Ina Opperman

By Ina Opperman

Business Journalist

Watch: How to finance your small business

You cannot start and grow a business without money so it is important to know how you will be financing your small business.

Financing your small business is the third step after you came up with a brilliant idea of what to sell and made sure that there is a market for your product or service.

People who start their own businesses can often raise start-up capital but are also often unable to grow their businesses because they did not plan to fund it. It is therefore important to have a good financial plan to tide you over when the market slows down and as the market grows, produce more.

There are various ways to fund your small business, including saving, borrowing from a bank, crowd funding, government funding, funding from business incubators, getting investors and enterprise development.

Use your own savings

The best option is to use your own savings to start up your own business and when you start making a profit, saving again to ensure that you can afford to grow.

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Borrowing from a bank

The major banks all offer small business financing and also have managers who help entrepreneurs choose a banking package. Take your business plan and visit the various banks to see what they offer. Compare the interest they will charge, the period for repayment and how much you will pay in the end to borrow the money.

You can also consider other banking products, such as overdrafts, for extra cash if you need it and for buying moveable assets and equipment for your business.


Crowdfunding is a good way to raise capital for projects, while it will also show you if the market is really interested in what you want to sell. It enables a group of people to fund a project in small increments in exchange for recognition in the form of minor rewards.

Government funding

The South African department of trade, industry and competition (dtic) offers various incentives, loans and funding schemes for emerging businesses, including visits to trade shows in other countries.

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Business incubators

Business incubators offer funding and resources, as well as services to support your small business. This includes physical space, capital, mentorship, services such as human resources, administration and accounting and networking. They offer small businesses the opportunity to speed up growth until they can function independently.

Getting investors

You can also get investors to invest in your business by contributing funding, resources or skills for a percentage share of the business.

Enterprise development

A number of big companies, such as mining companies, offer funds for small businesses as part of their enterprise development projects.

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Start with a business plan for small business finance

Regardless of where you go for funding, people will want to see your business plan. A business plan is quite a lot of work, but it shows investors that you are serious about starting the business, that you have thought it through and are ready to take the challenges head-on.

Your business plan must contain the following information:

  • A description and overview of the business
  • The goods or services you will offer
  • A realistic projection of your annual turnover
  • Your target market and key suppliers
  • An indication that there is a need for your product or service
  • A financial review with a projection of your income and cash flow
  • A statement of your personal assets and liabilities and projected cash flow statement for the next three years
  • How you will fund your business, such as your own cash, assets such as equipment and property
  • How much money you need and what the money will be used for
  • An analysis of your business’ and your strengths, weaknesses, opportunities and threats.

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