The start-up landscape in South Africa has experienced an impressive amount of traction in the past 10 years. This growth has been attributed (not exclusively) to a plethora of incubation centres, start-up competitions and NGO’s. Even with so many opportunities available to the youth, a lot of South African SMME’s are citing access to finance and markets as their main obstacles to participating in the economy.
Small and medium enterprises contribute between 35 and 45 percent to South Africa’s gross domestic product, but still struggle to access capital. Recent data shows that about 40 percent of an estimated 650 000 SMEs struggle to access funding, with many failing to meet criteria set by traditional lenders while others must undergo lengthy application processes.
STRATEGY VS FUNDING
There has been a heated debate around the notion that entrepreneurs could find a way around a lack of funding by exercising resourceful thinking to bootstrap their start-ups until such time they have proven their business concept. This line of thinking is supported by the belief that if you cannot find a way to launch your business concept with almost no funding then you are focussing your energy on the wrong business idea.
Self-determinism is an essential quality that must be nurtured everyday by all entrepreneurs to ensure they perform at their best on a consistent basis. The combination of breaking down the end business goal into daily bite sized marginal achievements, leveraging existing entrepreneurship opportunities for early stage funding, as well as access to mentoring will most likely result attracting funding or essential resources.
Funding is a great thing to acquire in any business, however a business model that has never been tested and proven is a very risky endeavour for any sober minded venture capitalist or potential investor. The business must grow organically in order to gain the necessary experience needed to grow and scale at the businesses full potential.
BY SEDIKANE LERUTLA