While many entrepreneurs dream of getting funding from investors, many have to start their business with little to no money.
In this case, the general rule is to go as far as you can without external capital or funding – also known as bootstrapping.
Here are 6 ideas that will give you maximum bang for your limited bucks.
1. Exchange skills with other entrepreneurs in your network
Fledgling companies and startups, which are keen to save on cash, can barter for services. Bartering refers to the exchange of goods and services without any money exchanging hands.
Some business services that can be bartered are: bookkeeping, marketing, IT and deliveries, among others.
To increase your chances of success with bartering, tap into your network, says Sebastian Elliot, founder of UK-based Skillbound.com, an online platform that enables registered individuals and businesses to list skills they are willing to swap, in a interview with the Guardian.
“As well as online platforms such as mine, social media might enable your business to find potential skill-swap partners, while simply asking business contacts or even friends and family could help point your business in the right direction,” he says.
2. Complete your business registration and certification through your bank
Entrepreneurs can register their businesses and apply for a business account on a bank’s website. CIPC registration through a bank was launched by FNB in partnership with the DTI in 2012; it is now available through all major banks in South Africa at a minimal fee. This includes the creation of a company with the registrar of companies (CIPC) on your behalf.
3. Make use of government incentives and non-financial instruments
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, says Tafadzwa Madavo, COO of the Riversands Incubation Hub, an entrepreneurship hub. 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.
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.
4. Stay ready
Stay organised – it doesn’t cost you a cent and can help you when it’s time to get the funding you need.
Documents you may be asked to produce (as provided by National Youth development Agency):
- Tax clearance certificate
- National identification card
- Company registration documents
- Your business/personal six months latest bank statements
- Lease agreement of where you are doing your business
- A loan breakdown of how much you need and what you need it for
- Proof of residence
- One year financial statement
5. Get your existing customers to write you testimonials
Testimonials that tell a compelling story and allow your prospect to relate to the before and after experience of the person providing the testimonial, are very powerful in sales conversion, says marketing expert, Shirley Anthony.
It’s no secret: we tend to follow the behaviour of others like us. It’s called social proof. When we see others doing something we tend to feel that this is the correct behaviour. We automatically build objections to a marketing pitch but testimonials help us to overcome these by showing us that yes, this product has worked for people just like us. Read more here
6. Watch your spending
Entrepreneurs should avoid wasting money by not paying for things they can do themselves, says Ncamisile Maphumulo, founder of the Coastal Nephrology Centre and winner of the Sanlam/Business Partners Entrepreneur of the Year Award. She says despite your good intentions, every time you spend money it must make economic sense. “When your business cannot afford it, you pull up your sleeves and do it yourself,” she says.
Maphumulo also advises business owners to go easy on the cash withdrawals, particularly if it comes from the business account. “I used to do a lot of withdrawals, then come month end I couldn’t pinpoint exactly what that money was for. Every cent should be accounted for,” she says.