Following up on my previous article (Access to finance: part one), I would like to highlight a few points for entrepreneurs to consider when they start the process of sourcing finance for their business.
As the driver of the business, you should have a clear road map of how the business can be financed, no guesses and indecisions. There are plenty sources of finance, do your homework on the financier so that when you approach them, you are able to meet their criteria and they are able to structure your finance appropriately.
The financiers will also look closely at your contribution in the business. An immediate red flag for financiers is where the entrepreneurs’ loan account is overdrawn and they want someone else to plough monies in the business. It becomes very difficult to motivate funding for your enterprise.
Furthermore, you should conduct your own due diligence around your own business. Evaluate your enterprise; understand the risk associated with your business and industry. Conduct a thorough and honest SWOT analysis. Often entrepreneurs ignore or play down their weaknesses, immediately when you do that, you open yourself to your competitor to pounce on these weaknesses.
No business exists in silos, so be prepared to seek assistance and information as well as share your knowledge. Often entrepreneurs are not prepared to part with ownership or form alliances in order to grow their businesses. This school of thought can be very limiting to the true potential of your business. Should you consider parting with ownership or forming alliances, ensure that all the paperwork is done properly and the documentation conveys the mutual understanding and intentions of all parties.