Before you start your start-up

By Ben Pretorius - Executive Head: Education Sector at Standard Bank

The world of business is exciting and challenging, but very rewarding when you get it right. You may find yourself asking “How do I start? What documents do I need? How do I get funding?” The information in here is only the tip of the iceberg, but it is a great place to start.

A - Know your AUDIENCE

Before you start a business you need to understand the market and environment in which you are aiming to operate. Ask yourself, “What is the need that I am trying to solve? Who am I looking to sell to? Are they willing to spend money on the product or service?” It is wise to remember that not all ideas that are great are commercially viable and profitable. A product can be functionally necessary but if there is no demand for it, the business is bound to fail.

B - Look BEYOND your perspective

Try to view the business from the outside, and, in your business plan, give insights from all angles. You should show that you are realistic about your goals and consider the good and the bad in your projections and research. Be clear about your competitors and what makes you different from them.

C - Be CLEAR

In your business plan, make it obvious why your business is different from the rest, and be clear about it. Do not tell your life story or more information than absolutely necessary – you do not want to be wasting the time of the reader.

D - DOCUMENTATION - what financiers want to see

There’s a minimum set of documentation that is important when searching for funding, which include the following:

1. BUSINESS PLAN

• Details about the business and owner/s (their experience)

• Industry and market analyses

• Competitor analysis

• SWOT analysis

• What is the ask?

• What traction have you made?

2. PROJECTED FINANCIALS

• What are the projected cash flows?

• When will the business start making profits?

• What are the assumptions that have been made when drawing up these financial statements?

• What are they based on?

3. COMPANY DOCUMENTS

• Company Registration documents

• B-BBEE certificate

• Proof of business address

• Shareholders’ ID copies

• Contracts

4. COMPLIANCE DOCUMENTS

• Tax clearance

• Industry-relevant compliance documents

5. APPLICATION DOCUMENTS

Most business financing institutions will have an application form that will need to be filled out.

E - EXPLORE and validate your Idea

Use the idea validation approach – it requires you to identify a business idea, develop a prototype of the product or service, identify your potential customer and then gather insights from the customer on whether the product is in demand, is priced right and has no risk of missing the prototyping process. If you need assistance with the process of idea validation, there are nation-wide business incubators that are equipped to take aspirant start-ups through the process.

F - FINANCING options

There are a variety of business financing options, and it is important to research the pros and cons of each when making the decision on which to take up. Below are some of the financing tools that your business can use:

• Debt financing

• Equity financing

• Grant Funding

• Crowdfunding

• Contract or Purchase order (PO) financing