The following is some information about the available options for new entrepreneurs looking for secure financing for their startups. Also discussed are some ways to get funding.
Are you planning for a new startup with different and innovative ideas but lack funding, one important thing.
Every startup requires lots of hard work, time to get going and funding to grow. Hard work and time, I am sure, you are willing to put in tons of, this write-up can guide you about some avenues that may help you in getting funding for your startup. The following is some information about the available options for new entrepreneurs looking for secure financing for their startups. Also discussed are some ways to get funding.
Before talking about funding just a few, but very important tips that would go a long way for your startup:
- Before starting your business, always do some research about market demand, potential customers, and competitors.
- Create a solid business plan, so you will know every aspect of your business.
- Try to register your startup with relevant authorities, so you can get help with legal compliance.
- Build a strong team with employees who share your vision and ideas.
Ideas for funding:
Family and Friends
Turning to family and friends is one of the most popular strategies for a small startup to get financing. If you have a large network of people who like your idea and are prepared to invest in it, this is a fantastic choice.
- find out who in your network has the resources to invest in your business concept.
- Be open and honest with your potential financiers about the risks in your business plan.
- To make the loan more enticing, think about including equity or interest.
Microfinance institutions (MFIs) provide small loans to individuals who do not have access to traditional banking services. There are many microfinance institutions in Pakistan, such as Kashf Foundation, Akhuwat, and FINCA Microfinance Bank, that provide tailor-made loans to entrepreneurs.
These loans range in amounts from PKR 5,000 to PKR 2,000,000 and can be used for a variety of purposes, such as purchasing inventory or equipment or paying operating expenses.
- Research different micro financing/lending institutions to find the best one for your needs.
- Prepare a detailed business plan to present to the MFI.
- Be prepared to provide a guarantee or guarantor for the loan.
- Keep in mind that interest rates on microfinance can be higher than on conventional loans.
To assist small enterprises, the Pakistani government provides several programs. The Small and Medium Enterprise Development Authority (SMEDA) is one of these initiatives, offering small enterprises financial help as well as business development services.
Another initiative that grants loans to young business owners between the ages of 21 and 45 is the Prime Minister’s Youth Business Loan Scheme. Loans for this scheme are provided by various banks such as Bank of Punjab, Bank Alfalah, Bank Al Habib, Habib Bank Limited, State Bank of Pakistan, Askari Bank, Allied Bank, United Bank etc.
- Look into the initiatives provided by SMEDA and other governmental organizations.
- Make sure your business idea complies with the standards for qualifying.
- Prepare a thorough business plan and financial estimates.
- Keep in mind that there can be restrictions or requirements attached to government loans.
Angel investors are people or organizations that give money to start-up businesses in exchange for ownership interests in the business. Numerous Pakistani angel investment networks, including i2i Ventures, Sarmayacar, and DotZero support and finance early-stage enterprises. Angel investors typically require a strong business strategy and a strong foundation before investing in a new startup, so keep that in mind.
- Attend startup events and networking events to meet potential angel investors.
- Prepare a strong pitch that clearly communicates your business idea and growth potential.
- Consider joining an accelerator or incubator program to gain access to potential investors.
- Be prepared to negotiate the terms of the investment, including equity and any voting rights.
It is a relatively new method of raising funds for a startup, but it has grown in popularity recently. Entrepreneurs can present their business ideas and raise money from many individuals in exchange for prizes or equity in the company using crowdfunding websites like Kickstarter and Indiegogo.
But it’s important to remember that effective crowdsourcing initiatives need a potent marketing plan and an engaging narrative to draw in investors.
- choose the platform that fits your business and funding goals.
- Create an engaging campaign that clearly communicates your business idea and what makes it unique.
- Offer attractive rewards or incentives to encourage people to invest.
- Be ready to actively promote your event on social media and other channels to generate interest and support.
It can be challenging for a startup or small business to find capital in Pakistan, but there are still opportunities. Entrepreneurs can improve their chances of obtaining finance for their business concept by thinking about the various funding sources and creating a compelling business plan and pitch.
This write-up is just a starting point. With the ideas, avenues, options, terminologies presented above, the entrepreneurs should explore other avenues on google, YouTube and by networking as they are already pioneers, at least in starting something new!
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May 06, 2023
The writer is a professional marketer and engineer with good work exposure to governments, and businesses and industries in the private sector in several countries. Idea is to take the first step in adding value to anything that one gets exposed to instead of just complaining about the same.