One of the hardest things to get , when you are looking to start a business is to get the capital required for it .
Raising capital to start a new business is not as easy as taking a decision to start a business . A primary reason for the failure of SMEs is a lack of funding . There are plenty of great products and ideas that have never come close to making it to the public . It does not matter how good your idea can be or how profitable it might be , if you cannot find a way to raise required capital to successfully launch it you might as well put it on shelf until you are able to raise the capital or sell it as an idea to any interested buyer . There are people who are not creative enough to come with ideas but have a good eye and resources for good ideas . It is very important that unless you have a proper plan in place for building your business in stages , you do not start a business without the required capital .
Many people start with a small capital and they end up with debts and ruined reputations because of hastening to starting businesses with small capital than what is required . Most of businesses that started with the required capital succeed and thrive because proper margins and projections to ensure profitability are well prepared and planned in advance . Irrespective of how good your idea can be and how good you can be , with less than required capital your business will either take many years to make it or close down before it can even take off . It ’ s either you have a good plan in place to launch your business in stages or have the required capital to start your business successfully .
Without entrepreneurship , the drive to just go for it and the wisdom coupled with patience in raising the required capital , we would not have Apple , Google , Facebook , Twitter , or countless other companies that are a part of our everyday lives .
Here are 6 ways to raise the required capital for your business idea or venture in today ’ s economy : 1 . Friends and Family . A tried and true methodology , this has been a staple of start-up funding for hundreds of years . It is however , not without its risks , as a failed business could lead to strained relationships or even the end of relationships .
2 . Small Business Agencies
The Small Business Agencies provides several avenues for borrowing money . SEFA , NEF , etc . allows entrepreneurs who are not bank-qualified to borrow money to start their businesses as long as the SME can present a very good business plan to them .
3 . Corporative Financial Institutions / Banks . Corporative banks actually have the capacity to be flexible with lending terms whereas large corporative banks do not . In South Africa , there are few corporate banks and they only help certain group of people in certain industries . SMEs operating in certain geographic area or in certain industry can unite and form these institutions for the purpose of funding their business and making a profit out of these institutions . This can be a good funding vehicle for SMEs in South Africa and as a SMEInvestor Magazine we would be happy to assist and / or join any group of SMEs who would like to start such institutions . 4 . Crowd-funding Crowd-funding networks like startme , investor network , investor contacts , etc . have raised some serious cash from individual and corporate investors . If you have an innovative idea or project , develop a reasonable funding goal and timeline and see which investors support you and pledge funding . Remember , projects must meet their funding goals before the time runs out , or else no actual money is received . Also , be aware that a percentage of the money raised will be kept by the crowd funding site as part of their fees .
5 . Corporate Banks Corporate Banks offer loans to those SMEs meeting their criteria . Currently in South Africa , it is very difficult to raise start-up capital from corporate banks . For an SME to meet all their criteria is a very difficult and costly process for an SME with limited resources . As an SME , ensure that you have researched on every criteria that you need to meet before you can start the process of preparing an application for funding . If corporate banks were funding SMEs on merit of the business idea and potential , and not on credit worthiness of the SME owner ( s ), South African economy would have grown far more than anticipated 6 . SMEInvestor Platform ( New ) SMEInvestor Platform is an online platform providing SMEs with the opportunity to have their business idea developed into a professional proposal and presented to potential pre-screened investors matching the SME investment needs . ( see SMEInvestor Online Platform on Page 19 )
Whatever the state of the economy , there will be those willing to invest in new businesses . New businesses create jobs , and power to grow .
There are sources to help with capital . So , once you find the sources , be ready with a great plan to show what you are going to do with the capital , and how the investor will benefit .
See our next issue for more on raising capital for SMEs
Do you need finance for your
business ? Let us help you source the finance your business need to succeed . If your business has been in operation for more than 1 year and has an annual turnover of over R1 million . Contact Us Now ! info @ atmconsulting . co . za