Funding Resources for Entrepreneurs

When starting a business its interesting how steep the learning curve is around areas that you may not have considered before. Funding of course is one of those areas which, especially as a new or first time entrepreneur you may not have spend much time thinking about before.

Ive recently come across some extremely useful articles and funding resources on the Investors Network website, some of which you can find bellow.

Types of Business Funding for Entrepreneurs
How to Get Business Funding
How to prepare a small business for investment
Tips on getting business funding
Options for Funding a small business

And many more.. Happy reading

SA small firms not to bothered by slow down

Great news for small business owners is that most of us seems to be coping very well with the recent economic slowdown. An resent research study on Entrepreneurs around the country have found that it does not have to be all doom and gloom and many businesses are maintaining business levels and even growing their revenues. The research is really just proving what we have been saying all along in that the flexibility and increased ability to respond to change in customer needs often provide small firms with an edge compared to their larger counterparts.

In a number of recent conversations with business owners, the subject often came up and more often than not the comments were made that if it had not ben for the large amount of column inches afforded to the slow down in the press, few entrepreneurs really would have known about the slow down simply from looking at their balance sheets and income statements.

The report mainly found that:

67% regard business as profitable
Only 5% have no or low confidence in surviving 


In addition to this we have also found that activity at the Investors Network has been business as usual. Business ideas are still receiving funding and investors are as interested as as they have been.

Please see below for the remainder of the research report I refer to above. Let us know your experiences on this.

Till next time,
Ben




Although small and medium-sized businesses (SMEs) have been hit by the tumultous economic climate, they have proven to be remarkably more resilient than large corporates, according to the findings of a study into the impact of the recession on this sector.

The study, based on interviews with 2 500 business decision makers, was sponsored by Standard Bank in conjunction with Fujitsu and the Umsobomvu Youth Fund (operating as the National Youth Development Agency). 

The research, released last week, also sought to test the sector's confidence levels, and small enterprises' ability to remain sustainable in a recession.

Principal researcher Arthur Goldstuck said small businesses were coping well amid tough conditions, which had seen South Africa experience its first recession in nearly two decades. 

Said Goldstuck: "Make no mistake, they are bowed, but not completely beaten." 

He said only 5 percent of SMEs were making a loss, whereas 67 percent regarded their entities as profitable, indicating a resilience on their part. Twenty-four percent of SMEs were breaking even, representing a 2 percent increase compared to last year.

"This percentage is fairly high and it indicates that any additional shock could knock these companies further over the borderline. But if they hold onto strategies that work for them, they should survive," Goldstuck said.

Only 5 percent of these businesses indicated that they had none or very low confidence to weather the recession, while about 36 percent said they were neither optimistic nor pessimistic, he said. He added that 28 percent reported that they had high confidence while another 31 percent recorded a very high confidence.

He said the aim of the survey was to provide a barometer of expectations for SMEs in the coming year, particularly as many business owners had never before done business in a recession.

Thami Mazwai, the director at the Centre for Small Business Development at the University of Johannesburg, and Nicholas Biekpe, the president of the Africagrowth Institute, said the findings were not surprising as not all sectors had been affected by the downturn.



Mazwai pointed out that as the research was not sector specific, its findings were likely to have limitations.

"It would be interesting to look at small business in terms of sectors. For instance, small businesses in the automotive and textile sectors are bleeding heavily and many have closed shop," he said.

Biekpe said the apparent resilience of the small business sector had more to do with managing costs rather than organic business growth.

"To keep their heads above water, most SMEs are now cutting back on costs, which includes redundancies, marketing and delays or cancellations in investment on new projects," he said.

Biekpe added that every economic cycle had both positive and negative growth sectors. 

"This means that some SMEs are better placed than others. In addition, some owners are naturally good at attracting and keeping clients during lean times."

Ezekiel Madigoe, the managing director of information technology company Mamapo Solutions, complained, however, that business was drying up and that banks were not willing to fund small firms.

He said government tenders were hard to come by as these were given to businesses with political connections, while big corporates preferred to work with small enterprises with sound financial standing.

His views were echoed by Titus Molefe of glass and aluminium company, Tit Glasses in the North West.

"People are postponing orders, some do not pay for months and months," he said. 

Molefe had last year said he would employ about five contract workers in addition to his two permanent employees, but this had not happened this year.

However, Hlekani Mahlaule of Xongi General Trading, which manufactures duvet sets and clothing, said her business was booming and she had hired five people

By Lucky Biyase from BusReport

Richard Branson Comments on Business Start-ups in South Africa

Richard Branson recently commented on a state of business start-ups in South Africa and it was evident that he not only sees huge potential in the entrepreneurial ability of South African entrepreneurs but also feels that much more still needs to be done. This article from the Business Report website

Virgin Group founder Richard Branson believes South Africa's failure to kick-start a vibrant small business culture is both a legacy of apartheid and the result of insufficient government support.

