Tips for budding entrepreneurs

With South Africa’s unemployment rate currently up from 24.5 percent in the previous quarter to 26.7 percent, encouraging a culture of entrepreneurship in order to promote job creation is key.

According to chief executive officer of Ecsponent Development Fund, Andrew Maren, it is critical that budding entrepreneurs understand that the spirit of entrepreneurship is based on hard work and testing your ideas over and over again and never giving up on your dreams.

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“While a growing number of business incubators continue to play an invaluable role in growing small businesses through up-skilling and providing funding for entrepreneurs, the reality is that most entrepreneurs would need to knock on many doors, and accept many rejections, before achieving tangible success.”

Maren added that there is a general misconception among entrepreneurs that having a good idea is enough to bring overnight success. However, starting and growing a business not only requires inspiration, but also goes hand in hand with thorough research, input, adaptability and peer-to-peer review, and sometimes a bit of luck.

He pointed out, “A particular challenge for entrepreneurs is realistically demonstrating to a potential investor or financial institution how their product or idea will make money.”

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Maren’s advice to entrepreneurs:

• Before you approach anyone for funding, it’s extremely important to bounce your idea off others, don’t fear rejection or someone else stealing your idea.

• Entrepreneurs find the red tape around company registration, tax compliance and financial management challenging. Streamlining these processes and making compliance easier will encourage more entrepreneurs to action their ideas successfully and be compliant.

• In the past, access to funding was also one of the biggest challenges for entrepreneurs but now there are a number of alternative funding solutions available to entrepreneurs which do not apply the stringent lending criteria used by traditional financial institutions. Instead, they consider transactional risk where collateral and credit history are less important in determining the credit risk.

• Your business plan also needs to cover a variety of possible scenarios in a typical business environment, such as changing interest rates, market demand and access to suppliers to show that it is robust.