HOW TO GET FUND TO FINANCE YOUR BUSINESS IN YOUR COUNTYRY

HOW TO GET FUND TO FINANCE YOUR BUSINESS

HOW TO RAISE MONEY TO START A BUSINESS

The task of raising money for a business is not as difficult as most people seem to think. This is especially true when you have an idea that can make you and your backers rich. Actually, there's more money available for new business ventures than there are good business ideas.

A very important rule of the game to learn: Anytime you want to raise money, your first move should be to put together a proper prospectus.

This prospectus should include a resume of your background, your education, training, experience and any other personal qualities that might be counted as an asset to your potential success. It's also a good idea to list the various loans you've had in the past, what they were for, and your history in paying them off.

You'll have to explain in detail how the money you want is going to be used. If it's for an existing business, you'll need a profit and loss record for at least the preceding six months, and a plan showing how this additional money will produce greater profits. If it's a new business, you'll have to show your proposed business plan, your marketing research and projected costs, as well as anticipated income figures, with a summary for each year, over at least a three year period.

It'll be advantageous to you to base your cost estimates high, and your income projections on minimal returns. This will enable you to "ride thru" those extreme "ups and downs" inherent in any beginning business. You should also describe what makes your business unique-- how it differs from your competition, and the opportunities for expansion or secondary products.

This prospectus will have to state precisely what you're offering the investor in return for the use of his money. He'll want to know the percentage of interest you're willing to pay, and whether monthly, quarterly or on an annual basis. Are you offering a certain percentage of the profits? A percentage of the business? A seat on your board of directors?

An investor uses his money to make more money. He wants to make as much as he can, regardless whether it's a short term or long term deal. In order to attract him, interest him, and persuade him to "put up" the money you need, you'll not only have to offer him an opportunity for big profits, but you'll have to spell it out in detail, and further, back up your claims with proof from your marketing research.

Venture investors are usually quite familiar with "high risk" proposals, yet they all want to minimize that risk as much as possible. Therefore, your prospectus should include a listing of your business and personal assets with documentation - usually copies of your tax returns for the past three years or more. Your prospective investor may not know anything about you or your business, but if he wants to know, he can pick up his telephone and know everything there is to know within 24 hours. The point here is, don't ever try to "con" a potential investor. Be honest with him. Lay all the facts on the table for him. In most cases, if you've got a good idea and you've done your homework properly, an "interested investor" will understand your position and offer more help than you dared to ask.

When you have your prospectus prepared, know how much money you want, exactly how it will be used, and how you intend to repay it, you're ready to start looking for investors.

As simple as it seems, one of the easiest ways of raising money is by advertising in a newspaper or a national publication featuring such ads. Your ad should state the amount of money you want - always ask for more money than you need so you have room for negotiating. Your ad should also state the type of business involved (to separate the curious from the truly interested), and the kind of return you're promising on the investment.

Disregard the stories you hear of "tight money," and start making phone calls, talking to people, and making appointments to discuss your plans with the people who have money to invest. There's more money now than there's ever been for new business investment.

The problem is that most beginning "business builders" don't know what to believe or which way to turn for help. They tend to believe the stories of "tight money," and they set aside their plans for a business of their own until a time when start-up money might be easier to find.

The truth is this: Now is the time to make your move. Now is the time to act. The person with a truly viable business plan, and determination to succeed, will make use of every possible idea that can be imagined. And the ideas I've suggested here should serve as just a few of the unlimited sources of monetary help available and waiting for you!

WINNING WAYS FOR FUNDING YOUR BUSINESS

Looking for funding to start your business can be a quite experience, especially if you don't know the right sources, this resource manual has therefore explore the various opportunities that are available to you. The manual will explore various funding windows, in both the local and foreign donor agencies

MAKING USE OF FEDERAL GOVERNMENT POVERTY

ERADICATION SCHEME:

It is exactly aimed at co-coordinating, monitoring and ensuring collaboration about programme that would eradicate poverty in Nigeria, their is programmes like "YES" i.e. Youth Empowerment Scheme, which has two sections. One is CAP, Capacity Acquisition Programme for non-graduates and the other is MAP, Managed Attachment Programme for graduates, where they attach graduates to some organizations and they give them allowance. As of now NAPEP is collaborating with Dangote Group of Companies. The programme is referred to as Dangote-NAPEP collaboration. The graduates under this scheme help Dangote to market its products that idea of having private sector comes into NAPEP to collaborate is in line with the reform programme of Federal Government, which is to collaborate in certain areas, especially poverty alleviation. You can kick start your business with these varying opportunities NAPEP has to offer. Development center are created in different parts of the country where people are trained in different vocations like catering, hair dressing, shoe-making, fashion designing, mechanic etc, they all fall under CAP. At the development centres they supply items like computers, sewing machines, dryers etc resettle them by giving them a start off loan so that they will become employers of labour. They have offices in each of the local government of the federation

FRIENDS AND RELATIVES

If they believe in you and your idea, friends and relatives are sometimes willing to fund you. Choose this route with care and ensure you execute a formal loan document stating loan terms (interest, terms of repayment)

