alert work. And how will you set it.
Thank you, Kenneth.
With Google Alerts, you can set keywords that you want to be alerted for. For instance, if you set an alert for Kenneth Dziwornu, anytime anyone creates something new on the web with those Keywords, Google will send you an email alerting you. You can learn more about Google Alerts and set your own alerts by reading this WikiHow article => http://www.wikihow.com/Use-Google-Alerts
This is really great but do micro loan lenders give money for businesses that are yet to start?
It depends on the particular microlending service. Zidisha for instance is very flexible and they give the entrepreneur the benefit of the doubt. Check out their FAQ page at https://www.zidisha.org/faq . I am sure a lot of the follow-up questions you may have will be answered there. Thanks for reading!
Great piece of information. Learnt alot. One link on Zidisha is showing error checked out main site is:
Thanks a lot! Oh yeah, I found the error and fixed it. Thanks for pointing it out.