Business Loans

Investing in Businesses in South Africa

Why should you consider investing in businesses in South Africa?

As an investment destination, South Africa has enormous potential, offering a unique combination of a vibrant emerging market economy with highly developed first world economic infrastructure. Aside from that, South Africa’s economy is also among the most advanced and productive in Africa.

If you need further convincing, here are other reasons why you should consider investing in businesses in South Africa:

• Competitiveness
• Ease of doing business in South Africa
• Trade reform, strategic alliances
• Access to markets
• Favourable legal and business environment
• Sound economic policies
• World-class infrastructure
• The country is the gateway to Africa
• Cost of doing business in South Africa
• Industrial capability and cutting-edge technology

The one desire of every investor is to invest in a start-up company before it profits and becomes a soaring success. Why? Because by doing so, the investor stands to gain considerable profit when the company he backed becomes a well-known brand in the market or a market-leader. However, more often than not, start-up companies will fail to achieve notable success and profit margins. Still, do not despair because by going about things the right way, you are sure to discover a start-up company in South Africa that can reach anticipated heights and even beyond.

Useful Tips about Investing in Businesses in South Africa

• Have a long term goal – set long-term goals instead of just looking forward to getting an immediate return on your investment. Start-up businesses will, more often than not, take a while to become established in a market so be patient.
• Go with what you know – this is always better than investing in an industry you know nothing about. This will also give you an advantage in terms of deciding if the idea for the start-up business is going to be a success or not. Investing in businesses in South Africa that you are familiar with will also allow you to cut down your research time.
• Start your own company – this could prove to be the most rewarding investment however it also involves the most risk. Evaluate if you are capable of turning your own business model into a success in terms of your idea and skills.
• Become an angel investor – an angel investor takes a stake in a business in return for an investment and some level of participation as agreed upon by the investor and the company. You have the option of investing alone or spreading the risk by combining your funds with other angel investor.
• Venture Capital group – another option when considering investing in businesses in South Africa is to invest through a venture capital group. This group will take your investment and pool it together with other investors and in return, the group will take a share in each company. The venture capital group will have a portfolio of companies which they can invest in. venture capital groups have a lot of experience with start-up companies so you can have the chance to invest with a group that has a reputable track record.

With the above reasons to invest and tips on investing provided, you should seriously consider investing in businesses in South Africa.

Business Banking

Opening a business account is an essential and necessary early step in getting a new venture off the ground for individuals who are embarking on their first entrepreneurial project. Business banking can be quite challenging especially during the first few years of the venture as this facility is utilised to help ensure that things run according to plan.

Because of this, it can be a good idea to write down on paper exactly what you foresee as the amount you’re going to spend over the first 12 or so months. This information may also form part of a wider business plan which is an outline for the operating budget of the business as a whole. More importantly though, this should be something that you can present to potential lenders or investors as a means of showing where the expenses lie and the cash flow in general. Aside from this, laying a solid business plan down on the page will help make sure that you and your company are anticipating and are well prepared for any future growth.

Banks usually offer numerous benefits to businesses in order to attract them to do business with them. However, many of these promised benefits fail to materialize and this usually happens when banks aim to increase profits and lessen service costs. This however does not mean that small businesses cannot take advantage of certain benefits offered without incurring unnecessary costs.

When it comes to business banking, there are important things to keep in mind to help you find a bank you can deal with that suits your business needs.

Some Business Banking Tips

• Electronic business banking – this type of banking makes things a lot easier for business banking. Moving money between business and personal accounts has become less complicated with the invention of online banking. With electronic transfer, multiple bank accounts with the same bank as well as other banks are easier to manage and money can be easily transferred between these accounts. This eliminates the hassle of withdrawing the money from one account then paying it into another.

• Account separation – always keep your business accounts separate from your personal accounts. For tax purposes, it is a lot easier to maintain that a business is in fact a business if no money from that account is being used for personal expenses. It is very difficult, in fact almost impossible, to separate receipts between personal and business. original receipts make it easy to decipher costs but viewing bank statements and trying to figure out costs and decide which are tax deductible and which are not is almost impossible.

