Too many aspirant entrepreneurs place an overemphasis on start-up capital as the key enabler to entrepreneurial success. We give you five different ways to start up your business without resorting to high-interest loans.
By: Joshua Maluleke
Many people who want to venture in business think that if they have little or no capital, they may not get funding and are therefore doomed for failure. Whilst it is true that capital (in money and machinery) plays an important role in starting an enterprise, it is not always true that not having a lot of it disqualifies you.
Another myth is that all businesses are capital-intensive (heavily reliant on capital to succeed). So here are ways you can start your business without having lots of cash.
1. Personal Funds
A great starting point is your savings or any income that you may have in your name. I’m fully aware that many people are unemployed and have no source of income, but the little that you have can go a long way into helping you start-up your enterprise. The other reason why this is important is that many investors tend to fund people who have themselves financially committed to their businesses.
2. Your Family and friends
Family and friends are usually your number one supporters. The other advantage is that when you pay back an advance or a loan from a family member or friend, it may be without interest. Even in the case where you have to pay back with interest, it will usually be cheaper than the interest that you would ordinarily pay to a bank.
3. Business angels
There are people, usually rich and affluent, who invest in businesses (and business ideas) that no financial institution will touch. You may do yourself well to look out for these people because they attend many networking events (especially where they know that there are people with business ideas who need funding).
4. Financial institutions
A popular choice by many entrepreneurs is to approach financial institutions like banks and other finance houses for funding. If you consider this option, make sure that the interest that you will have to pay at the end of the term is not too significant. Otherwise, look for other options as exorbitant interests may delay your business growth and profitability.
5. Start-up support entities
There are many entities that are set-up to support start-ups in our country. In most cases, those who ultimately benefit from these are those that are able to prepare business plans. Your ability to prepare a practical and relevant business plan may put you in good stead to qualify for the support.
Joshua Maluleke is a Financial Manager at Deloitte Consulting who regularly contributes to Bona Man online. Read more of his columns here.
