Funding: An entrepreneur’s curse

with financiers who make endless demands before telling them that they cannot have the money after all.
Instead of investing time into their businesses, a considerable amount of time is spent looking for funding and in the Zimbabwe setting, most banks are under fire for their insensitivity to those starting out in business.
They are often accused of demanding collateral and other securities.
However, the bankers have countered that the entrepreneurs never take time to understand what is required for the application to succeed.
The bankers have argued that they are running businesses as well and they have specific mandates that they must follow.
As a starting point, the owner of the business must do his research and upon realising that there are different types of funding that have specific criteria and mandates that must be met.
Each business and industry has a suitable funding structure that suits the setting. o amount of moaning, sulking and bashing down doors will work if you continue knocking on the wrong doors and ignore the rightful procedures.
An article published by the South African Entrepreneur magazine notes that not all ideas are as innovative as entrepreneurs seem to think they are and most of them are simply not feasible.
According to South African research analyst Alexandra Fraser, the first thing funders want is for entrepreneurs to validate their ideas before they even pitch them to investors.
This involves researching the idea and the market.
She gives the example of Coca-Cola’s marketing success: “People were not dying of thirst before Coca-Cola hit the market. The brand needed to find another need or want to attract customers.
“It’s vitally important that you know what the hook will be. You can’t just simply say I have a product and people will buy it. Why would they buy it?”
The magazine highlights four critical areas that entrepreneurs are expected to concentrate on when they approach prospective funders and these are:
l The market – Is there a great market for your product? Is it a growing market full of opportunities, or is it saturated?
l Competitive advantage – Does your business have a competitive advantage? Do you have a value proposition that is quicker, smarter or cheaper than your competitors. Why should your potential clients buy from you?
l The team – An idea is all fine and well, but unless it can be executed, it isn’t worth much. The team is a vital component of the overall success of a business.
What kind of experience do the various team members have? What does their network look like?
What qualities do the various team members display, including competence, balance, high energy, motivation, determination and trustworthiness? A golden rule is to do what you know.
l Economies of scale – Can you start small and expand over time? Is the business scalable? If it is going to make money you need to be able to scale the idea – and you need to show how you can do that. While borrowing money has been encouraged in some circles, it has often been discouraged in favour of having equity partners who come to invest in the business.
Such ventures are often bound to succeed as no fair-minded investor would sink in their money in a business that in not likely to succeed.
That should not dampen your spirits however as hundreds of successful businesses are being launched everyday.
All you have got to do is to put together all the requirements in place and answer the attendant questions and you are on your way.
As always, let’s make money.