01 Feb 2010

Get Funded: Make Your FIFA Business Idea Come True!

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By Justin Wolff

Has everyone around you gone World-Cup crazy?  Are they talking about all the opportunities for making money that come with this spectacular event?  Maybe you’ve heard your friends talking about how fresh produce will be at a premium, or that getting into the transport business is a sure road to riches.  But you’re keeping quiet – you’ve got a much better idea.  All you need is some cash to get you going.  So what do you do?

The bad news is that most banks are not keen to give credit to startups – they prefer to lend you money once your business is established and they know what they’re dealing with.  Government offers financial assistance for Small, Medium and Micro Enterprises (SMMEs) – you can get more information at dti.gov.za – but it’s a long process before you get the money.

“Your best option,” says Marlize Schwar, Head of Credit at ABSA’s Small Business division, “is to contract with one of the FIFA Partner companies.  They have been allocated 2010 opportunities by FIFA and are obliged to make use of SMMEs where possible, particularly BEE SMMEs.  On the back of a contract from one of these partners, many banks will offer finance.”

Funding is one of the biggest challenges facing any startup business.  “There is so much red tape and undue requirements burdening SMMEs needing to raise funds,” says Mfundo Thango, CEO of Mpilende Foods and winner of the Top Young Black Entrepreneur Award for 2009.  “I got very frustrated and opted to start and fund my business through the funds I raised from small contracts executed on behalf of clients.  I still struggle to gain the confidence of financiers in terms of raising funding for growth, even after having proven  my capacity and capability in business.”

“Where you do manage to secure funding on the back of a contract, you still need to make sure that you have a buffer of cash to cover your business expenses for a few months,” says Schwar.  “If your funds take longer than expected to be released, you don’t want to get into trouble with your suppliers and employees.  But there’s a wealth of knowledge out there on the internet, through mentorships and the banks themselves often have programmes to assist SMMEs.”

ABSA, for example, has Enterprise Development Centres around the country that can assist in drawing up a business plan and their Fund Specialists can help with loan applications.  Research shows that 46% of SMME failures come down to a lack of knowledge about business.  The more you know, the more chance you give yourself for success.

How did Mfundo get started?  “I decided not to beg the financiers for mercy, as the vision was mine, so I needed to act quickly, and devise a means to fund and grow my venture.  You have to establish a name for yourself in business through reliability, then commit all you can into your business success and help will find you on the way.”

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