Most new businesses need initial capital to get established.

This capital requirement may be quite high because of :

• the cost of adapting and fitting out premises and the cost of stock (working capital) or equipment.
• The cost of initial stock or equipment is likely to be a real problem – for example in the case of clothing shops or electrical goods outlets.
• Suppliers are highly unlikely to offer credit terms because they don’t know you and have not yet done business with you.
• You would thus have to buy stock and equipment in cash and then sell it to the public.

Places that provide initial capital :

a) Loan from a bank

The bank will need information about yourself, your business, how you will promote your business, what market research you have done and most importantly information about the financial side of the business.

The banker will want to know how much money you need, what the capital will be used for, how much of your own money you are using and how you will repay the loan.

You therefore need a business plan.

Preparing a business plan sounds very intimidating, but it is not and you should be able to draw up a plan if you do sufficient research.

It is important that you do it yourself, understand it and believe in it.

It need not be a lengthy document, but it should include a cash flow projection.

Remember that you must make this document your own.

b) IDC and other development agencies

The Industrial Development Corporation (IDC) has a wide variety of funds for which you can apply.

These funds are however set up to target certain sectors of the industry.

Like the IDC there are many other government and non-government agencies where you can apply for funding.

The best way to proceed is to search for such agencies on the internet.

SOURCES :
Cronje & Cronje
Business Partners