Friday, August 30, 2013

Sustainable business

Within business practices, sustainability is closely related to corporate social responsibility. In the future, the two terms might become completely synonymous and some might argue that they already are the same. But as of now, there are a few key differences, which I highlight below.

Definition: Sustainability is a business strategy that drives long-term corporate growth and profitability by mandating the inclusion of environmental and social issues in the business model. Unlike corporate social responsibility, which retroactively addresses issues, sustainability implies a forward trajectory. In other words, CSR looks to the past actions of a company while sustainability looks forward by changing the nature of the company.

Purpose: to generate a maximum increase in company, consumer, and employee value by embracing opportunities and managing risks derived from environmental and social developments.2

Attributes:

According to a recent study in the Ivey Business Journal, a business model must combine and continually maintain four elements to achieve sustainability3:

  1. Sustainable development: this concept balances the corporate need for economic growth with environmental activism/protection and societal progress. With regards to sustainability, sustainable development sets the boundaries of the societal and environmental issues and defines the company’s goal(s).
  2. Corporate social responsibility: for a definition, see my previous entry. Corporations use CSR as tool to address societal and environmental issues. Sustainability incorporates societal and environmental issues as building blocks within a business model. Therefore, a sustainable business will use some CSR practices.
  3. Stakeholders: while CSR primarily focuses on shareholders, sustainability focuses on stakeholders (don’t worry! I will define these two terms later).
  4. Corporate Accountability: This contributes to a sustainable business practice in that corporate accountability provides a legal and ethical basis for a company to report on its impact on society and the environment, in addition to their financial performance.
    1. A company’s societal and environmental impact as well as its financial returns is known as a company’s Triple Bottom Line

Wednesday, August 14, 2013

Overcoming your fears about starting a business


It is often the case that people who have a fantastic idea or a dream they wish to fulfil are so scared of failure that they do not even try to make it become a reality. Starting a business is one of those dreams which for many people never comes true thanks to these fears.

The fear associated with starting a business is not irrational like a phobia. In fact, it is very rational thoughts such as ‘What if I lose all my money’ or ‘What if my family won’t support me’ that can put a stop to the development of even the best business ideas.

However the most successful entrepreneurs in the world are not afraid to take a risk if they believe an idea will work. It is gaining this confidence – backed by a good business plan – that will help you clear your mental hurdles and cross the starting line to success.

Confidence can only come by identifying areas of anxiety and addressing them one by one.

Losing sight of your objectives

When you get bogged down with thinking about the obstacles to setting up your business, you can lose sight of why you started it in the first place. Re-focusing on your original objectives and working on a business plan will help you to work through your worries.

According to Associated Content, one of the best ways of rectifying this situation is to sit down and outline, not only the reasons behind starting the business, but also individual long-term and short-term objectives; if an objective can be written down, then it is possible to achieve it.

"Fears can arise out of nothing more than a loss of focus. If you find yourself bogged down in the tiny details of starting a business ... take a minute to remember why you're venturing into the business world," said Associated Content. "Often, renewing your passion for the business will give you a second wind and chase those pesky fears away."

Get the job done and don't make excuses

Another potential source of fear is the endless list of unfinished tasks and the list of those that have not yet been started. These are a recipe, not only for unhappiness, but also for a sense of failure that can be paralysing.

Associated Content recommends that it is far healthier to make the effort and complete at least a few of these tasks – especially if they are the ones you’ve been dreading. This not only helps you towards achieving your goals, but generates a positive sense of success that can provide the necessary fuel to go on to other successes.

Whoever said that success generates success is probably right. On a related point, the sense of inertia when it comes to completing lists of tasks can compound a tendency to make excuses. So, if this is indeed the case, stop. If budgeting is not one of your strengths, do something about it and get some training. The more you know about a business area the less scary it looks on your task list.

Legitimise your worries

Excuses don't help anyone overcome their fears about starting a business, they simply make matters worse. Don't indulge the "what if's", fight them. Instead of pushing them to the back of the mind or simply dismissing them as silly worries, a more sensible course of action would be to actively address them. You won’t always know if they are false concerns or legitimate worries unless they are properly examined.