LIFE INSURANCE

Some types of life insurance policies have cash value, which can be borrowed at very low interest. You are not obligated to pay this money back but if you don't your policy payout is reduced by the amount borrowed

LEASING

Unlike loan, leasing is like long-term rental. At the end of the lease, you don't automatically own the asset; you have the option to buy it at its residual value. A lease requires little or no money down and is an alternative to purchasing such item as cars machinery or office equipment. By leasing instead of buying, your business can usually write off the monthly lease expenses

APPROACHING MONEY LENDERS

This form of lending is very popular and vital to small business development. A lender incurs risk and charges a corresponding rate of interest based on that risk. The lender usually assesses a variety of factors such as the strength of your business plan, and your personal credit history. In Nigeria, a lot of people have set up this type of business venture, the payback period does not always exit 12 months, and they receive collateral like Cars, C of O's radio, TV etc.

GOING PUBLIC

Once again this option is available primarily to fast-growth companies. This is when you offer and sell equity interests in the company (e.g. shares) through a stock exchange or broker network. Going public involves a rigorous process of regulatory compliance and promotion.

JOINING A COOPERATIVE SOCIETY

They are micro finance institutions, and they have existed in Nigeria since 1935, they form themselves into trade union associations, almost all the corporate organizations in Nigeria has a cooperative society and their existence have been beneficial to all the members as they provide emergency loans with little interest rates, members can also collect this loan to start a small business which will provide an alternative source of income. They do have periodic meeting to discuss the financial status of the association

RETIREMENT PLANS

Some retirement plans allow you to borrow against vested benefits. Generally up to 50% may be borrowed. The government has made it compulsory for all corporate organization to be part of this scheme; it is called Insurance Trust Fund which made all the employee of a company to contribute 2.5% of their basic salary while the employers contribute 5%.

LOAN FROM BANKS AND CREDIT UNION

These are funding from commercial, the community banks and specialized bank like Peoples bank. There is also industrial Development Bank (NACB), which provide support for SME's. This approach will require that you present a formal plan to the bank showing justification for the amount you are borrowing. Requesting a loan when you are not properly prepares sends a signal to your lender, you must be able to able to convince your lender that you are a good credit risk. After the harmonization from January 2006, Nigerians Bank will be capitally solid enough to meet the demand of any serious and well focus industrialist.

THE INFORMAL SAVING SECTOR

The most predominant type of informal finance in Nigeria is the Esusu. Among the Yoruba, it is called either Esusu or Ajo. Among the lgbo, it is called lsusu or Utu while the Edo call it Osusu. The Hausa call it Adashi', the Nupe Dashi, the Ibibio Etibe, while the Kalahari call it Oku Some Esusu operate with written laws while others operate with unwritten laws but on oath of allegiance and mutual trust. The general practice is that esusu associations contribute a fixed amount periodically and give all or part of the accumulated funds to one or more member(s) in rotation until all members have benefited from the pool.

MAKING USE OF INDEPENDENCE FUND MANAGERS

It is called the SME's manager limited (SML), which is an investment advisory company establish by African Capital Alliance, they have an office at Octagon Towers Victoria island, Lagos, they are set up to promote SME led investment in Nigeria by making equity investment in Nigeria, also available is New Partnership for African development NEPAD, also available is the African Project development Facility (APDF), they provides credit analysis support and also assist small business in raising long term credit

support usually in foreign exchange their office is at 11A Ganges Street, Maitama, Abuja.

SELLING YOUR BUSINESS IDEAS

Once you've got a company set up, it may seem presumptuous to go knocking on the doors of rich people and asking them to invest tens of Millions of Naira. But when you look at it from the rich people's point of view, the picture is more encouraging. Most rich people are looking for good investments, so you can contact them.

VENTURE CAPITAL

The introduction of the small and Medium Industries Equity Investment Scheme (SMIEIS) in 2001 heralded a new vista for the Nigerian venture capital industry. The scheme, an initiative of the bankers committee and the Central Bank of Nigeria (CBN) aims at stimulating sustained economic growth in Nigeria by providing a veritable source of long term funding for small and Medium Scale Enterprises (SMEs). It is recognized that these SMEs could be start-ups and emerging growth companies that do not have access to the capital markets and existing companies embarking on new ventures that entails some investment risk. Consequently upon this initiative, the Nigerian VC companies especially SMIEIS based VC companies, hence the need for an umbrella body to represent the interest of stakeholders in this emerging innovation in financial services in Nigeria The Venture capital Association of Nigeria was founded in December 2003,

and the birth has recorded satisfactory progress so far, within the short period of its existence. At May 2005 81 Banks have registered with the scheme and they had set a total of #14.6 billion aside out of which #4.3biliion or 29% of the fund have been invested. To obtain Venture capital funding your company must have thorough preparation and a well-defined management structure in place.

