This is a common question that many entrepreneurs ask themselves. So what is the answer?
There is no short or simple answer. Yes, there are inefficiencies in the funding mechanism as a whole in SA. Yes, there are gaps in the funding stages - notably in the seed funding stage. But, just filling the gap is not necessarily a solution.
Consider, for example, an organisation where you fit all the criteria in terms of accessing funding support. You apply and sit back. Four weeks later they haven`t got back to you, then four months then a year. After about a year their response is "sorry, your application has been turned down".
Just letting you know sooner that your proposal would not make it (and why it wouldn`t) would have been extremely valuable. Here the problem is not that there is no organisation that is willing to cover a certain stage of funding but that the mechanism for evaluation of business proposals is so poor that the organisation may as well not exist. The solution here is an efficient and useful evaluation process. This brings up the question of "how do funders assess your proposal?"
In most cases there is a panel of experts who will evaluate your proposal. It is inevitable that subjective evaluation will occur, ie their evaluation will be based on their experience and what they can compare your business proposal against. Since we now this, is the responsibility not on us entrepreneurs to provide a case for our business that a funder just cannot say no to. It still amazes me how few people do a proper competitive analysis or don`t develop their value proposition for their business let alone or include it in a funding proposal. Intuitively I would want to see some survey results showing willingness of my target market to buy my "wares". And if the response to this is "I don`t have the time" then you may as well be saying "I don`t want funding for my business".
My approach is this. Research what a good proposal should comprise. Better yet access one of the many business support agencies in the country (private or government - whichever you can afford) and get them to help you. I don`t mean to inadvertently "put-down" enterprise development consultants at government agencies but we are not all incompetent. Some of us are here because we want to help and have the competence and the track record to do just that.
Now that you know what a good proposal requires, go ahead and develop it. Note I say develop, not write. A good proposal requires thought, design, research and talent to put together. It is an art. There are not set formulae. Guidelines yes, but no "do this and you will get funding". You have to think about it like this: will you give someone R300 000 (or whatever amount you are applying for) if it was your money and they came to you with the proposal you are putting forward? Once you have developed the proposal, ie you have all the information at your fingertips, writing it is a synch. In fact, it helps if you write it as you progress.
These are all the details that people commonly overlook. You still have to consult the guidelines on what makes a good funding proposal or business plan. The usual information must still be included (marketing plan, marketing objectives, operations plan, financial model, etc).
If after doing all this and your funding proposal is still turned down then you have grounds for griping (provided of course that your business idea is a worthy one). If you haven`t taken this approach then you can`t complain as the shortcoming is on your side. Join the ranks of astute entrepreneurs around the world and develop a quality funding proposal or business plan.
Craig Aaron is a business consultant at the Bodibeng Technology Incubator (www.bti.co.za). He can be e-mailed at craig@bti.co.za.
Note that the BTI is holding an event on "The Art Of Bootstrapping, How to Start Your Business Without External Funds". The guest speaker is Gregory Serandos of Andromeda-SA. To find out more, call Simpiwe on (011) 695 4800. The event is on 27 October.
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