• Security – it is true that internet banking has made life a lot simpler for business owners however there are also security risks involved in this method of banking. When doing business banking online, you should take measures to protect yourself, your business and your assets. Personal accounts have daily limits and in case one gets compromised, it can only be robbed of a certain amount however it is a different case with business accounts where the entire balance can be wiped out without recourse from the bank.

• Investment options – most banks now have electronic features which lets companies put unused funds from their business bank accounts into investments. Through business banking, entrepreneurs now have the option to put their liquid assets to work in market investments.

Tips to Buying a Franchise

It is possible to make a fair amount of income through buying a franchise however, before you venture in to this, it important to know and understand both the benefits and disadvantages of buying franchise. Here are some helpful tips to buying a franchise that you may find really helpful plus a look at some of the pitfalls involved in the venture. It always pays to be a well-informed entrepreneur.

3 Tips to Buying a Franchise

1. Budget  - the first thing you need is a budget. With a set budget, you will be able to think of how much money you can actually spend on the franchise. Compared to starting a small business from scratch, buying a franchise is riskier and a lot more expensive. With that in mind, you must be completely aware of what you’re putting your money into and if it’s all worth it.
2. Choose carefully, choose wisely – there are countless franchise opportunities out there and it is very important that you spend all time necessary weighing your options. Although buying a franchise is riskier than starting your own business, this approach to entrepreneurship guarantees a higher success rate. When buying a franchise, choose from those that are currently considered hot. But then again, it will not be enough to choose a franchise that have products selling like hotcakes. You also need to consider if the offered commodity will sell for a long time or if the product has a strong marketability in the long term. A lot of franchise opportunities fall flat on their faces after they have over saturated the market with whatever they’re offering.
3. Understand what the business is all about – this is one of the most important tips to buying a franchise. You must fully know and understand the policies of the franchise opportunity prior to committing to buying it. Make sure that you understand the contract before signing it and don’t allow yourself to be carried away by mere coaxing or verbal word play from the company who only want to make you see things their way. Always proceed with caution when buying a franchise.

Things to Consider Before Buying a Franchise

After presenting you our tips to buying a franchise, we now give you some of the things you need to consider prior to purchasing a franchise.

1. Proper training – franchisors must offer to train you properly to help you establish, run and expand you small business.
2. Financing – do you have enough money to finance this new venture? Can the franchisor provide you with a highly flexible financing option?
3. Established market – does the franchise line have proven products and methods which are not merely seasonal? The point to buying a franchise instead of starting your own business is to sell products and services that already have a proven market.
4. Know about the cons – franchises are highly expensive and there are ongoing payments most of the time. These payments include royalty fees and debt service that franchisees must pay for. Another disadvantage to buying a franchise is the loss of independence. Franchisees are not the ones who came up with the business idea in the first place so they are always bound to adhere to the rules and regulations of franchisors when it comes to running the business. Franchisees are required to adhere to the company’s good image as well as service and product quality.

Buying a franchise is a decision that mustn’t be taken lightly. Remember the abovementioned tips to buying a franchise: you must have the budget, choose wisely and understand the business.

Commercial Loans

Many people are overwhelmed just by thinking about commercial loans and this is mainly because a lot of people have the wrong notion about this type of loan. A better understanding of this will make it easier to deal with the topic. It’ll help to break down the loans into types then determine the different lender requirements.

Commercial loans can be broken down to 2 types:

1. Large commercial loans
2. Small Commercial loans

Large Commercial Loans

These loans may prove difficult to obtain as it involves larger amounts of money than regular loans. A well laid business plan will be a great advantage when trying to be approved for a large business loan.

Almost every business needs a location and real estate loans and commercial mortgages are two of the most popular types of loans necessary for an organization to get off the ground. Additionally, there are various types of loans designed to meet different needs. Mortgages are important to any type of business that needs a storefront or office space.

Construction, renovations or buying a building are among the important things to consider which can increase the total loan value.

Small commercial loans

This type of business loan is a lot simpler and easier to get. Small commercial loans are usually intended for purchasing equipment, machines and inventory. Small commercial loans are for new and well-established businesses. Small commercial loans can be paid off in a few years and most have a seven-year maximum length.