And where concerns are identified as legitimate, refer back to the previous two points and stop making excuses, just get the job done. If it becomes apparent that you’ll need help, don't be afraid to ask for it.

"Failure can be uncomfortable and unpleasant, but is not life-threatening. And failure is always an opportunity of one kind or another - an opportunity to stretch beyond our usual boundaries, to learn something valuable, or to make previously undreamed-of connections," said Susan Ward, in a report by About.com.

In conclusion, the only real way to overcome your fears of becoming a small business owner is to address them, realise them for what they are and then adopt practical steps towards overcoming them. When concerns are viewed in the cold light of day, they are often not nearly as insurmountable as they first appear. 

Tuesday, August 13, 2013

SOUTH AFRICAN INSTITUTIONS PROVIDING FUNDING FOR ENTREPRENEURS


 

The following is a short list of institutions that offer funding for entrepreneurs. It is not comprehensive. Government is in the process of restructuring and streamlining its funding programmes and is moving them from the Departments in which they are lodged to the Department of Economic Development. It is hoped that the process will result in easier, simpler and speedier access to funds from Government.

 

1.Business Partners Limited

Business Partners is an investment company for small and medium enterprises. The company invests between R250 000 and R15 million in SMEs across all sectors, with the exception of farming, on-lending and non-profit organisations.

 

Investment financing is offered for businesses at all stages of development, including start-ups, expansions, outright purchases, management buy-outs, management buy-ins, franchises, tenders and contracts. The company also manages a number of specialist funds, which provide investment financing for defined-profile entrepreneurs.

 

Business Partners also has a range of support services for the entrepreneur. This includes property management consultants, mentors who are allocated according to the company's needs and access to other expertise need to ensure the success of a business. 

Contact:

E-mail:  enquiries@businesspartners.co.za

Web:  www.businesspartners.co.za

Tel: Cape Town: 021 464 3600

Durban: 031 240 7700 

Johannesburg: 011 470 3111  

 

 

2.Commercial Banks

The commercial banks have specialist SME divisions, providing finance for qualifyingentrepreneurs. Visit the banks’ websites to find out about their products and services, and their criteria to obtain finance.

 

ABSA Bank:  www.absa.co.za

First National Bank: www.fnb.co.za

Nedbank:  www.nedbank.co.za

Standard Bank:  www.standardbank.co.za

 

 

3.Khula Enterprise Finance

Khula Enterprise Finance Limited is an agency of the Department of Trade and Industry (DTI) established in 1996 to facilitate access to finance for SMMEs. It is one of the funds being transferred to the Department of Economic Development. Khula provides assistance through various delivery channels. These include commercial banks, retail financial intermediaries (RFIs) and micro credit outlets (MCOs).

 

Contact details for some of the Khula products are not available. Where this is the case, the following contact details can be used:

 

Contact:

E-Mailhelpline@khula.org.za

Web:www.khula.org.za

Tel: (012) 394 5560/5900

Toll free: 0800 118815

 

3.1
Small Business Growth Trust Fund

This non-sector specific fund is a partnership between Khula and Fabvest Investment Holdings (FABCOS). It provides:

Finance start-ups, expansions, bridging finance and asset based finance to qualifying SMEs
Qualifying SMEs with the necessary infrastructural support and resources
Fosters entrepreneurship within the SME sector and
Reaches out to SMEs in priority provinces of South Africa
Migrates Black businesses from the informal sector to formal sector

Loans range between R10 000 and R3million per portfolio entity with a repayment period not exceeding 5 years.

