Getting Finance for Growing a Business

Corry and Jaco Coetzee started their small business four years ago. They decided on a goods supplier to the local community as there was a clear gap in the market at the time and they wanted to have flexible working hours. Recently they decided to grow the business further and have now secured R5 250,000 in funding to expand. Here Corry shares her top tips for getting business investors on board.

Update your business plan
A clear business plan is essential. If you acquired funding for your business when you started up you will probably already have a business plan. Now is the time to update the plan to reflect your business and its needs as it is today. Without one people aren’t even going to look at you. You need to make sure you have done your research properly so when you get grilled you aren’t going to loose people’s confidence. It doesn’t have to be long, it just has to contain the key factors.

Consider business angels
Business angels invest capital in new businesses and can also give a huge amount of advice. We were introduced to ours through an angel network called Investors Network and secured R2 000,000. At the beginning we didn’t feel worthy of their help, but it’s amazing how many people are prepared to give advice and invest their money in your business.

Be realistic about how much ownership in the business you want to give away
If it’s too low you’re not going to win confidence in your investors. Obviously you want to give away as little of your business as possible so decide the maximum and the minimum first and stay within that.

Get a good business manager
It’s important to have a good business manager at your bank to get advice from. After building up a relationship with ours we managed to secure R2 500,000 with the help of a local business loan guarantee scheme. The very fact the bank was prepared to give us this amount of money meant other investors had more confidence in us.

Be resilient
You are going to get knocked back lots of times. It’s not a quick process. We emailed a lot of people, and I think it paid off to keep revising the proposal to make it look more professional until it got somewhere.

Get an accountant on board
Be sure to get professional advice, even if this means spending money. No matter how excited you are about your business, the investors are going to be even more concerned because it’s their money at stake.

Where to find a business angel in South Africa

When looking for business finance, the term business angel is perhaps not as well known in South Africa as compared to the US, UK and Europe. Business angels who are often individuals who are well of from previous business success, may have strong industry links in specific business industries and come with plenty of experience, unsurprisingly really can be a great asset to a new business.

It comes as no surprise that in some countries, business angels are preferred partners for business finance and moral support. 'Wow that sounds like a great option for my business' you may be thinking at the moment, so where can I find a business angel?

Contacts with business angels are often made informally. You really need to be keeping a look out for these individuals where ever you are and may find the ideal person amongst:

Personal friends and family.

Wealthy business contacts.

Individuals known to your professional advisers (eg your accountant).

Major suppliers and clients of your business.

You may want to approach an angel networking organisation such as Investors Network.
Many of the most active business angels use these services to find out about interesting investment opportunities.

You usually have to supply a credible business plan and financial forecasts as part of the registration process.

Once you are registered, the organisation passes information on to business angels. Typically, angels will attend presentation meetings (where you present your business to them) or receive bulletins.

In addition to the above you may also attempt to find Angel Finance through the business to business sections of various newspapers include advertisements from investors and from businesses looking for finance.

If you want to advertise your business, the advertisement will have to meet the newspaper's standards.

The benefits of angel finance is well known and although it may not be as straight forward as walking into your local bank to apply for funding, as a new business just starting out it will certainly be worth your while to get a business angel on board as soon as possible.