"You've got a whole generation (whose) parents were oppressed - and so entrepreneurship doesn't run in their families," Branson told Business Report in an interview on Thursday.

He was in South Africa to participate in a leadership summit and launch a range of initiatives, among them a R122 million disease control hub in partnership with the government, and a competition for five students to complete an incubator programme at the Johannesburg-based Branson School of Entrepreneurship.

An estimated 12 000 students at various tertiary institutions are expected to compete for the chance of receiving seed funding of R1.5m to develop their business plans.

Branson said that compared with a country like India, whose government was "much more supportive" of getting small businesses up and running, South Africa was dominated by big companies in almost every sector of the economy.

"In most sectors, you've got really big dominant companies. There aren't many sectors where that doesn't happen and therefore competition is needed. Virgin, in a small way, is doing that in one or two sectors," he said.

The Virgin brand in South Africa includes health and fitness chain Virgin Active, Virgin Mobile - a joint venture with Cell C - and Virgin Money, which three years ago launched a credit card marketed on the basis of a flat interest rate and fee transparency.

Branson said large companies with accompanying higher cost bases and inefficiencies provided the space for new, young companies to compete. "Small companies create many more jobs than big companies do," he added.

"Entrepreneurship is a crucial factor in creating a strong and sustainable future economy. I believe that encouraging entrepreneurship in this country… will help increase growth and jobs," he said.

Branson launched the entrepreneurship school in 2006. It is a project of the Virgin Group's non-profit foundation, Virgin Unite, in partnership with Cida City Campus.

Branson said the school aimed at providing seed funding for many entrepreneurs, and it was possible that much bigger investments would be forthcoming over time. "We're debating a whole new concept to get quite large sums of money."

Branson's own 25-year-old business empire, which employs 60 000 people in 30 countries, was launched with $300 that his mother gave him after she found a bracelet on the side of the road that nobody claimed.

"That enabled me to get my business going," he said.

Asked what small business he would consider starting in South Africa, Branson said: "Funny, a lot of students ask me that question… The problem is I suspect I'd have already done it if I thought there was a gap in the market."

Nevertheless, he saw "enormous opportunity" arising from global warming and the spike in fuel prices.

"If you can go into people's offices and go into homes, and say 'I can save on your electricity bill, give me 10 percent'. Find out how to cut down on carbon output. I would get knowledgeable about how to set about doing it. That's just one idea."

He advised entrepreneurs to go only into a business in which they had an interest. "You must see a gap in the market, and you must make a real difference to other people's lives," he said.
Article by INGI SALGADO

SA Business Optimism Grows

Good new for South African business owners and Business Investors is that the report in the Times this week that business confidence in South Africa is on the up. If you are anything like me you may also be growing tired of the constant press of down turns and slow economic sow downs, so this news comes as a welcome respite.

From my own conversations with small business investors and SA entrepreneurs, opinion has been divided on the effect of the slow down. Many small businesses are growing and feel little effect apart from that they have been reading about in the press. On the other side there are also a number of businesses who are very much aware that consumers are careful with their spending. I do still believe that many businesses have their future in their own hands and a forward looking innovative approach seems to still be baring fruit for numerous business owners and entrepreneurs. The article from the Times can be seen bellow.

SOUTH African businesses are optimistic about the country’s economic climate.

These were the findings of the June Business Confidence Index compiled by the South African Chamber of Commerce and Industry, and which measures confidence in the economic climate.

But the report cites the recent 31.3percent electricity tariff increase by Eskom as one of the most significant threats facing business.
It said that by May 2010 the price of electricity will have gone up by 62.5percent.

The index recorded a score of 83.1 that, while far below last year’s June level of 92.6, was the highest recorded for 2009.
In March, the index was at its lowest at 78.9 before making gradual improvements in April and May.

Out of the 13 indicators, six had a positive impact on the index. These were liquidation levels, exports, vehicle sales, construction projects, precious metals prices and the rand exchange rate.

The negative indicators for the month were in manufacturing, imports, retail sales, inflation, private sector borrowing and real finance costs. The impact of share prices remained unchanged.
Sacci economist Richard Downing said: “Domestic and foreign demand for South African goods and services is strained and this has negative consequences for the supply side factors of production, namely labour, capital and operating overheads.”
Economists said the index was tracking the state of the economy fairly accurately.

Tony Twine, Econometrix director, said: “It certainly confirms the general business activity during the second quarter of the year. Vehicle sales, which were atrocious in March, recovered in May and slightly more in June.”
Standard Bank economist Johan Botha said, though the climate was still depressed, the economy was beginning to turn around.

“The rand has strengthened well over the year, which might have a negative effect on imports, but it also indicates that we are approaching the bottom of the cycle,” he said.
More details on this from the Times News Paper here

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How to get business funding: On Investment Network

There is a great article on the Investment Network Blog this week, so if you are looking for business funding or know someone who is, here is the link.

How to Get Business Funding | investorsnetwork.co.za: "How to Get Business Funding"