MULTINATIONALS

Some multinationals has tried in their own way to help the small scale enterprises, they empowered the community through the support and promotion of micro and small enterprises, helping people to create additional goods and services for local markets. Today, hundreds of community based enterprises, micro-credit schemes, Youth Business Development Programmes and Neighborhood improvement schemes have benefited from these programmes. Such programmes are traditionally implemented by NGO's on behalf of the Oil Companies, NGO like growing business foundation; their office is at 15th floor UBA House marina, Lagos.

PERSONAL SAVINGS

Set a budget at the beginning of every month, sit down and look at how much money you'll have coming in. Subtract the amount you'll owe for bills that are due, and make a plan for what's left over; you are your own best "lender" if you have the savings. This approach can be quick and easy a lot of business has grown has a result of good saving plan.

GRANTS

A lot of grant seekers have developed their business as a result of their requesting for grant from foreign grant makers, for instance African development foundation ADF, supports is focused on community groups, and businesses where there is active involvement and participation and other underserved populations. Their application form is FREE, and their office is at Plot 54 Ibrahim Abdulkadir Close, Off Mississippi St. Maitama, Abuja, another NGO that is based in Nigeria is fate foundation their aim is to foster wealth creation by promoting business and entrepreneurial development among Nigerians their office is at Ijora in Lagos

CORPORATE SUPPORT

Strategic partnering aren't just a much-talked-about trend, they're the best alternative for many companies that find themselves either shut out of traditional finances deals or unwilling to swallow the equity valuations or interest charges required to make those deals happen. Cash infusions connected with strategic partnering are usually much smaller than they might have been with traditional financing deal (and sometimes investments aren't a factor at all). When a partnership's synergy clicks, however, the resulting growth can often yield far greater capital options later on.

SELL ASSETS TO RELATIVES AND FRIENDS

Asset sales to relatives and friends can offer a neat and relatively simple alternative to either loans or equity deals. Put simply, your company sells one or more assets to someone you know or trust, he or she then leases those assets back to the business at a price that seems fait to both of you. Your company gets one tine infusion of capital and presumably, better leasing terms than it would have received if it had been dealing with an independent financier. Best of all your capital structure remains clean.

TRADE CREDIT

A very important source of financing for your business may be from the creditors and suppliers with whom you do business. Many suppliers will originally ask for cash on delivery or, in some instances, they want payment before starting on your order, depending on the nature of your purchase. Most suppliers will quickly establish trade credit with you once you have gained their confidence by continuing to do business with them and paying as requested. Establishing good relationship with trade creditors is essential because it allows you to use the goods and services in your operation and sell your product to your customers, in some instances before you pay for them. Other suppliers will rely upon the trade credit you build today as you attempt to establish yourself with other suppliers in the future

REWARDING A LOYAL MANAGEMENT TEAM

You can reward a loyal management team to invest in your business since they share your vision, you can give them 10 to 30% equity in your business

Business funding initiative from foreign Countries: United states agency, call Small Business Administration SBA is collaborating with Nigeria Investment Promotion Council (NIPC) to assist Nigeria SME's to midwife direct foreign investment in Nigeria.

This has resulted in partnerships joint ventures and other collaboration for the export of SME product to the US. For more information you can contact NIPC intheir office at Plot 1181 Aguiyi Ironsi Street Maitama District, Abuja. United States - Nigeria Development Institute (USNGDI), the institutes ensures that market access, technology transfer, capital availability, and management training are realized in ways that increase the sale of Nigerian products in the United States their office is at 2A Bobo Street, Off Gana Street, Maitama District, Abuja. The center will be the place where Nigerian entrepreneurs will receive intense one on one support in developing an export for their products and services

REATING WEALTH THROUGH LEASING

Equipment leasing is without doubt, the creative financing alternative of today. Though young in Nigeria, globally it is an imposing industry in terms of scope, size, potential, as

more and more of the world's equipments need are met through this unique form of financing. Leasing meets the different needs of lessees. For example small companies may lease to conserve cash and large profitable companies may lease to keep bank credit lines open to other purpose. In order words, an equipment lease is usage agreement between an equipment owner and a user of the property. The user pays the owner a period a of rental fee as compensation for the usage of the property. Your number 1 life changing magazine has decided to bring to you the varying opportunities leasing can offer to today's inventors.

Equipment leasing is a tool that can be used to solve the problem of inadequate investment in capital equipment, high cost of equipment maintenance and the general problem of lack of needed loans and credit facilities. Considering the poor financing position of most manufacturing companies, replacing obsolete machines, maintaining existing ones and repaying existing loans could often become difficult, worsening further the lots of these companies, but lease provides a measure of relief through the provision of non-cash financing window. The leasing company in Nigeria has been estimated to worth over #115billion. This figure according to Equipment Leasing Association of Nigeria (ELAN) excludes the assets base of other stakeholders in the industry who are members of the association. The worth of leasing industry is estimated at $650billion, this makes leasing one of the most important sources of medium and long-term financing in the world. The benefits of leasing are now being used strategically by governments around the world to stimulate and create jobs. In a lease transaction no collateral is required. The leased equipment serves as a security.