By Smart Emmanuel
Access to fund is one of the major challenges confronting entrepreneurs across the world. It is even worst for start-ups because they don’t have anything apart from juicy ideas to show intending investors in their dreams. Investors on the other hand will likely ask for what the owner of the dream has done to set his dream in motion before they commit their money in such a project. Therefore, it is important to look for alternatives to push your ideas through personal efforts before calling for investors.
The following are alternative sources of funding for entrepreneurs
• Personal savings: you can fund your business from your savings. No matter how little your savings might be, it will help you to set things in motion thereby giving intending investors that you are not being parasitic .For example, if you want to produce a television programme that will be syndicated and you need sponsors, it is advisable you produce about one or two episodes with your personal money and pitch it with your prospecting investors rather than reading theory to them during your presentation.
• Friends and Family: The first set of people you should approach are your close friends and family members who believe in you. They will likely fund your ideas especially if they know you to be trustworthy in the past. The fund from family and friends come with fewer aches as it attracts little or no interest in most cases.
• Government grants: You can apply for a grant from the government by keying into any of the available programme at the time. In Nigeria for example, the Government of former President Goodluck Jonathan introduced a YouWin programme whereby many entrepreneurs pitched their ideas with the programme and they got grants of about two million Naira and more. I heard the current administration has reformed the programme and titled it N-power. Also, in Lagos State, the Government is also disbursing money to entrepreneurs at 5% interest rate which they titled –Lagos State Employment Trust Fund (LSETF) other states have their own funding schemes you can key into.
• Cooperatives: This is a very nice source of fund for your business. It is contributions by a group of people to an individual per time until it goes round. This is mostly common in Africa. Fund from this source does not usually attract interest as long as the individual will fulfill his/her obligation when it is time to contribute to another member of the cooperative when it is time to do so.
• Go into partnership: Many people are skeptical to go into partnership because they believe it ends in legal tussle or quarrel between partners; yes it is true if it is not done properly. When going into partnership, you need to do all the paper works with terms and conditions of the partnership contract clearly spelt out. This should be done by investment lawyers of both partners so as to avoid conflict. Don’t be selfish, if you have a beautiful business idea, you can meet a partner who has the fund and he is ready to sponsor such idea with terms and conditions favourable to both of you.
Finally, before you run to banks for loan, make sure you have explored the aforementioned alternatives because banks’ conditions for loans are not really favourable to entrepreneurs especially in Africa. In Nigeria, interest rate is about 20% to 30% which is ridiculous. The same story is the case of South Africa, Zimbabwe, Uganda, Kenya and others