Advice For Entrepreneurs Who Believe A Lack Of Funds Is Standing In Their Way Of Success
Big money lessons you can expect from this year's FundEX
Tafadzwa Madavo, COO of the Riversands Incubation Hub which is hosting this year's FundEX
"We want to address the belief that there is no funding available," says Tafadzwa Madavo, COO of the Riversands Incubation Hub, an entrepreneurship hub, which is again playing host to the funding and investment conference and expo, FundEX on 17 August.
Now in its second year, the event exposes entrepreneurs to funding opportunities available. Last year's event attracted more than 500 entrepreneurs looking for practical advice on securing funding for their businesses.
This year’s one-day conference and expo builds on last year’s success and will once again highlight funding opportunities available from banks, government funders and alternative funding platforms.
Beyond just raising awareness of funding opportunities, the event will also help entrepreneurs become funding-ready, Madavo says.
"Regardless of the economic conditions of the day, funding is not a silver bullet to ensure growth"
"There is a massive demand for practical information about funding. Becoming funding-ready is a process; entrepreneurs need guidance to go through the steps," says Madavo.
SME South Africa speaks to Madavo about why funding does not guarantee survival, and why money is not the only resource entrepreneurs should be seeking.
Q: We have seen some major economic setbacks take place this year - the economy going into recession, the downgrade etc. How will this affect entrepreneurs' mindset and approach to funding?
Economic conditions are tougher this year and will affect the small business sector. Entrepreneurs must be careful not to use funding received to 'paper over' the tough times. It should still be used to expand the business, and not to cover operating expenses. This requires a huge amount of discipline.
The savvy entrepreneur also recognises that money becomes more expensive during these types of economic conditions. This requires a careful balance and not borrowing more than what is affordable.
Client payments may also get slower, entrepreneurs need to adjust their mindset in order to invoice and collect promptly to avoid a cash squeeze and meet their loan obligations.
Regardless of the economic conditions of the day, funding is not a silver bullet to ensure growth. Entrepreneurs need to keep their operating expenses low while they scale their business. This also means a healthy attitude to bootstrapping – cutting back business and personal expenses in order to free up money for expansion.
Entrepreneurs and aspirant entrepreneurs may believe that a lack of funding stands in the way of their success. Yes, it’s a hurdle, but start something regardless. It could be a side hustle to begin with, or it could be gaining some work experience in the sector that you want to work in. Just keep moving!
Q: How will FundEX address entrepreneurs’ biggest funding challenges?
The event aims to tackle the following challenges:
- Addressing the belief that there is no funding available – on the contrary, there are countless funding vehicles for entrepreneurs to explore.
- Breaking down the steps in the path to funding – by providing practical advice that entrepreneurs can absorb easily.
- Bringing funders much closer – allowing entrepreneurs to bridge that distance that exists between themselves and funders. We believe that there is huge value in hearing information straight from the source.
Q: What incentives and non-financial instruments should entrepreneurs also be exploring?
There are many programmes and initiatives to support entrepreneurs in South Africa; there are so many opportunities to build your business skills. A lot of this is either free or very affordable. For example, Riversands alone offers regular, free lectures, workshops and group coaching on topics that are tailored to entrepreneurs.
Learning opportunities aren’t the only support option available – there are many initiatives to support entrepreneurs gain market access and grow linkages outside of South Africa. The dTI offers programmes, as does the Cape Design and Craft Institute for Western Cape design businesses.
Entrepreneurs may also boost their business by regular engagement with a mentor. Many incubation programmes offer this type of support.
There are also many initiatives to bring resources closer to entrepreneurs. For example, the Technology Innovation Agency (TIA) offers Technology Stations in diversified sectors, ranging from agro-processing, chemicals, clothing and textile to tooling. These provide entrepreneurs access to university-level technical levels and specialised equipment at affordable pricing levels.
Q: This year you are expanding the Funders Lounge because of demand - what does that tell you about what kind of interaction local entrepreneurs are looking for with investors?
The Funders Lounge last year couldn’t keep up with the demand from entrepreneurs! From this we can see that despite the huge amount of information online, people still want to speak to an individual.
Entrepreneurs need guidance (without the financial jargon!) when it comes to tapping into the various funding pools available. There is a need for more practical advice, packaged in a user-friendly format, to meet the huge demand for funding education.
Q: What is the Riversands team most excited about at this year's event?
Funding is such a broad topic and it’s great to have a second shot at tackling something new.
We are excited to be bringing new topics to the table; including tapping into the Black Industrialists’ programme, grants for agro-processing and funding for technology startups. We also have a panel discussion featuring entrepreneurs sharing their funding stories and secrets to success.
- The one-day event runs from 9am to 5pm on 17 August, and is open to the public, with tickets available online at http://www.fundex.co.za at R200 per head.