Entrepreneurs also take advantage of small commercial loans for their working capital. Most businesses need to run within their means. A working capital is the difference between the company’s liabilities and assets. There are just times when liabilities become too overwhelming thus a business may seek small commercial loans to help restore balance. This type of small business loan typically has a 5 year maximum term.

Small commercial loans are usually unsecured which means that the loans can be obtained without collateral. This is also one of the reasons why this type of loan is attractive for most entrepreneurs. Typical lenders require some sort of security to ensure that the debt is repaid however, no collateral is necessary when acquiring small commercial loans. Lenders of small commercial loans are more than willing to provide funds to an endeavor that shows a lot of promise of succeeding. In this way, both the lender and the borrower benefit if the enterprise does well.

Some Tips When Applying for Commercial Loans

1. Always read the details when taking out a commercial loan. Any concealed charges and other conditions could greatly affect the overall cost and repayments of the loan. Additional charges often include set up charges, penalties for early repayment and delinquent payment charges. Compare the costs of different commercial loans available and always factor in these potential additional charges.
2. Revisit existing loans and judge the likelihood of refinancing. Commercial loans are sometimes amortized over longer terms and the market can experience some significant changes all though the loan term. Both long and short term financing are necessary for business owners who are aiming to increase their working funds.
3. If your business is expanding facilities to cover the new need for capital, space and hardware, a long term commercial loan is the right financing option for you.
4. Small business owners are advised to consult a commercial loans expert who can provide invaluable information about business finance especially now that the prevailing commercial borrowing climate is challenging.

Fast Business Loans

Fast business loans are preferred by every entrepreneur because to most business-minded people, there is no sense in waiting for some bureaucratic procedure to be completed (which could take months) when you have the next best concept waiting to be put to work!

Fast business loans are usually offered by independent financial companies. These loans are typically limited in amount however, they are fast and are really helpful if you need extra cash to get your business going.

Obtaining a loan for your business is one of the hardest things to accomplish since most banking institutions will need an endless string of paperwork as well as collateral before your application could be processed. The difficulty is mostly due to banks considering small businesses as high risks with their rigid cash flows and low capital bases. Small businesses are even made more volatile by their lack of experienced managers. Banking institutions are simply very selective when it comes to approving loan applicants. Financial lenders other than banks also make it difficult for small businesses to get loans. Their standards are often too high to accomplish and due dates are very strict. These standards are set even higher to prevent hassle on the end of financial lenders.

It is a good thing then for all entrepreneurs that new financing firms are now offering fast business loans to those who need it – entrepreneurs with small enterprises but with great potential. Independent financial companies providing quick loans to entrepreneurs are more considerate and have standards that are fitting to the borrowers’ needs.

Money borrowed through fast business loans may be used for infrastructure like renovations and new building constructions, for administrative obligations like payment of wages, for operation-related purchases like materials and equipments, for health plans or other employee benefits. Basically, the loan may be used for whatever purposes related to the business.

Advantages of Fast Business Loans

These quick business loans have a lot of benefits. The loans offered are mostly unsecured which means that the lender will not require the borrower to supply collateral to back up the loan. The lender will rely on the borrower’s signed promise to repay the loan within a certain amount of time which could range from 30 days to 6 months. Most lenders providing fast business loans don’t require the borrower to submit personal or business financial statements or a business plan and there are no set-up fees for the application. Once the loan request is approved, usually within 24-hours, the funds may be used for any business purpose. There are some lenders who may agree to loan large sums of capital which can be made available in about three business days but they may ask for additional requirements (i.e. a business plan, a solid proof of income, etc.) and a much higher interest rate.

Fast business loans don’t need credit verifications which take so much time in a standard loan process and to make it even faster, lenders are now making use of the Internet to offer their services. Independent financial companies have websites set up where borrowers can apply without having to deal with time-consuming paperwork. There is also a ready availability of consultations by experts on fast business loans online.

Private Business Loans

Do you need money to fund your small business?

