A number of new and interesting business ideas that address the need of Nigerians are created daily; many originate from projects and researches carried out in tertiary institutions across the country.
However, many aspiring entrepreneurs believe that their ideas need to be novel and patented to be able to attract investors. But, a careful look at successful businesses in the country shows that they are actually models of others outside the country, which have recorded remarkable success.
Regardless of whether the idea is an original one or a mock-up, a business consultant, Ayorinde Bamgbose, says the most important factor to consider when starting a business is the ability to sell.
He says the availability of a market to sell your products or services is one of the attributes that investors are looking out for.
Most entrepreneurs say that one of their futile efforts in attracting external funds involves distributing their business plans to successful business owners and government agencies, but that at the end, their proposals are either discarded or the ideas stolen and implemented by the supposed investor.
As such, investment experts have highlighted ways to attract funds from investors.
Venture capital financing
Experts note that venture capitalists are professional investors who have expertise in identifying highly profitable businesses and they invest funds from limited partnerships, pension and endowment funds in it.
Highlighting the advantages of attracting venture capitalists to your business, Bamgbose says the investors can get an entrepreneur other resources apart from the funds such as contacts of people and useful information that can help make the business a success.
According to him, some investors are highly influential, such that the mention of their names as an investor in a new business will attract additional capital from new partners.
“Venture capitalists can also help you think more strategically about your expansion plans using their wealth of experience in building businesses,” he adds.
According to Investopedia, an angel investor is an investor who provides financial backing for small start-ups or entrepreneurs.
It adds that the capital they provide can be a one-time injection of seed money or ongoing support to carry the company through difficult times.
Bamgbose says angel investors who utilise their personal resources to support start-ups were common in the past but because of trust issues in the present business environment, they are hard to come by.
He says that angel investors are often retired business owners and executives, with experience in business management practices, as a result, they can provide valuable management advice and business connections.
This mode of sourcing for finance has often been associated with philanthropy, giving to a cause and often utilised by non-governmental organisations.
Experts say that crowdfunding, a practice of funding a project by raising contributions from a large number of people, is typically done via social media platforms.
Though business financing method is a great way to raise funds for a new business, Bamgbose says it may not be suitable for all businesses.
“As you nurture your business ideas, prepare for funding opportunities that may come your way either from friends or family members, government or interested business associates,” he advises.
Federal grants and loans
The Federal Government, through its special banks, assists small businesses with low interest loan and long repayment period.
The Youth Entrepreneurship Support programme of the Bank of Industry, aimed at addressing youth unemployment in Nigeria, is one of such loans.
BoI provides technical training for participants as well as improve their entrepreneurship and business management skills.
Other credit facilities are also available for business owners in agriculture through the Bank of Agriculture.
In addition, the Central Bank of Nigeria through its collateral registry initiatives aims to increase SMEs’ access to loans through the use of moveable assets as collateral.