HOW TO FINANCE YOUR EXPORT BUSINESS IN NIGERIA May 13, 2017 16:31:41 GMT 1
Post by Trade Coach on May 13, 2017 16:31:41 GMT 1
When you are planning to start your own export business in Nigeria, there are many things you need to put in place. You need to register your business and obtain certain licenses and permits issued by the Nigerian government. You need to fulfill all legal requirements imposed by the government of your foreign target market. You need to have a deep understanding of the export market and how the business works. And you need to adequately plan everything about your business: export commodities, target foreign markets, connections, startup costs, and so on. However, one major factor that stops most aspiring exporters in Nigeria from kick- starting their export business is funding. The cost of starting and running an export business in Nigeria is far more than what most people can afford though this varies depending on the products to be sold and the foreign markets targeted.
If lack of funding is the only challenge preventing you from starting out, here are proven tips on how to finance your export business and get it off the ground:
Ask Family And Friends
When you are sourcing for funds for your export business, don’t overlook any possible source. And this is not the time to be an introvert, either. Approach members of your family as well as your friends who you think can afford to lend or give you all or some of the money you need. The advantage of seeking startup funds from your close ones is that there is little or no protocol or formality involved. And trust won’t be an issue, since they have known you for years. Chances are that they will be willing to help you if they have the money, unless you have done something really bad in the past, So, approach that rich uncle of yours or contact that your good friend. Schedule a meeting with them, and go with a copy of your business plan to show that you are really serious about starting the business. If you are able to get funding from a friend or relative, be sure to clarify if it’s a gift or a loan.
Approach Angel Investors
Angel investors are wealthy individuals and serial entrepreneurs who are willing to invest in business opportunities with huge profit potential. In return for the funds that they invest in your business, angel investors will take a share of your business, hoping to get back their investment with time alongside huge profits. You can use the web or your connections to locate and contact angel investors in your locality who might be willing to invest in your export business. Once you are able to get in touch with an angel investor, schedule a meeting with them during which you present your business plan. However, you must bear in mind that angel investors are only willing to invest in promising business ideas and opportunities. So, you need to prove beyond all levels of doubt that your export business will turn out profitable.
Approach Venture Capitalists
Venture capitalists are limited liability companies that are looking to invest in lucrative business opportunities. A fund manager invests the funds on behalf of investors who contribute money to the venture capital fund. Like angel investors, venture capitalists also seek to take some shares in your business in return for the funds they invested. And they will be looking to get back their money by implementing an exit strategy between five to ten years after your business launches. To find venture capitalists in Nigeria, check a physical business directory or an online business directory such as Vconnect or Nigeria Galleria. You must bear in mind, however, that Venture Capitalists seeks to take more control of your business than angel investors do. So, if you are not willing to trade your power to make decisions on your business for anything, then this option is not for you.
Another common way to finance your export business in Nigeria is to take loans from banks and other loan-issuing institutions. Although getting a loan might be difficult if you’re new to the business or do not have connections with influential individuals. But it’s not impossible, provided you have a convincingly promising business idea. If you have no luck with the high profile banks, the microfinance banks will more likely fund your business.
However, note that you will need a valuable property as collateral for securing a loan. And you will pay a fixed amount as monthly interest on the loan. There you have them! If you have a promising export business idea, but have no funds to get started, you just learned four realistic ways to get funding here in Nigeria.