When I started my consulting business, which was established to bridge the gap between the high number of businesses registered each year and high number of businesses that go out of business each year, from various “reasons why businesses fail”, the one reason I couldn’t nod to contently was “lack of funding“.
Are you sure you need business funding?
I strongly don’t believe that funding is the signed-sealed-delivered solution or rather a guarantee that your business will be successful.
Funding is not the prerequisite to launching a profitable business.
Whether your business has low capital costs like a consulting business, or it is high capital intensive like manufacturing, funding is not the number one thing you need.
You need to solve a problem or meet a need in the market, and have someone willing to pay for your value proposition.
Before you obsess over applying for business loans and grants, obsess about your business case.
It is not fair on you as a business person who wants to build a business empire to decide today that you want to start a catering business (for example) and tomorrow you’re knocking at the door of a financier with no clear business and operating model, proved market viability and returns on investment.
More than 90% of businesses I consulted for which needed assistance with business plan to apply for funding, ended up not continuing with the mission to apply for funding because before I start working in your project I ask questions like:
- “How much funding do you need? “
- “How are you going to use it“, and
- “What kind of funding are you looking for?”
And most of them realized that they were not in need of funding but of paying clients. What they needed was to be in business and trade.
Some business plan development consultations evolved into marketing strategy development and business idea feasibility studies, because most new business owners heard rumors that if you’re starting out in business, need to look for funding first.
And it was not explained to then that not every business idea need R1million funding, some needs only R100 for transport to go pitch and get R1mil contract.
What do you think? What has been your experiences so far? Let me know by sharing your thoughts in the comments below.