“Those that start with too little money are more likely to succeed than those who start with too much. Energy and imagination are the springboards to wealth creation.” Brian Tracy
“It’s almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that.” Richard Harroch – Venture capitalist
Let’s face it, one of the major constraints that many small and medium sized businesses face is insufficient, cost effective funding. it is often difficult for growing businesses to obtain the right funding.
Obtaining the right mix of funding can be key to overcoming some of the challenges facing a growing business.
The funding difficulties facing start-ups, irrespective of how good the idea or concept might be, are even more daunting. There are a range of funders available in South Africa many of whom are sympathetic to small and growing businesses.
Private Sector Funding /Venture Capitalists / Angel Investors
In the private sector there are the large commercial banks (some have business units devoted to servicing small and medium sized businesses) and there are other commercial funding operations specialising in various forms of asset based, trade and other forms of financing. There are also venture capitalists and angel investors who may take equity in exchange for their funding.
The answer may lie in having a proper business plan or in knowing which lenders to approach or you may need help in “pitching” your business to prospective lenders.
However, all private sector lenders adhere to strict lending criteria and normally require the borrower to have a solid track record and provide security for what they borrow. Most like to see that the borrower has put his own money into the business.
This means you may have to get more creative in your approach when looking for funding.
There are two other broad areas available for funding for black empowered businesses and those interested in taking on BEE partners.
- Firstly, there are a number of government grants, loans, business support and job creation programmes on offer. These cater for a wide range of businesses from SMME through to mature businesses looking to expand or diversify. There are a number of government schemes designed for the financing and development of small businesses while The DBSA, The IDC, The Jobs Fund and others cater for much bigger projects.
- Secondly, the large corporates in South Africa are aware that economic transformation is required in South Africa and that jobs need to be created. In some instances and circumstances they are available to support young, growing businesses with transformation and job creation potential. They also need to enhance their own B-BBEE credentials and have Enterprise Development programs aimed at building and supporting SMME.
A Financial Partners consultant handles Enterprise and Supplier Development programmes for various corporate clients which involves, amongst other things, identifying potentially viable SMME.
All these organisations have their own specific lending criteria which we are familiar with and as a result we can help you put together the best possible proposition.
Our services in this respect include:
- Business funding recommendations based on an analysis of your business or business opportunity. In the case of distressed businesses the funding recommendation may form part of a broader plan.
- Assistance in the preparation of business plans and business models.
- Assistance in preparing and presenting proposals to prospective lenders
- Canvassing of potential lenders
- Facilitation of BEE/purchase/sale/merge transactions
- Providing the tools and guidance to those who want to handle their own funding applications.
- We also offer some special services at reduced rates to start-ups and small businesses (see “Start-up Support”).
How do we work?
In the case of established businesses our Co-ordinating Consultant meets with company management or owners to assess the best way forward and makes recommendations.
- This initial consultation is free and without obligation.
- Thereafter our fees are normally included in a project costing or charged for at a pre-agreed hourly rate (see “Our fees”).
- In the case of start-ups, we offer a free fifteen-minute telephone consultation. (See “Start-up Support’”)