Raising money to start a business is a common challenge for new entrepreneurs and often becomes a reason to delay. While cash is crucial for funding a startup, it is less important than factors like creativity, focus, persistence, passion, and a clear vision. With these qualities, entrepreneurs can often find ways to move forward, even with limited cash, and eventually find the financial support they need.
If you’ve already minimized your start-up costs but still need funds for initial production or samples, there are multiple potential sources. If you have prior work experience, your options may include personal savings, assets, friends and family, cooperative societies, savings and loan associations, or banks.
Using personal savings is often the best approach to funding your startup. Begin setting money aside specifically for your business if you haven’t started already. This may involve trimming unnecessary expenses from your budget, such as eating out, reducing clothing purchases (especially ceremonial attire), and cutting back on phone and cable TV bills.
The main issue isn’t just cutting expenses but rather adjusting your lifestyle to save consistently, ideally 10% of your gross income as a starting point. With 10% saved monthly, you’ll accumulate one month’s salary over ten months; at 20%, you can save a full month’s salary in five months.
Often, expenses we take on are linked to the image we want to portray in society. While there’s no harm in enjoying a comfortable life or presenting a certain image, those serious about saving for their business may need to set image and leisure aside temporarily. Just like a woman in labor forgets about appearances in the face of her goal, an entrepreneur may need to focus on practicality over lifestyle.
In addition to savings, consider a “Clean House” approach to raise additional funds. Similar to the “Clean House” TV show, where homeowners raise money by selling unused items, you can gather funds by clearing out unneeded clutter in your home. Many of us have cash tied up in unused items—old appliances, electronics, and jewelry—that could be converted into startup funds. Some may even have assets like extra vehicles or rooms (such as unused boys’ quarters) that could be rented out to generate cash.
How far you go depends on how committed you are to getting your business up and running. In the next installment, I’ll cover raising money through assets and, perhaps most interestingly, from friends and family—where financial support and relationships intersect.