FOCUS ON FUNDING11
Identify appropriate funders
Apply to the funders based on
your financial requirements, and make
sure you understand all the different
types of funding that is available. Don't
approach short-term funders for when
you want to buy equipment; apply for
the appropriate funding product for the
requirement. At the end of the day you
may need to apply to more than one
funder to meet your requirements.
12
Understand your financials
Funders will expect you to be able
to defend your financial assumptions and
answer basic financial questions. So, be
sure that you understand your financials
and your forecasting assumptions.
Prepare to be interrogated. Understand
margins, break-even figures, mark-ups,
and the difference between a balance
sheet and income statement. Also
demonstrate a firm understanding of
your sales cycles and industry cycles, and
include these in your financials.
13
Show where the money is going
Show the investor what you
intend to do with the capital and how it
will fuel your growth. You should also be
able to explain how previous capital was
spent and how it has taken the business
to its current level.14
Make yourself bankable
Start by making yourself bankable
if you want to get the nod from investors
and grow your business.No competition? Not possible!
The three statements below are sure to
scupper any funding deal you have on
the go:▪ My product/service or business has
no competition. All this statement proves
is that you haven't carried out in-depth
market research, and no investor will fund
an entrepreneur who hasn't done the
necessary legwork.▪ These figures are conservative. They
aren't. You probably sat and engineered
your financials until you thought they
looked good, and then told yourself that
they were conservative.▪ Top-down market info. "In Pretoria
East alone there are over 100 000 people
that braai. So, if only 5% buy my widget,
we can all retire." The only thing this
statement proves is that you haven't done
your market research.Doing all the hard yards to present your
business in its best possible light, as
well as staying humble, will go a long
way towards getting you the funding
you need. It's a slog, but it'll be worth it.
Good luck!John Fogwell is an expert in international
corporate structuring and Pan-African
business development. With over ten years
of in-the-trenches experience and over
30 successfully launched ventures,
Fogwell is fast becoming known as the
undisputed expert on African business
and offshore business development.
Email: [email protected]."In our first year we prepared
several business plans and
presentations, but no one wanted
to fund a township logistics
business. We bootstrapped that
year until in our second year we
landed material contracts that
generated revenue. We realised
that being able to show that wehad clients was the best way to
project our credibility to investors.We recommend that
entrepreneurs looking to
fund their businesses join an
accelerator, and gain market
access as quickly as they can,
to cement their authenticity.""I put together an extensive
market intelligence document as
well as an acquisition and strategy
plan, together with a business
plan. I had no background in
my industry but my funders
were willing to back me as an
entrepreneur, because of the
execution plan I had put together.
To date I have been able to raise
over R20 million for the business.Entrepreneurs need to know that
having a great idea is important
but not critical. What is critical is
having the ability to show your
potential funders a sound route
to roll out your business."HOW DID YOU GET FUNDING-READY?
We posed this question to two entrepreneurs who were category winners in last year's
Entrepreneur of the Year competition...
ITUMELENG PHAKE,
Founder of Zenzele Fitness Group
SIZWE NZIMA AND SIRAAJ ADAMS,
Founders of Iyeza Health