Finance for your start-up, TIMESLIVE.CO.ZA
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There are numerous options to obtain funding to get a small business off the ground, writes Tina Weavind
A lack of funding is probably the single biggest excuse potential entrepreneurs use for failing to get their businesses off the ground. Funding isn''t easy to find, but it''s not impossible.
A thriving small and medium business sector has long been recognised as one of the answers to South Africa''s unemployment problem, and a multitude of development finance institutions have been created from which risk capital may be sourced.
One of the problems with institutional funding is that it''s tough to get through the red tape, and you could be bankrupt before you''ve complied with all the basic requirements.
But if you can get a good guide and refuse to give up, that might be a good place to start. It''s not the only place, though. The commercial banks are still primary funders of new businesses, and venture capital, including “angel” investment, is becoming an important driver of early-stage businesses.
Then there is bootstrapping, which is how Richard Branson, Steve Jobs and Bill Gates went about making their fortunes.
BOOTSTRAPPING means funding your start-up with little or no outside capital. It''s slower, tougher and less sexy, but growing a business by bootstrapping has numerous benefits, the most significant being that there is nothing to pay back . The business owner is completely invested, believes in the business and is prepared to sweat blood to get it off the ground. When the time comes to take it to a new level, investors or financial institutions will be more disposed to handing over cash to a proven, debt-free business than one that is bonded or has swapped equity for capital.
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