Contact Details

Tel: (011) 421 2939
Cell: 082 901 2813
Email: 
info@sisonkefund.co.za

 

3.2
Izibulo SME Fund

The Izibulo SME Fund is a partnership between Khula and Metropolitan Life Limited and The Median Fund (Pty) Ltd. Its purpose is to:

Provide early-stage funding to SMEs (improve access to finance);
Provide SMEs with necessary infrastructural support and resources;
Foster entrepreneurship for men and women in the SME sector;
Reach out to SMEs in far-flung areas of South Africa;
Encourage meaningful economic participation of historically disadvantaged South Africans;
Invest in equity and debt, loans, loans convertible into shares (ordinary or preference shares);
Purchase shares (ordinary or preference shares);
Purchase debentures or convertible debentures (convertible into ordinary or preference shares);
Purchase warrants, options and other securities of, or relating to portfolio companies;
Provide consulting services, skills facilitation and development to portfolio companies;
Provide working capital, expansion capital, the purchase of capital assets, refinancing of existing debt obligations;

Excluded investments include buy-back/purchase of shares from a third party in the portfolio company.

3.3
Identity Development Fund (IDF)

This non sector – specific fund is a partnership between Khula and Identity Development Fund (Pty) Ltd (IDF). Its objectives are to:

Create long-term growth from profitable portfolio investments in SMEs
Promote BEE (black women and youth)
Provide both debt and or equity funding (50%/50%)

Repayment periods range between 3-5 years for start-up/early stage companies of R250000 to R3million, emerging /MBO and expansion of R3million to R7.5million and R7.5million to R30million for community projects.

Contact Details

Tel:(011) 351 2900

Fax: (011) 351 8900

 

3.4
Enablis Acceleration Fund

The Enablis Acceleration Fund is a partnership between Enablis Financial Corporation SA (Pty) Ltd and Khula Enterprise Finance Limited. It is currently capitalised at R50m. Its purpose is to:

Improve access to early-stage funding to SMEs
Reach out to SMEs in remote/rural provinces
Create new sustainable jobs.

 

It offers equity and or debt instruments over loan periods that do not exceed 60 months.

 

Eligibility:

South African SMEs that are accredited by Enablis Entrepreneurial Network
Black owned and women entrepreneurs for start-ups and/or expansion of the business.
SMEs involved in all sectors - ICT, transport, tourism, agriculture and services industry.
SMEs that need working capital and or asset finance.

 

3.5
Khula-Akwandze Fund

The Khula-Akwandze Fund (KAF) is a joint venture between Khula Enterprise Finance Ltd (Khula) and Akwandze Agricultural Finance (Pty) Ltd (Akwandze). Its purpose is to provide agricultural development loans to small and medium scale sugarcane growers and contractors within the sugarcane production value chain in the Nkomazi region of the Mpumalanga Province. The Fund is managed by Akwandze.

 

The following loan instruments are offered to meet financing requirements:

Crop establishment/re-establishment
Ratoon management (crop maintenance)
Purchase and installation of above ground irrigation equipment
Installation of fixed irrigation infrastructure
Electricity supply
Contractor bridging loans and
Right-to-occupy (RTO) rental bridging loans.

 

Eligibility

The beneficiary must be a registered Mpumalanga sugarcane grower with the South African Sugar Association;

Have a Cane Delivery Agreement (CDA) with Tsb Sugar
Have authority to occupy the land they are farming (freehold, leasehold, right-to-occupy)
Be a citizen of the Republic of South Africa
Be black owned (>50% black owned) or black empowered (>25% black owned)
Be viable and creditworthy, or
registered contractor with Tsb Sugar that provides services to growers (e.g. cane cutting and cane haulage).

In addition, the beneficiary must be:

A citizen of the Republic of South Africa
Black owned (>50% black owned) or black empowered (>25% black owned) and
Viable and creditworthy.

 

Loan Size

Depending on the type of agricultural activity being financed, the maximum loan limits for the different loan instruments range from R1,300 to R15,500 per hectare.

 

Contact Details:

Akwandze Agricultural Finance (Pty) Ltd Tsb Sugar Mill, Mhlati Farm Malelane, 1320

Tel: Malelane - 013 791 1396 / Komatipoort - 013 723 4247

Fax:Malelane - 013 791 1175

 

3.6
Anglo-Khula Mining Fund

Anglo-Khula Mining Fund is a joint venture between Anglo American plc and Khula Enterprise Finance to provide financial assistance to junior mining projects.

