Get your SME 'finance ready'

17 May 2019 | Columns

Small and medium enterprises (SMEs) contribute up to 60% of all employment and as much as 40% of GDP in emerging economies, according to the World Bank.

As such, it is vital for the SME sector in Africa to flourish in order to bolster job-creation and contribute to the GDP.

However, Gerschwyne van Wyk, country manager at Business Partners International, points out that the biggest hurdle faced by SME business owners across Africa is access to finance, despite there being various institutions with finance specifically earmarked for small and medium businesses.

This signals a disconnect between the financiers with adequate funding available and the businesses seeking access to this business finance, he says.

“A key reason for this disconnect is because, while access to finance is a challenge for many business owners, sometimes SME owners create additional challenges for themselves by overlooking the clearly stated requirements of financiers, which may hinder or delay the funding process,” he said.

As such, Van Wyk lists five key steps that SME business owners can take to get their business ready for finance:



Know the numbers

Being able to accurately account for your company's current financial position is a critical component of being “finance ready”. It is also a good idea to conduct two different forecasts with as accurate figures as possible to provide realistic reflections: forecast for the worst- and best-case scenarios.



Refine your story

Prepare and sharpen a concise business story that contains only the essential elements that will interest an investor - marketability, sustainability and your own passion for the project. To do this, you need to ensure that you know all the aspects of your business, as well as its market and industry.



Have a detailed business plan ready

Not only will it help to give you the knowledge mentioned in the previous point, but the fact that you will immediately be able to send or present your plan if someone wants to have a closer look, will help to convince potential investors of your readiness.



Polish your public image

It is almost guaranteed nowadays that an investor who becomes interested in your idea will do a background search on not only the business, but also you, on the internet. It helps to have a good website and a strong presence on social media in which your successes are highlighted, not only in your current business but in previous ventures and jobs.



Ensure the business meets potential financiers' funding requirements

Too often, business owners approach a financier without having determined whether they are in fact the best fit for their business. For instance, the funding requirement may be outside the financier's funding threshold, or the business may be in a sector that is not of interest to them.

It pays off to do your research on all potential financiers in order to determine not only whether the business matches the specific criteria of the investor and speaks to their investment parameters, but also that the proposed business finance agreement ensures a fair deal for both the business owner and investor.

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