Money: love it or hate it, it can be challenging to live without it. This is especially the case if you are just starting up a new business or at a crucial growth-junction for your small business.
Coming up against the cash-crunch can be stressful and not knowing what the options are can make it even more nerve-wracking.
Contrary to what it may feel like, there are options. Here are some of the ways you can raise more capital.
Chances are you are already doing this to some degree. If not, you ought to be. Before convincing others that you’re worth supporting begin by supporting yourself. Use the internet to research, self-teach & do things yourself – this kind of bootstrapping takes up time but does free up money.
Some small business owners and Startup Entrepreneurs go all-in on their fledgling enterprise. While this carries a significant personal risk it certainly gives one the motivation to keep at it and press for success.
However, leaving yourself without a back-up plan will not cause your business to be successful by the mere ‘neccessity’ that it has to work. & be wary of the notion of Meritocracy; just because you put in the time & effort, it does not mean that your business will be a success. Putting all your faith in something, does not ensure it.
If you are considering the all-in option it would be wise to consult with a Financial Planner. You don’t want to jump into a decision like investing your pension, taking out a second mortgage, or investing your entire savings without wise counsel.
While we would never advise skimping on everything it is wise to scale-back where you can. This doesn’t raise your capital per say but does free up cash-flow from elsewhere that you can than redirect to where you need it most. This could look like moving the office online to free up cash tied up in physical property and electricity bills. Or it might mean making use of the free platforms available for businesses and forgoing the traditional software licenses which can really add up.
Whether you are a brand-new business or already up-&-running, Crowdfunding may be a viable option especially if you are offering a product or a service that has a wide potential market or fan base. Read more about how it is done here; there are South African specific platforms such as Thundafund (that comes with unique benefits like mentorship) & Jumpstarter too.
Get a Grant
RSA offers some unique opportunities in the form of government starter grants offered by several departments specifically geared towards increasing and fostering small business and entrepreneurship. Keep in mind these are often especially geared toward business that are job creators and incorporate Black Economic Empowerment.
Applying for a grant often requires a great deal of paperwork but it is often worth it because the money does not need to be repaid with interest like a bank loan.
In addition, keep your ears open to hear about regional grant offerings such as the Gauteng Township Entrepreneur Awards (#TEAwards). The prize for winning this competition is a valuable chunk of change to re-invest back into your business.
Find an Angel Investor
An Angel Investor could be anyone; including one of your family members, a co-worker, or a previous employer. Networking is important for many reasons, add finding an Angel Investor to the list.
Since you are working with individuals, instead of corporate entities, the investor/business relationship can be negotiated several ways. Perhaps the investor will want a share of the business, say in management, or a set return. Think through what you are prepared to offer prior to these meetings. Decide what is fair and what you can live with and look to achieve that. Make sure you document it thoroughly for everyone’s protection.
Secure Venture Capital
This may be an uncomfortable exercise for most people but it can have extreme payoffs when one is successful. Perfect your pitch before you go! Make sure it is concise, thorough, and showcases the successes you have achieved thus far. It is best to have all your registrations, tax ID, VAT Number and other such requirements already received and up-&-running to demonstrate the legitimate potential of your business.
Ensure your budget and your plan is water-tight and well-thought through!
If your pitch gets turned down, don’t give up, find someplace new to pitch!
Take out a Bank Loan / Government Loan
Sometimes this may be the best choice to move forward but you should definitely explore other options before signing on the dotted line. The terms and conditions can be tricky; so it really is best to do your research beforehand and know exactly what the terms in the contract mean – you can sign-up for our Newsletter to receive a future article that offers insight into this. Shop around for the best conditions and have everything in your business primed already so that if approved you can jet off from the get-go. [ but be prepared for otherwise too ]
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• The inspiring female-owned business we backed from the Gauteng Township Entrepreneur Awards.
• The free tech we equipped this small business owner with so he could grow his business using connectivity.
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Links to Look at Next
• Department of Trade and Industry
• National Empowerment Fund
• The Small Enterprise Finance Agency
• Small Enterprise Development Agency
• Development Bank of Southern Africa
• The Industrial Development Corporation
• Technology Innovation Agency
• The Jobs Fund
To Note: The above article is not to be taken as Financial Advice, it is merely meant to be informative & entertaining.