Money is the fuel of business; and just like fuel to a car, you need money to get your business up and running. As a millennial entrepreneur, here are six options to explore when looking for funding for your business idea.
This involves using your savings and personal finances to fund your business. Instead of borrowing money from investors, you use sweat equity.
This is when your parents and guardians’ advise to “save”; your bank savings; and the salary from your day-time job, all pay off. Using bootstrapping for the initial start of your business would dictate that you start small. You can’t pay weekly salaries, give work benefits to your staff or even have staff at all.
Mark Briggs, an entrepreneur, journalist and author points out that the business axiom that bootstrapping teaches is; “while everyone wants to build new products fast, good and cheap, you can get to pick only two of those three. If it’s good and fast it won’t be cheap to develop. If it is cheap and fast, it won’t be good.” And if it’s good and cheap, it won’t happen fast. You are most likely looking for the latter.
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Friends and family funding
Remember that rich uncle? Well this is where he comes into full play! Your family, mostly immediate, is always vying for you. But if you have a strange step-mother situation, then hey, your friends should be able to help. You can’t fail to have both, even the devil has his loyal ones!
Interest your family and friends to invest in your business. You can promise to pay them back or give them equity in your business. This money source involves the least struggle, but it is likely to ruin your relationship with family and friends if your business fails.
This is free money usually given by organizations to help young innovators create new and big businesses. You don’t have to pay it back. Some governments provide such grants for their youth. For example in Africa, the government of Uganda set aside an equivalent of about USD 15 million every financial year, as funding for youth entrepreneurial ventures.
Companies such as Total, MTN,Knight Foundation and many others have previously held competitions for millennials to participate in, after which the winning team is given capital to develop their business. They are highly competitive, meaning that millennial entrepreneurs need to be aggressive and assertive if indeed they intend to succeed.
This is one of the oldest forms of funding new businesses. Local banks are awash of loan schemes for any demographic of business. Visit your bank and find out the different loans available and the requirements to get one. Be warned subject you to extreme measures of hierarchy and bank visits.
Also, micro finance institutions for example Grameen America, can aid fund your entrepreneurship venture.
Related: Budget Your Business Money
If you have watched the TV show, “The Shark tank”, this is the kind of thing angel investment involves. You sell a percentage of your company (usually between 30% to 40%) for an investment. A Forbes.com article titled Looking Past Equity Investments calls this “revenue share”.
Such funding usually comes from thriving entrepreneurs who will in turn give you advice. The con here is that if you don’t make the expected worth of your company, the investors are likely to sell it off to a bigger company.
This is huge money (upto $100million), given by professional investors. Your business idea must be “Facebook-big” for you to get such investment. A recently viral article titled Zebras fix what unicorns break pointed out that venture capitalists are looking out for a unicorn. This basically means that you must create a life-changing business for this to take precedence.
Without money, your business is as good as an idea. You must be able to make monetary sacrifices for your business triumph in the long run. “Money makes the world go round” you’ve heard people say. Well the world of your business can only be ran by money.
Related: 4 Steps To Test Your Business Idea