Financing great business idea has always been an issue amongst Start-Ups in Nigeria. Some of the start-up firms don’t see the light of day after creation while others who are so lucky to attract investors die early due to lack of financial intelligence, good managerial skills, discipline among others. Many successful entrepreneurs has proven that not all start-ups needs investor money at their early stage to grow; a practicable model has since been discovered and practiced in Nigeria and start-ups can position to take advantage of this among others.
The customer-funding model is helpful especially now when traditional forms of financing, such as bank loans, are tight, as is the case in many Nigeria markets right now.
One of the biggest benefits of pursuing client financing is that it allows company founders to focus on creating, testing, refining, and proving their business models instead of on courting investors.
In most case to be sincere, as a Start-Up pursuing bank loads and investors is not the best way to start and they really don’t have any role to pay in helping your growth. Start-ups with great ideas need to be skillful in turning their ideas into a unique products/services that must give their potential clients a good reason to prepay for their products or services.
However, getting financing from your clients is very difficult – but possible. The way to get financing from them is by requesting a prepayment for an order. Once your client prepays, your business gets the funds it needs to deliver. Obviously, you must use the funds to deliver the order. Don’t use the funds for anything else.
A modern medical company: Flying Doctors of Nigeria is an Air Ambulance service established by Dr Ola Orekunrin is one of the most celebrated start-ups of the past decade, and its creation story is worth emulating by Nigeria Start-Ups: Dr. Orekunrin as a physician has always been restless and love to do something beside her medical career, when she was in Medical school, her sister died because the family couldn’t get a medical transfer in Nigeria. Her sister’s death made her to start thinking on how she could get the right patient with the right medical facility within the right time using the air transporting. She decided to return back to Nigeria and started a company that could offer that. According to her story, aside all the initial challenge they faced as start-up then, they were able to get a client whose off-front payment helped them to lease an aircraft and starting off their product process.
Currently, Flying Doctors of Nigeria has its main office in Lagos and another in Port Harcourt with 20 aircraft and 47 staff, 44 of whom are doctors. As well as moving injured and ill patients to hospital, the organisation has set up medical infrastructure for the government, and worked with private companies to improve their on-site medical services.
It contracts with the government and private companies. Helicopters are provided for corporate clients running large events, and wealthy families and individuals can set up a membership plan for private emergency healthcare.
The company has entered into an agreement with a UK-based call centre to operate telephone services in order to provide stable communications
The business model is structured so that “advance customer cash” helps finance growth, making Flying Doctors less dependent than many other start-ups on early outside funding.
Therefore, Start-Ups should found innovative and creative ways to source customer funding and turn it to their advantage.