Potential businesspeople and creative thinkers will often have amazing business ideas, but they put them on hold due to lack of funds. They know that their idea(s) will not go far off the ground unless they have some funding behind them.
Access to start-up funds remains a nightmare to many would-be successful entrepreneurs. Most banks will not agree to loan a business that is at the “idea” stage and when they do, the amount of interest rates they surcharge can send an already struggling business to an early deathbed. So what options can one pursue? Today we discuss 5 debt-free ways to raise start-up capital.
1.Crowd Funding
Crowd funding is simply conducting a mini-fundraiser where you convince donors and people of good will to finance your idea. Unlike the typical church fundraiser you may be familiar with, crowdfunding can be done online.
You simply go to websites like M-Changa, Babandu, GoFundMe.com or KickStarter.com and upload a very inspiring story of you and your business. If your proposal appeals to people and involves them emotionally, then you will have higher chances of getting fully funded.
The good thing with crowd funding is that it’s free money and you don’t have to worry about the burden of repaying it with punitive interest rates. The only downside is that crowdfunding is quite competitive.
2.Bootstrapping
You don’t always have to start the business with capital that covers all needs. You can start with whatever little you have and try to survive within your means. (Detailed Definition of Bootstrapping)
In that case, you will be ploughing back the profit and growing your capacity without necessarily going for loans. Although bootstrapping is not easy, it can be a safe starting option especially given the fact that risk of failure is always there during the first few years of operation.
Just figure out how to do everything within budget and efficiently because even if you raise money through other means it will still run out and you will still have to operate with what is available.
3.Offer Cheap Consultations
Everybody is an expert at something. Even if you are a class 8 drop-out, you can still be an expert at say cooking, dancing or even knitting. If you are a form 4 drop-out you can offer expertise in say ECD learning, animal husbandry or even basic mathematics – and so forth.
One way to raise money for your dream startup is by tapping into these talents and skills and offering cheap consultancies. Altogether you end up making some money from these engagements and get an opportunity to create long-term relationships with potential clients which could even save you a tonne of shillings that would otherwise be spent on initial marketing budget.
Related: How To Start Consultancy Business in Kenya
4.Take Up Part-Time or Short-Term Employment
There is nothing wrong with working and saving money. In fact, this is the method most successful entrepreneurs today used to start their businesses.
Sweating for your money will help you not be wasteful. In addition, you will have time to learn some of the best practices of running a business and you can even use the opportunity to create essential contacts.
There are even more benefits to be reaped if you get employed within your respective industry because that way you will be earning a salary as you learn a few insider tricks.
5.Raise Money from Potential Customers
This is a simple but smart strategy for financing a business. You simply approach a few of your potential customers, showcase your products to them and convince them to pay an up-front fee or deposit to get the job done.
For instance, let’s say you have an idea of this great website that would help company ABCD to operate more efficiently. So you simply approach company ABCD, show them a demo of the website and once they place an order you request them to provide a deposit.
Here you can use the language of “I will give you a 20% discount if you pay an upfront fee.” Once again, a very simple trick that can go a long way in helping you overcome the challenge of raising initial capital.
Final Word
There are many ways to raise start-up capital out there, but unfortunately most ordinary people don’t know about them. Do you have some more funding ideas for small businesses and start-ups? Share them via the comment box so our readers can learn more about them.
