Capitalizing your business is a startup or business continuation move that can have long term effects on your company’s success. Funding startup expenses, inventory and operations is a challenge for many business owners. However, numerous options are available to entrepreneurs who are willing to consider both conventional and nontraditional ways to capitalize their businesses.
Pitching your company’s objectives, goals and projected success to a private equity firm could very well be a wise choice for capitalizing your business, particularly if you have already developed an exit strategy. Seeking capital through private equity investments generally starts with a discussion about your business plan, negotiations regarding the amount of funding necessary and consideration for your exit strategy. An exit strategy details how you will ultimately relinquish full majority control and ownership of the company and the amount of ownership that transfers to the new business partners you acquire throughout the investment process.
Parting with your company’s inventory may be an unconventional way to raise capital, but in cases where the value of your inventory is shrinking your company’s net worth, it could be worth considering. Liquidating inventory or assets can infuse cash relatively quickly and thus can enable your company to stay afloat when you desperately need capital.
Applying for a bank loan requires a well-constructed business plan, management team expertise and, in some cases, personal investment as a demonstration of your commitment to your entrepreneurial vision. Obtaining financing from a bank can be difficult for some businesses, especially if your plans for success are shaky. However, provided you have a clear mission and are able to convincingly articulate your ability to operate a business, you may be able to get the capitalization you need for your company. Loan programs offered through the various SME support programmes in Nigeria. To qualify for this programme, you must meet certain criteria related to the size of your business.
The benefit of using your own savings is that you do not have the stress of making loan payments looming over your head. Self funding your business allows you to direct your focus toward building your company through developing a marketing campaign, networking, cultivating relationships and other tactical steps in your strategic plan for success.
Angel investors are individual investors who fund businesses that show promise of high growth, according to Entrepreneur magazine. They can provide much needed capital for startup companies. Your pitch to angel investors has to be very impressive. There are thousands of people looking for capital to launch a business or funding to realize a dream and only the best ones get funding sources through angel investors. You’ll likely have to be willing to give up some control of your company.