A key part of small business development is funding. You might have a game-changing idea and a watertight business plan, but without funding, you won’t be able to put it into action.
The good news is that South African entrepreneurs have many different funding opportunities available to them. This includes both private and government funding schemes.
In this guide, we’ll cover some of the key small business development steps, including how to gain funding for your business.
How to Develop a Small Business?
Small businesses vary greatly in size, organisational structure, and growth capacity. However, all small businesses face the same common challenges during different growth phases.
To address these challenges, any new venture needs to have the right small business development plan. Here are a few key strategies and steps that this should include:
- Clear growth plan: It’s essential to always think ahead and plan the next stages and growth opportunities for the business. A clear business plan is necessary for securing funding and ensuring the business operates effectively.
- Established revenue sources: Successful small business development requires consistent, growing revenue. When developing a business, understand how to attract repeat revenue as well as to find new revenue streams.
- Understand the competition: A clear competitor analysis is necessary to help any business establish its place in the market.
- Find the right team: Before worrying about your small business growth trajectory, you need the right team in place. Hiring the best people for the job is the most effective way to grow quickly
- Understand and manage risk: A key part of small business development is being able to take calculated risks that grow the business. Understand the risk potential and opportunity of every action, and manage these risks carefully
These are just a few of the most important small business development steps and strategies to focus on. Of course, to get to the stage where you can start to develop your business, you will need to access funding and support.
How Do I Get Funded for Business Development?
Getting funding for small business development can seem like one of the biggest challenges any new entrepreneurs face. You might have a great business idea and a solid plan, but none of it can be put into action without putting some money behind it.
There are two options to get funded for business development. You can either secure private funding, or you can secure government funding and grants.
In terms of private funding, there is a long list of investors that back South African startups. To gain the attention of these investors, you will need a solid business plan and model. Many of these investors are only interested in developing small businesses that are already generating revenue, so starting your business small is usually the first step before gaining funding.
Private funding generally follows the form of equity funding. This is when an investor buys a portion of your business in return for a shareholder percentage. This means the investor receives a portion of profits. The other option is to take out a small business loan, with a bank or lender, that your business repays with interest.
To get funded for business development, some of the most important things you will need are:
- A unique business idea
- Proof of earning potential for your business
- A clear market and growth potential
- A reason for investors to trust and choose you to develop this business (Do you have expert knowledge and experience? Do you hold valuable copyrights or patents? What do you offer that other entrepreneurs don’t?)
Government Funding Options for Small Business Development
If private funding seems out of reach or unsuitable for your business model, South African entrepreneurs do also have the option of government funding.
Obtaining government funding for SMEs can be done for all kinds of industries and small businesses. Funding could range from grants to incentives, each option offering a form of financial support for small business development.
Government funding options include:
- Full or cost-sharing grants: Grants that are usually not repayable
- Incentives: This includes things like tax incentives to make it easier to start and grow a business
- Equity funding: The same as private equity funding, but from a government funding agency
Seeking funding for your small business may seem intimidating, but it doesn’t have to be. There are many different funding and business development opportunities, suitable for all kinds of businesses and entrepreneurs.
As long as your idea and plan are strong, funding and developing your business doesn’t have to be an impossible hurdle.