 

Product

Equity and or debt instrument with individual investments between R1m and R20m per project
Equity stake will not exceed 49% of the issued share capital of the investee company.

 

Who qualifies?

The owners of the investee company must be involved on a permanent basis, in the day-to-day management and operations of the investee company
The owners of the investee company must contribute to the investee company from their own resources to ensure commitment and risk sharing
The investee company shall comply with all necessary legal requirements as well as Anglo American’s standards and procedures regarding environmental and safety policies
Deal flow of the investee company should emanate primarily from contracts between the investee company and Anglo and its subsidiaries.

 

3.7
Khula Credit Indemnity Scheme

The scheme provides access to finance to people who wish to start or expand small to medium sized businesses but do not have sufficient collateral / security to support facilities provided by participating banks. The scheme covers facilities from R10 000 to R3 million.

 

Who qualifies?

Owner-managed businesses - the owner should be involved in the day-to-day running of the business on a full-time basis
Business activity must be situated in the Republic of South Africa
Business must be conducted with a profit motive and be economically viable
The borrower must be able to repay the bank facility
Individual or person holding a controlling interest must be a citizen of the Republic of South Africa
Borrower with proven and sufficient entrepreneurship, knowledge, skills and experience directly related to the nature of the business
The entrepreneur must provide own contribution towards a start-up or expansion of the business

 

Access is via any of the following retail financial intermediaries:

Nedbank Ltd
ABSA Bank Ltd
First National Bank Ltd
Standard Bank of South Africa Ltd
Khula Regional Offices for assistance with a business plan development and/or advice on which institution supports the scheme. The financial institution will assess the business plan and facilities application in terms of its lending criteria.

 

3.8
Non-Bank Retail Financial Intermediaries

Non-bank Retail Financial Intermediaries are independent organisations or companies, which are lent money by Khula on a wholesale basis to on-lend to SMEs. Since RFIs are obligated to repay Khula, they use their own lending criteria to on-lend Khula`s funding. However, each RFI has to contribute towards the achievement of Khula`s developmental impact objectives, such as providing funding to SMEs which are black owned, women owned and from rural areas. Khula restricts its RFIs to on-lending a minimum of R10 000 and a maximum of R3 million per SME.

 

Purpose of RFIs

To provide a funding alternative to SMEs, who would otherwise not be able to obtain funding from the commercial banks;
To provide financing solutions to SMEs operating in niche markets, where traditional financial products would otherwise not be able to meet the financial requirements; and
To provide Khula with a vehicle to facilitate access to finance to previously non-bankable SMEs operating in rural areas.

 

Geographic Spread of Existing RFIs

Khula currently has a network of non-bank RFIs represented in Gauteng, Kwa Zulu-Natal, Eastern Cape, Western Cape, Free State, Limpopo and Mpumalanga. Although there are RFI branches in Gauteng, Kwa Zulu-Natal and the Western Cape, priority is given to provinces other than the three latter provinces.

 

Contact:

E-Mailhelpline@khula.org.za

Web:www.khula.org.za

Tel: (012) 394 5560/5900

Toll free: 0800 118815

 

 

4.Communities Fund and Small Business Hub Programme and Small Business Hub network

The programme supports small and medium enterprises, facilitating entrepreneurial opportunities and the subsequent creation of jobs in communities located in the vicinity of Anglo American Mines.

 

Purpose

The fund assists entrepreneurs with seed and working capital through loan finance of up to R1 million per project at preferential interest rates. Beneficiaries must operate in Anglo’s business unit areas and comply with the black economic empowerment (BEE) criteria set by the Mining Charter.

The Communities Fund works hand in glove with a network of 13 Small Business Hubs which are staffed and financed by Anglo’s platinum, coal, iron ore and diamond businesses and are located in their respective areas of operation.

While the fund assists micro enterprises with seed and working capital, the hubs extend a guiding hand to entrepreneurs at walk-in centres.