A lot of people assume that they can only apply for loans from credit unions and banks. There are, however, other funding sources available in the finance world. There are a lot of private lenders who are more than eager to lend their own money to small business owners rather than put their money in a bank for low interest rates. This makes opportunities for private business loans available for almost anyone these days.

Private Lenders vs. Conventional Lenders

There are two principal types of lenders in the lending business: private lenders and public or conventional lenders. Conventional lenders are those that the public commonly go to for financial assistance i.e. banks and financial and lending institutions. These lenders have really strict requirements before loans are approved which borrowers are mandated to comply to. A borrower with a good credit report often ends up getting the best deals – low interest rate loans. In most cases, applications are rejected because of reasons related to credit rating, security and income. Getting approved for a loan from conventional lenders is difficult and it is mainly because these institutions basically follow regulations set by law as they are making use of public finances. Public lenders rarely default and mostly offer secured loans.

On the other hand, private lenders or businessmen lenders lend their own money to small business owners. They are more like investors who are after better benefits than those offered by low-paying bank accounts. Private business loans are also often called commercial loans and these transactions have been proven to be rather healthy for the South African economy.

Basic Features of Private Business Loans

• The approval procedure is not very strict or complicated.
• The borrower’s credit report and credit rating plays an important role in the process but aren’t used to determine the interest rate.
• Interest rates are rather moderate and affordable.
• Bad credit is not a major issue.
• Private business loans can be approved very quickly – a positive thing for small business funding.
• Private lenders for small businesses pay more attention to the revenue projection of the total business instead of the borrower’s personal credit history.

Things you will need to apply for a private business loan:

• Your proof of income
• Bank account details
• Credit records
• Your business plan

Like conventional lenders, private lenders will also perform some background checks and due diligence prior to making a decision to support you financially. They are after good business ideas and airtight business plans that have realistic forecasts and contingency scenarios.

Locating Private Business Loans

There are ways you can find a private lender to support your small business. Many business lenders have websites that allow potential borrowers to apply for loans. Borrowers will be accountable to repay the loan with interest directly to the lender. When dealing with private money lenders, it is important to do more inquiries about a private lending company to avoid any complications. You can also look for private money lenders through your local phone book. The yellow pages should have these companies listed in the investment or bank section. Take your time when looking for private business loans and do proper research so as to avoid getting involved in a scam which could prove devastating for you.

How to Write a Business Plan

Planning to start a business? Need to know how to write a business plan? Well, then you’ll need money and where else to get this than from your bank. Before you can get your banker to agree and lend you the capital, you need first to present your business plan. A well-written business plan is your best tool in convincing a lender. Lenders will always want to know what you’re going to use the money for and whether your purpose will enable you to pay it back.

Even if you do have your own capital to use, it is still a good idea to lay down your plans on paper to help give you direction. This is your assurance that your money is headed somewhere profitable.

Knowing how to write a business plan properly is important whether you are starting a small home-based business or a corporation because this serves as your guide for how to proceed with your venture, how you expect to succeed and how your success will be measured.

This article includes a simple and quick guide on how to write a business plan. You may find some of the steps or suggestions as unnecessary however this guide should help you outline your goals, marketing plans, expected costs and exit strategy in a comprehensive manner.

How To Write A Business Plan

1. Make an executive summary that outlines your objectives. The executive summary is the most important section in a business plan for lending institutions. It introduces your objectives and summarizes your entire business plan. Keep in mind that you are writing the executive summary for an executive who, most likely, does not have time to read the entire business plan. The first few pages of the summary must let the loan officer know that you have got a viable business proposal or else your loan request will be denied. An executive summary is also a means to communicate your ideas to your employees and potential customers.

2. Write an account on how the company started and make it short and concise. Tell readers how your business came to fruition and how you or your business partners came up with the idea to set up the business.

3. State your company’s goals. In a few paragraphs, explain your short- and long-term goals, how fast do you think it will expand and who your target markets are.

4. Write a short biography for each of the lead members on the management section and include their names, backgrounds and respective responsibilities.

5. Write about the product or service you intend to offer. An important part of this section will be the discussion of what makes your product or service different from those already on the market.

