What is the biggest thing we think about as owners of a business? CAPITAL. We are always thinking about where to get money to start, sustain or even expand our businesses. Here is a link to an article on other things we ought to consider apart from the capital when starting or sustaining our business - https://wawerumacharialaw.co.ke/2022/05/31/starting-your-own-business-here-is-what-you-need-to-know-from-a-lawyer/

Today I will share ways in which you can get capital and what to look out for at each point;

1. Friends and Family - this is the easiest and the cheapest way to get money for your business. The disadvantage? Money from family and friends most times comes with strings attached. In this case, the worst kind of strings attached are the ones not communicated PRIOR to the lending. If you use this route, ALWAYS write a contract with your family/ friend and have it signed in front of a witness. Have a clear and precise discussion beforehand with the family/ friend and FULLY UNDERSTAND what expectations they have in return for lending you the money. Do they want a bit of ownership in the business? Do they expect payment with interest? Is the money really a gift?
2. A loan - this, on the other hand, is the clearest and most precise way to get money. Going to our financial institutions for money is fairly achievable. The disadvantage of getting loans would be the process of getting the loan in the first place from the institution, high-interest rates and the fear of being auctioned if you don't pay the money back. For these, I would suggest doing thorough research on lending institutions that have the best deals suited to your specific needs and where you are in life. At the point of signing the loan documents, ALWAYS read and read and read the contract. This way, you will catch any inconsistencies or things you would like to amend before you even commit.
3. Investors - many people do not know this, but there are wealthy people who enjoy investing in new businesses. The catch? Your business must have the ability to grow and make them tons of money. In addition to this, investors will ALWAYS want a slice of your business or ownership rights. Investors are a great option, especially for ensuring your business stays on its feet for a long time. Despite this, be wary. They can be cunning. Always have your own lawyer to go through any agreements you get into with them. Don't sign or commit to anything before long long discussions with your lawyer.
4. Your savings - I have saved this for last because I believe that we all must have a nest somewhere to cater for our day-to-day survival that will NOT be capital for our business. This means that when the business starts or is not doing well, we have money to live off of that does not require us to close up shop because we are broke. If you can, separate your day-to-day survival nest and your 'money-for-my-business' nest. Very Important.

For more legal advice on how to open and run your business, book a consultation with us for more assistance.