Young entrepreneurs must set realistic funding requirements, based on needs of their businesses.
Entrepreneurship has been recognised by government as a key driver of future economic growth in South Africa, yet the unfortunate reality is that many of today's budding entrepreneurs rely on their savings to start and build their businesses.
Referring to last year's Real State of Entrepreneurship Survey, which found that 88% of South African entrepreneurs are selffunded Gugu Mjadu, spokesperson for 2019 Entrepreneur of the Year® competition says it's no wonder then that a lack of funding remains one of the primary barriers faced by young entrepreneurs. The competition is sponsored by Sanlam and BUSINESS/ PARTNERS.
In addition to this, Mjadu explains that even for those who do secure funding, there may come a time when you need to supplement it with personal funds.
Mjadu offers the following tips for self-funding one's entrepreneurial dreams.
Create a detailed plan
1. Just as you would be required to do if you were applying for external funding, Mjadu says that the first thing any hopeful self-funded entrepreneur should do is draw up a comprehensive and well-motivated business plan. "From a financing perspective, give specific attention to the risks and rewards associated with the total investment required."
Define realistic funding requirements
2. Once a detailed financial plan exists, Mjadu urges young entrepreneurs to set realistic funding requirements, based on the business' needs. "Based on your business plan, you need to determine the level of funding the business requires at each stage of operation. The 2018 Real State of Entrepreneurship Survey revealed that 28% of entrepreneurs needed less than R10 000, while 30% needed less than R50 000."
Separate and formalize your business savings
3. Right from the onset, Mjadu says that entrepreneurs should keep their business savings separate from their personal savings accounts and investments.
Be Consistent
4. While there are guarantees to be some bumps along the way, Mjadu says that consistency is key when it comes to saving money towards selffunding your business.
Seek professional advice
5. When starting a business, it is important to surround yourself with people in the know. These range from an industry advisor who can be an experienced entrepreneur to show you the ropes within your industry or an financial advisor that can guide you on saving money.