6. Discuss the market potential for your product or service. Extensive research is required for this section to enable you to present it in such a way that convinces lenders, employees and others of the marketability of your product or service. This section should show to your readers that your target market is large and growing. If your business is based locally, evaluate the demand for your product or service within a certain mile radius based on what you think is a reasonable distance from your place of business. If your business is web-based or one that relies on both local and online traffic for revenues, assess demand on a local and/or a national basis. You can pay for a research report from sites like Forrester Research which can cost you a few hundreds to thousands of dollars or, you can gather basic information through the many directories and search engines available on the Internet.

7. Outline your marketing strategy. Discuss how you plan to make your business known to the world – by word of mouth (works only if you’ve already established a reputation), through advertising on TV, on the web or newspapers or all three media, make use of online services to get your business advertised on other sites and listed on search engines. You should also include in your discussion your marketing budget.

8. Present a 3-5 year financial projection. In this section, include a summary of financial forecasts with spreadsheets that show the formula you used to come up with the projections. Balance sheets, income statements as well as cash-flow projections for the entire forecast period will be required for this section. In this section’s summary, you should also let your potential lenders know how much money you intend to borrow for your startup costs. If you are not sure about this kind of financial modeling, you can hire a professional or invest in financial management software – it will be worth your money. Remember, the assumptions you present in this section can either make or break your business.

9. Discuss your exit strategy. Your business plan, like any good ones should include a section that shows the measures you will be using in case you decide to end the business. You can base your strategy on the market’s reception to your idea, revenue growth, a consensus among top officers, or on a dollar figure.

There are no standard business plan formats or outlines, and the above steps are intended only to provide you some reference. When your business is already in operation, always keep a copy of your business plan handy and refer to it from time to time and update it whenever new information or data comes in. Assess your business developments by comparing actual results with your financial projections presented in your business plan. This way, you can think of ways on how to further improve your business. I hope that helped you discover how to write a business plan.

4 Tips To Keep Your Business Fresh

Customers are always looking for something new and different. They are more adventurous now, and that is one thing that business owners have to keep in mind. Your customers are very important in your endeavor, and if you cannot give what they are asking, they might go somewhere else.

Things around you evolve. Even businesses are fast-changing and you need to keep up with the pace, to make yourself more successful. There is a great demand for fresh and new ideas, especially where business is concerned. You, therefore, have to try your best to keep up.

Here are some ideas you can try:

• Redefine your goals: A few years ago, when you opened your business, you must have established a few goals for yourself to achieve. Given the length of time that has passed, you must have achieved some of these goals, already. A good way to always keep your business fresh, is to create new goals from time to time. Do not stop trying. Always strive to be a better version of yourself, so after you have accomplished something, challenge yourself to achieve more.
• Break your routine: If you, yourself, are tired of the monotonous routine that you are following, then it is time to do something fresh and new. Strive to look at things from a different point of you; you might notice something significant, that you have missed in the past. Try out new techniques. Offer something different. Do not be afraid to go against the norm. Surprise yourself and surprise your customers with something they do not expect.
• Study the market: People’s tastes and preference, change. This is why updating your business is very important. To be able to deliver something out of the ordinary, you will have to make an effort to know the market. You have to find out what they want, what they need, and what they might need and love. You need to know your clients, to strive to catch them off guard.
• Do not stop learning: To efficiently provide customers with products that are new and fresh, strive to update your knowledge of the field you have decided to conquer. To be able to provide better products, better services and more options to your customers, you need to widen the scope of your learning by attending seminars, going back to school, and reading.

Do not allow yourself to be left behind. If the pace is quickening, you have to try to be faster than everyone else. The competition in business is tough and to be able to gain an advantage over others, you will need to keep your business fresh and new, all the time. Your customers are very important. Their presence in your business will affect your chances of success. If you want your business to prosper, you will have to always keep your customers happy and wanting to come back. And the best way to do this is to keep them interested. This is easily done by keeping your business fresh and new.

