Sourcing fund for business? Learn the easiest approach

Sourcing fund for business? Learn the easiest approach

So many younger entrepreneur who entered into business venture without making adequate arrangement on Sourcing fund for business have failed.

Many business entrepreneur’s possess the skill and power required but lack self-confidence and fund available. When many sources are available, the business must know that all sources are not equally desirable. It must be borne in mind that borrowed fund is liability and must be paid back at specific time.

Sourcing fund for business :

  1. Personal savings: there are vast sources of finance to meet the requirement of your new business, but no other source is as reliable as the personal investment. The amount of money you decide to invest depends on how much you have readily available, be it savings on how the ownership of the business if formed. It is natural that any time a person’s wants to borrow money from anybody, the likely questions should be how much do you have and when can you repay the loan?
  2. Friends and relatives: you may approach your family members or friends to help you finance your business. But do not lose sight of the basic problems involved in such finance. It is advisable to make concrete provision for the repayment of such loans in writing and state clearly the interest rate, length of time and the payments schedule, if you have offer from outsiders to invest in the business with you, it is necessary that you investigate carefully unto their business record and financial dealings with others as we as their family backgrounds before getting involved with the persons. If your family or friends wants to invest in your business, it is important to know if its equity participation. In such case, profits will be shared and they will also be involved in the control of the business.
  3. Trade credit: trade credit is financial assistance provided but the business to other customers. This type of assistance is more pronounced in supplying of inventory which is always being replaced.
  4. Borrowing: this is the most common sources of business finance of small scale business. The entrepreneur may raise the required amount of money in one or may of these ways:

 

(a) A personal loan which may be acquired by personal business assets.

(b) Loans to the business by friends, family members or even from potential employees

(c) Loans from equipment’s manufactures of suppliers

 

(d) Advances from customers.

(e) loans from financial institutions, these may either be short, medium, long term loans and  May be made by an investment company, bank, government agencies such as directorate of employment, entrepreneur and development, or specialized bank such as NIDB, NBCL and the people bank of Nigeria

  1. Sale of stock: small scale business owner can sale shares or stock as a: source of capital. However, there is a problem because this method is an option permitted only to corporations. The Nigerian stock exchange will have to determine the value of the shares and a broker appointed to market the shares. Since this involves obtaining a cooperate charter, it is advisable to consult a lawyer for assistance and advice.
  2. Entering into partnership: if the business owner does not want to borrow money either from the bank, friends and relatives, another option opened to him is to take part in running the business, they just hold full partners status because of their initial investment in the firm.

The duties, responsibilities and right of each partner must be clearly state in the partnership agreement.

Leave a Reply

Extraloops is Stephen Fry proof thanks to caching by WP Super Cache