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Funding your business

Funding your business


Starting Business in Nigerian can be quite herculean as there are several procedures as well as factors to be considered before you embark on starting one. It a rigorous stage or process whereby you embark on strategic planning in drafting out your business plan which will contain the various details your business will be built and run on.

For the average business enthusiast or starter in Nigeria, one of the most daunting challenges that they are always faced with is the raising of business capital that is sourcing for the money which will be used in starting the business enterprise. Ask any Nigerian about their business plans, and you will realize that there are diverse and amazing business ideas that can leveraged on to creating big brands in the contemporary Nigerian society.

The Nigerian government in recent times have continue to encourage people especially its youths to start embracing entrepreneurial activities by engaging themselves in various small and medium scale business enterprise. It has put up several economic policies to see to it that there is a big drive towards business engagement from the youths.

For many who are very interested in doing one business or the other, their inability to get the much needed capital to kick-start this business ideas from mere ideas to reality often serve as a stumbling block.  Capital is a very integral factor greatly influences the success of any business outfit. There are some business ventures that requires little or no capital to start them, while there are others that requires a large chunk of resources before they can be started.  Capital according to investopedia implies to a number of different concepts in the business world. While some people think of financial capital, or the money a company uses to fund operations, human capital and social capital are both important contributors to a company’s overall financial health.

This implies that within the business world, there are various meaning or understanding of the word capital, it could refer to anything that can be used for productive purposes by a firm or individual.

For the purpose of this article and an in-depth understanding of the subject matter, we shall consider before we continue to the main crux of the matter the different types of capital that we have.

  1. Financial Capital- this is regarded as the capital or equity in finance, accounting and economics, measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based. According to Investopedia, Financial Capital is gotten from two sources, and this can be either debt or equity. Debt refers to the borrowed funds that must be paid back later and when it is paid back the borrower pays with interest.

There are four common types of debt capital; they are Bank Loans, Personal Loans, Overdraft agreements and Credit card debt.

Equity Capital implies the funds gotten from the sale of stock, either common or preferred shares, unlike debts these funds are not paid back and the investors expects a certain rate of return as it is considered an investment.

  1. Human Capital- this refers to the skills and abilities offered by the owner or the employees of a company to bring it to operation. Human Capital is a much less tangible concept; however its importance cannot be undermined.
  2. Social Capital- just like human capital, social capital is a more intangible asset and this refers to the relationship between people. In other words this can be likened to networking in business.  Social capital is the value of the content of the relationship between people and not the product of the members of the network in and of itself. For example, if you are about starting a business and you have a rich brother who is willing to invest in your business, knowing that brother or your relationship with that brother is a value added which you can leverage upon to sail your business. This is regarded as social capital.

In sourcing for capital there are various factors or questions which you must put into serious consideration before you proceed, you have to determine the type of capital or fund that your business needs. It is important that you ask yourself these set of questions

Can my firm qualify for debt financing?

Am l ready to lose my house if my company goes under?

Will I be able to make monthly repayment of debts until it is fully paid off?

Will the lender give me more money?

And if its equity financing

Will investors be interested in buying your business idea?

Am I really comfortable with people going through my confidential financial information?

Will I be able to give investors the information they need?

Will I be able to share my hard earned profits or returns with my investors?

Once this has been carefully and critically examined and answered, you can now proceed to sourcing for the capital which your business needs to thrive.

  1. Save- this might be quite tasking especially if you do not have any other source of income to save from, but if you do you can start preparing for that business idea by saving upfront for it. This is achievable when you set aside a chunk of their income for the purpose of using it later to start a business. You can create a separate account for this so that you do not touch it for any other venture. Money gotten from other sources can also be used for this purpose.
  2. Friends and Families- this is another way which is quite common employed by people to get funds for their various business ideas. This can be achieved by pitching your business ideas to people close to you, convincing them by explaining to them what you intend doing with your business ideas, how you intend executing it and other details which will go a long way in proving that you are serious with the idea. No one will be willing to part away with their money on a business that has no value.
  3. Small Business Loans- there are various institutions that are willing to lend individuals certain amount to start their businesses. Although getting them can be quite stressful and engaging as you will be put to test over the intent, structure and other factors which are quite vital to the success of your business venture. Banks only lend money to individuals or people who they are sure has the financial capability to repay the loans given to them. It is actually important that you do not just jump into collecting a loan from anyone or from any financial institution. You have to be sure that you have what it takes to effectively manage the funds or the loans in a way that will yield more returns for you or your organization. Failure to pay up your loans within the stipulated timeframe which you promised will definitely attract stiff penalty which may be the end of your business enterprise
  4. Investors- when you have brilliant ideas, you can reach out to investors who can invest their money into funding your business. It is quite important for you to note that investors do not just invest their hard earned cash into business that has no chance to survive. In attracting investors for your business, it is actually important that you present a brilliant and well-crafted business plan. This why it is important for you to know how to write a good business plan or your business.
  5. Grants- there are various grants which are available for people who intend starting a business. There are various online platforms where you can access this grants. They can be from the government which can either be the federal government or state government. There you are given the chance to pitch your idea either through oral mode or onsite interview. One of the famous grants in Nigeria is the Tony Elumelu grants. You can go to for information on more than 100000 federal grants programs
  6. Crowd funding and Crowd lending sites- According to Forbes, these virtual sites which can be engaged for fund raising. The king of crowd funding is, on Kickstarter, you can post a video of your idea or business project, and from there send emails out to friends and families, politely asking them to share your video and also invite their friends. There are other platforms online that you can use to raise funds for your business. We also have Naijafund, this can be accessed via This is a crowd funding platform that empowers and enables people to raise funds for anything. It seeks to help entrepreneur and start-ups get their business up and running. There is also Quickriaz which can be accessed via This is a top and award winning crowd-funding platform in Nigeria. Unlike other platforms, it features are limitless to creative or businesses. This platform allows you to start any campaign on its platform and it also does a lot of background checks to ascertain the legitimacy of its users.



By Marcus Amudipe

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