How to Keep Your Business Afloat in The Recession

The economic recession had seen a worldwide fall of many businesses. Businesses, big and small, are still struggling to obtain a perfect stance in the recession. One by one, you may have witnessed, businesses shutting down and owners giving up. Perhaps, you are fearing for your own. You are probably wondering how much longer you could stay like this. You are scared because you can feel it coming.

Is it possible to survive during these hard times? Can a business withstand the negative effects and end up victorious? Well, it is definitely possible, if you know what to do.

• Do not spend so much. You may have been used to a fixed budget for years, but if you are going to survive through this recession where there is scarcity in customers and business opportunities, you need to start cutting on your expenses. Identify your priorities and focus on the things you need most. If you do not need to spend on something, then put aside. You can save a lot of money by prioritizing your expenses.
• Meet short-term goals. When you plan your life goals, you have short term and long-term goals. The most definitive moment of your journey will be when you have achieved your long-term goal. However, success does not always have to be extravagant; and when you are dealing with the effects of recession, you should concentrate on attaining short-term goals, first, so that you can accomplish little things and achieve success in small packages but at a sure pace.
• Cut down the number of people working for you. It may sound cruel but you are not in business for charity. You need to let go of people whose jobs are not necessary in your business or else you will lose your business. Make a list of the individual tasks that people in your business do. On this list, determine which tasks are most important and find out if anyone can manage to perform two tasks. This is going to be painful and tough, but this is the reality. If you want for the business to survive, you need to cut costs. Wages cover a big chunk of your expenses, and unless you can negotiate a lower salary with everybody, you ought to let go of some people.
• Make smart investments. You may think that making an investment is going to be unwise, given the situation. But there are great opportunities around you, and you need to find those opportunities and grab them. The most important thing to realize here is that the economy acts like a rolling ball and while some figures may be down right now, it could easily turn back up again.

Many people think that surviving the recession is impossible. Going through this is does not necessarily lead to the end point of your endeavor. If you know what to do, nothing is impossible. You can save your business and everything will be all right.

5 Expert Tips On How To Expand Your Business

Great things start from small beginnings so there is absolutely nothing wrong with starting small. A lot of the big businesses now, used to be smaller ventures. Some of these were brought about by a crazy idea that nobody else would believe in and suprisingly, flourished into something truly brilliant. Small businesses are great because it gives you the opportunity to feel the market, before actually getting to it. You will given the opportunity to try out the field, see if it is good for you (or not), before you put in a big investment.

However, even from a distance, you will have to envision the expansion of your business. Expansions are scary at first thought, but they are inevitable for successful businesses, and you should be prepared for it.

Expanding your small business is not easy, but it can be done. Here are some tips you can take:

• Collaborate with a bigger force. An easier way to expand is to team up with a bigger and an already established force. Combining your efforts and expertise can truly work to your advantage, and you just need to know how to utilize it properly. Partnering with someone is good because you are able to widen your scope for the least amount of money. But you need to be careful because going into a partnership is not exactly a breeze.
• Explore your talents. Do not limit yourself to what is expected of you. Look at yourself and see what you can do and what more you can achieve. Do not be afraid to explore more of yourself. You can achieve more than what you are doing right now. Look at what you have on the table, and see if you can still offer more.
• Expand your network. If you are thinking of expanding, you will need to maximize your networking potential. Your life will be so much easier if you know more people, and it will even be easier if you know the right people. Attend events, join organizations, and widen your contact list. Do not be afraid to bring yourself out there.
• Do not underestimate the power of good marketing and advertising. If you are ready for something big and better, you should also make sure that the market is ready for you. Visibility is important for business. If you are wishing to achieve greater heights with your business, you need to have an audience ready to receive you. Be creative with your ideas and try all sorts of marketing and advertising tools. Take advantage of affordable and free resources. Such things do not always have to be expensive.
• Join trade shows and similar events. This opportunity will be a perfect venue for you to showcase what you can offer to people. It gives you the opportunity to promote your business, and it will allow you to establish the right setting for your planned expansion.

Expansions are not done overnight. It involves a series of calculated steps that you have to take, in order to achieve something great. Do not be afraid to aspire for bigger things. If you do things right, luck will be on your side.