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Helping you start and build your small business empire

Common Problem 1 - money

Common Problem No.1

“Not enough money to start your own business?”

This is easily the biggest hurdle to starting a business. So we have developed a simple series of questions to point you in the right direction

Question 1. Do you have assets such as a bond free house, investments or other property? Yes – then read below, No – then go to question 2.

You fall into an unusually small category. If you are convinced about the probability of your venture’s success and are prepared to bet your house on it (literally) then simply approach the main retail banks for your loan. They all have extensive products to cater for your business and its financial needs. Simply view their web sites. The big four are Standard Bank, FNB, ABSA and Nedbank. You will need to convince them that you can pay the loan back and that if you can’t, they can sell your assets and investments to get their money back. Before taking out a loan with any of these institutions, I strongly recommend that you take a look at this site on protecting yourself against financial ruin.

Question 2. Do you have an idea that is unique, new and with a probability of high profits which you are prepared to share? Yes – then read below, No – then go to question 3.

You now need to have a very convincing business plan and can approach venture capitalists. These are companies that will invest money in your business in return for a share of the ownership. They will then also take a share of the profits. Business partners and HBD are two examples of this type of investor.  If your business is similar to other existing ones or your plan is based more on dreams than facts, they will not even look at you. Generally some sort of fantastic new product or service is required here.

Question 3. Do you have friends or family from whom you can borrow? Yes – then read below, No – then go to question 4.

You could be treading on dangerous ground here. Make sure that the friend or family member is fully aware of the risks and that they can afford to lose the money. If you mislead them it can result in ruined friendships and family stress. This is because many businesses do not succeed and so their money may be lost. That said, if they are well informed and can afford it then go ahead. Put agreements in writing and make sure that both parties understand what their roles are.

Question 4. Do you have time to search the internet for special government loans and grants? Yes – then read below, No – then go to question 5.

These facilities are available but generally have specific requirements such as BEE, employment conditions, rural upliftment, etc. Often they will only partly finance a venture or they will only refund money once the business is operational. You will need to spend plenty of time researching conditions and requirements and may find that you don’t fit into any of their categories however it is probably worth the effort. Begin with the DTI.

Question 5. If you’ve got to this stage you’re part of the vast majority and our suggestion is below.

Slash that budget. Start as small as possible. Yes we know you don’t like this idea, but in reality you’re running out of options fast. It is probably easiest to use an example to explain:

  • Mary wants to quit her current job as a store cashier and instead start her own business that makes T-shirts. She wants to have a little factory with four staff and two printing machines that will print company logos on to T-shirts. She intends selling them to various companies in her neighbourhood as promotional items and for their staff. She will also need a receptionist to take orders whilst she is on the road selling, a delivery van and office equipment such as computer, fax, photocopier, etc.
  • With no assets, rich friends or an exceptionally new idea, she has now to reduce her expectations. Do not quit your job. Instead run the operation part time from home and team up with an existing T-shirt company. You could buy the goods from the T-shirt company and resell them to your customers or work on a commission basis. Change your target market. You can no longer sell to corporates as you are operating after hours and on weekends. Instead try and target novelty shops, schools, local clubs and the like. It may not sound like much as you’ll be able to make very little profit, but at least you can build up a good reputation and loyal customers. As your customer base grows you can get better discounts and hence more profits from you supplier. Save every sent you earn
  • Slowly you will be able to buy that printing machine with your own money and run it yourself over the weekend, then perhaps employ a helper and so on until your company is earning enough to be able to pay you a small salary. Then you can quit your job and start focussing on the corporate customers you originally targeted. Now your company can grow assuming your idea is a good one with a good product and service combined with sensible management. Eventually you may well end up with those 2 machines, 4 staff, an office, and a delivery van. It may have taken 5 or so years, but at least it has happened and now the sky is the limit.
  • Small business very seldom results in immediate gratification. Often it will take many years before you can savour the fruits of your venture.
  • Use your imagination in cutting your start up costs. Where there’s a will there’s a way. For more guidance on reducing your budget click here.

More detailed discussions on financing your business can be found in our finance section.


The subject matter dealt with on this site is of a general nature only. It is always advisable to consult a professional for your specific situation. All information provided on this site has been carefully chosen and is to the best of our knowledge correct and current. If however you find errors, broken links or disagree with facts provided, please contact us at so that we can make the correction and provide South African business owners with relevant and error free factual information. If you believe there is relevant content missing and you wish to add this value to the site, then you can contact us at the same address

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