The purpose of this guide is to help you start your business with as little capital as possible, but there may be times when you need a little boost—just a little extra cash for something like buying extra stock, paying off an unexpected bill, or taking advantage of a really good price on something you need. Remember, the longer you wait to obtain funding, the better position you will be in not only to get approval, but to get terms that will be more favorable.
If you’re a startup entrepreneur with no proven history or track record in business, you’ll find it nearly impossible to get funding. Even if you have a killer idea, investors aren’t likely to take a risk on you if you haven’t proven yourself. Let’s take a look at some ways you can obtain funding for your business.
- Angel Investors
Angel investors are more likely to invest in unproven startups than venture capital firms, as they are usually individuals, and they are usually investing not only for profit, but to help other entrepreneurs like themselves get started. Angel investors typically invest smaller amounts of money than venture capital firms, as they are individuals and not companies or organisations.
Investments are usually under a million Rands. Most angel investors do want you to have a very solid idea, as well as a solid business plan, so be sure you have all your ducks in a row before seeking appointments with potential investors.
- Venture Capital
Venture capital firms typically prefer to invest over a million rands in companies, but they are much stricter on the companies they invest in. They want to see things such as a proven track record, profit and loss statements, and solid revenue before they will invest.
While it may be possible to secure funding with a venture capital company without all of this, it would be incredibly difficult. You’d need a big name and proven track record in business before your idea would even be considered. For this reason, it’s advisable to wait until you have solid figures to show them before considering this type of funding.
Loans are a bit easier to get than investments, so if you aren’t at a stage where you can visit angel investors or venture capital firms, a loan can be a good option. Keep in mind that loans do require good credit and/or collateral to obtain, and if you don’t have either you probably won’t have much luck obtaining one. In South Africa one can secure loans made available by the banks such as FNB, ABSA, NEDBANK, STANDARD BANK etc.
- Fund Grants
The South African Government has made funding agencies available for small business owners, but in order for one to qualify for this funding they have to go through necessary procedures.
Where do i get assistance to establish a small business?
SEDA – http://www.seda.org.za
SEFA – http://www.sefa.co.za
FINFIND – http://www.finfind.co.za
IDC – http://www.idc.co.za
NEF – http://www.nefcorp.co.za
- Saving Money
Now let’s take a look at a few ways you can save money on those things you do need to buy.
1. Don’t buy anything you don’t need. It seems simple enough, but you’d be surprised how many people waste money on things they don’t really need, such as decorative things for their office or renting a fancy space for their company. Buy those things once your company is profitable. Don’t buy them in the beginning!
2. Always shop around. Prices can vary from vendor to vendor, and from day to day, so take the time to do some comparison shopping. Even saving a few rands here and there can add up. Before you buy anything that costs more than a few bucks, look for a sales, discount, or better price.
3. Buy used whenever possible. A lot of people make the mistake of thinking they need to buy everything brand new, but sometimes gently used items make more sense. Why pay R5000 for a brand-new desk for your office when you can get a very nice used one for R1000? Sand it down and paint it, and it might look brand new at a fraction of the price.
4. Don’t take a salary. I know it’s painful to hear, but one of the biggest mistakes startup founders make is taking a salary for themselves right from the beginning. I get it. We’re all in business to make money. Otherwise, why start a business at all? But when you’re just getting started, you need every dime you can get for startup expenses. Unless you’re incredibly lucky and achieve profitability overnight, hold off on taking any money for yourself.
6. Don’t outsource anything you can do yourself. You can learn to do most things on your own, such as setting up a basic website with WordPress and even designing your first logo. If it’s something you can do, you should do it yourself unless it’s so inexpensive to have it done that it wouldn’t be worth the time and effort it would take to learn how to do it yourself. These are just a few ideas of ways you can save money, and you don’t have to use them only when you’re getting started! It never hurts to stay frugal, even when your company is making a good profit.
Do check out other Blog Posts below:
- What Is A SideHustle?
- How To Sell An Online Course Through Udemy and Skillshare?
- Make a Living By Cooking
- How To Sell Digital Files On Etsy
- Questions To Ask When Considering a Side Hustle.