5 Ways To Generate Finance For Your Start-Up
Owing to the fact that an expected cut in South Africa’s credit ratings to ‘junk’ grade is already being priced in by investors, new start-ups may struggle to generate finance through traditional means, such as applying for a business bank loan.
On top of that, certain investors may not have much confidence in your enterprise either, as weak growth and large deficits coupled with few signs of future fiscal strength could seriously dampen the success of South African businesses. However, that doesn’t mean to say you are out of funding options…
1. Foreign exchange
With several of the world’s major monetary authorities slashing interest rates, there has never been a better time to make money from the foreign exchange (forex) market. This might seem like an unconventional way to generate finance for your start-up, but online forex trading with IG is incredibly easy and can be extremely effective.
What’s more, this world-renowned broker provides all the help and assistance you need to convert one currency to another, which includes a range of trading charts and direct market access with full transparency.
Although a lot depends on the nature of your start-up, crowdfunding could be the solution to your financial problems. It works by convincing potential customers to back your business with money in exchange for some sort of reward, which can range from exclusive pre-orders to a complementary gift.
However, it is important to bear in mind that hundreds of campaigns on popular platforms like Indiegogo and Kickstarter go unfunded each year. Therefore, you must be able to write a compelling description of your start-up, along with details about long-term goals and future financial strategies.
3. Family and friends
Some start-up entrepreneurs are too proud to ask for help from family members and close friends. However, this is a super simple and cost-effective way of generating crucial capital.
Chances are your family and friends will trust you with their money and have complete confidence in your ability to achieve success. Even so, you should probably draw up a proposal that outlines repayment and ownership details.
4. Government grants
Again, your start-up may not qualify for a government grant, but you’d be surprised at how many different industries and organisations the Department of Trade and Industry (DTI) supports. After all, this is a critical time for the South African government to support the economy, create more employment, and attract foreign investment.
Full details about government funding can be found on the DTI’s website, but eligibility criteria relating to turnover, years trading, black members of staff, and shareholder credit history may apply.
As long as you start out small and simply use the savings, investments, and assets you can afford to lose, there is no reason why you can’t self-fund your own business.
You can enjoy a number of additional advantages with this option too, which include keeping all of the profits, retaining control of the business, and avoiding interest repayments or loan charges. Wait until you’ve saved enough – and then go it alone to keep control.