One of the single most contested topics in any entrepreneurial discussion is funding. Is there enough? Can business owners access it? Do you really need external funding to grow?
Raymond Ndlovu offers growing businesses three key pieces of advice when it comes to funding a growing business.1 Understand when you need funding — and when you don’t Before you do anything else, evaluate why you think you need funding.
Is it to grow? Will the influx of capital allow sustainable growth, or will the growth simply burn more cash than you make.We often see business owners who bite off more than they can chew in the name of growth.
Investing in new products, machinery, staff or office space is all fine and well, as long as the additional income covers the investment. In many cases it doesn’t, and a business that was doing well is suddenly in dangerous territory.
My advice? Stop worrying about where you want to be and focus on where you are.Allow growth to happen when the business and market conditions are right, not before. Once conditions are right, you can either fund the growth internally, or approach an investor with a clear and sustainable investment opportunity, or safe and sustainable loan application.
2 Concentrate on making more sales
Find the right customers at the right price point and your profits will naturally increase. Manage your money wisely and you’ll often be able to fund growth internally, without outside funding — or at the very least you’ll be able to merely supplement growth with outside investment.
So, how do you concentrate on increasing sales?Have you been studying your clients and potential clients? Have you evaluated where their potential value leakages are? Approaching a client and saying, “I’ve noticed your business has value leakage in this area, and here’s how we can help you improve your systems,” is a very different conversation to a straight product or service pitch. Your company exists because it adds value to something — you need to show this through the context of their business, not yours.
3 Understand B-BBEE
There is a significant pool of under-utilised, investible capital on corporate balance sheets, and a policy environment that encourages enterprise development and preferential procurement.If you have the right idea, product or service, and you can present it to big corporate in such a way that it suits their mandates and speaks to their needs, that capital is readily accessible.
There is a huge opportunity here, but again, it needs to be viewed from the perspective of the corporate. Always start by understanding their burning need, and then developing a solution that solves that need.What are their headaches? How can you solve them?If you switch your thinking from what you need to what they need, opportunities will open, sales will increase, and growth will follow.