Red Tape and funding not biggest challenges for entrepreneurs

Myths that funding and red tape are the two biggest challenges faced by emerging companies and entrepreneurs have been debunked by a report released on Tuesday. PwC’s report, Emerging Companies and the Ecosystem, said market access was cited as the largest commercial challenge by most respondents who took part in its survey.

Although red tape was cited as a growth inhibitor by entrepreneurs, it only ranked fourth out of 10 as a growth stopper, with only 9% of respondents choosing this option. A third myth, which was proved to be true, was that the main inhibitor of business growth is cash constraints.

A staggering 81% of the respondents had never applied for government funding opportunities, with 41% of those saying that they were unaware of any opportunities. Of the 743 participants surveyed, 58% were not part of any start-up support programme and 60% were in the technology sector. Applicants appear to be less successful in raising funding without professional assistance.

It’s encouraging to some of our emerging businesses to know that actually there is help out there, they can get access to this funding and maybe they just need a little bit of help from other people to get access to it and to know who to access it from.

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Partnership model is key

The success or failure of any venture is directly related to the effectiveness of the partnership model established between the internal and external stakeholders.

Effectively executed, co-creation drives five key success factors to ensure a venture adapts as required to survive and succeed in the long term. Here are five key roles identified as a prerequisite in ventures:

1. The Entrepreneurs

Entrepreneurs are the custodians of the idea and the jockeys driving the venture. They ensure efficient use of resources and see to it that all parties contribute and remain aligned. Entrepreneurs need to remain agile, constantly figuring out how to shape and develop their offering.

2. Marketing

Marketers provide direct access to end-users and distribution channels for early validation of the value of the idea and to confirm the timing of the offering.

3. The Development team

The people that develop the product or service offering need to align and adapt with all other stakeholders’ understanding of the offering. Without the right people, even the best technology concepts and ideas will fail.

4. Management

Execution is the most important part of strategy and strong management is key to execution. Vital administrative and governance support is important for start-ups. Dropping the ball on financial management, HR management or administration creates distracting crisis’s to even the greatest of ventures.

5. Investment

Cash, sweat equity, governance, mentoring and patience will only be possible if the investor is part of the creative process actively contributing to define the ideal business model for the venture. Attracting investment, be it angel, venture or otherwise is about more than money. Securing a large amount of cash early on is the worst thing that can happen to a new venture.

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Bidding successfully

Bidding is such an important source of work for many companies (printers, for example), that experts are employed full-time just to prepare quotations and proposals in line with what a tender has requested. It is not surprising, though, that not many small businesses can hire full-time professionals to do this. The owner usually has to do it himself, and writing proposals is seldom what they are good at. This opens the door for a “bid writer” or “tender writer” who can help a business to craft a strong response to a “request for tender” or RFT. To do this as a business, you need to have excellent writing and communication skills.

Your writing skills need to be flexible too, so that you can adapt your style to match the needs of the person or organisation who will consider your submission and make a decision. Each proposal will include a summary of your client’s expertise and why they should be considered for the bid opportunity.

Your skill will be to work closely with your client to understand exactly what the tender requires, and then to put the best possible case forward for how the job will be done and why your client’s company is a good choice of service provider. You may also need to prepare detailed reports with statistics, graphs, financial information, appendices and footnotes.

Clear thinking is vital, as these proposals must be structured so they are easy to understand and convey a strong message.

Bids and tenders must usually contain:

• A written quotation, which includes an outline of the project and its deliverables.
• Terms and conditions, which outline the duties and responsibilities of the bidder and the procurer.
• A letter of agreement for the contracting parties to sign, which shows the quotation for work, start dates and deadlines.
•  Details and qualifications of those people involved in the bid.
• A detailed explanation of how the proposed work will be carried out. You need to be able to work with a client in a way that brings out their knowledge and experience, without dominating the conversation or imposing your ideas.

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Select a lender cautiously

Business owners and property investors to be cautious when selecting a lender. Too often business owners and property investors in South Africa fall prey to predatory lending, which imposes unscrupulous and abusive loan terms on borrowers, and can swiftly put businesses into debt. Fraudsters posing as licensed credit providers are on the rise according to the National Credit Regulator (NCR), which recently released a statement urging consumers to be more vigilant when selecting alternative lenders.

Key points

There are key points which borrowers need to remember before taking out a loan. First and foremost the borrower must check that the lender is licensed and regulated. It is also crucial to confirm that all relevant information such as the loan terms, payment structure and terms and conditions are in writing, and to ensure that all terms are understood before signing. It is important that borrowers understand what they are signing for and know what the regulations are in terms of surety and cases of default.

Before committing to any lender, ask:

• How long has the lender been operating in the market?
• What type of lending do they offer? Are loans backed by moveable assets such as a car or boat?
• How many clients does the lender have? This will often indicate how reputable they are – for instance, if the lender only has one client, it may mean that they are inexperienced;
• What are the history and current state of the lender’s books?
• Who has financially backed the lender, for instance, a bank or organisation?
• Who prepares the client’s legal documentation and what regulatory body does the lender comply with? It is important to be aware of this information to gauge whether they comply with the NCR regulations.

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