These hubs offer practical support to emerging business owners and aspiring entrepreneurs in the form of business plan assistance and management training and coaching. The hubs also offer telecommunications, internet, printing and meeting facilities while giving entrepreneurs advice on the day-to-day running of their businesses.

The Communities Fund provides loan funding of up to R1 million per project. Businesses applying for finance must operate within 50 kilometres or within the labour sending area of an Anglo American mining operation serviced by a hub. The entrepreneur must be a member of the local community.

Contact:

SBH TeamLizette MollFax: 086 656 4713

National representative:Henry SnymanTel: 083 527 2123

 

www.smallbusinesshub.co.za

 

 

5.Industrial Development Corporation - (IDC)

 

The Industrial Development Corporation of South Africa Ltd (IDC) is a self-financing, national Development Finance Institution that promotes economic growth and industrial development in South Africa.

 

5.1IDC Gro-E Scheme:The IDC is investing R10-billion over the next five years through its Gro-E Scheme. It offers financial support to start-up businesses, including funding for buildings, equipment and working capital. It also funds companies wanting to expand provided that they show an ability to create jobs and operate in sectors supported by the IDC which include:

Green industries, which include renewable energy, energy efficiency, pollution mitigation, waste management and recycling, and biofuels
Agricultural value chain, including agro-processing
Manufacturing, focusing on advanced manufacturing; automotive, components, medium and heavy commercial vehicles manufacturing; clothing textiles, footwear and leather, forestry, paper and pulp, and furniture; metals fabrication, capital and transport equipment; pharmaceuticals; plastics and chemicals
Mining value chain, including downstream mineral beneficiation, mining and mining technologies
Tourism and high-level services, which includes business process services and tourism
Media and motion pictures, which has to do with media pictures production, the media value chain of broadcasting (radio and television), media expansion including new media, music value chain, and film production and animation and
The knowledge economy, to do with health care, information and communications technology and biotechnology.

 

Criteria:  

Start-up businesses, including funding for buildings, machinery and working capital;
Existing businesses for expansionary purposes;
Businesses that demonstrate economic merit and have prospects of acceptable profitability to be able to service their obligation;
For the duration of the funding period, businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required;
Broad-based Black Economic Empowerment certification from an accredited verification agency, where applicable; and
Businesses operating or expanding in South Africa.

 

Loans are given at prime less 3% with a minimum of R1-million and a maximum of R1-billion per project.

 

Contact:

Email: callcentre@idc.co.za.

Website: www.idc.co.za.

Call Centre: 0860 693 888

 

 

6.
South African Investment Network

This is an online platform that connects entrepreneurs seeking business funding with angelinvestors looking for investment. They maintain that they have access to R83 billion to invest. They connect global and local investors and entrepreneurs.

 

Contact:

Website:www.investmentnetwork.co.za.

 

 

7.
Sasfin Private Equity

Sasfin provides private equity funding for entrepreneurs. It is a versatile form of funding that allows enterprises of any size to unlock their potential without burdening them with excessive debt. Sasfin Private Equity invests its own capital in the client’s business and also providessupport and guidance to grow the value of the companies in which they invest in the form of strategic insight and, where necessary, operational, financial and governance input.

 

Contact:

Email: msegal@sasfin.com

Web:www.sasfin.com 

Tel:011 445 8001.

 

 

8.The International Tourism Marketing Assistance Scheme (ITMAS)

ITMAS provides partial compensation to businesses for certain costs incurred for activities aimed at promoting tourism to South Africa. It assists South African companies to market their tourism products in foreign countries by way of brochures, manuals, multimedia presentations, computer-based marketing information or any other international marketing materials. Reimbursement is provided for the design, compilation, production, printing, reprinting and distribution of material to market the products internationally. Assistance will only be provided for materials that were specifically produced to market tourism products in foreign countries.

 

Contact:

Department of Tourism to register as participants in the scheme.

 

Email: callcentre@tourism.gov.za
Switch Board Number: 012 444 6000

Switch Board Fax:012 444 7000

 

Physical Address:
17 Trevena Road
Tourism House 
Sunnyside
Pretoria
0001

 

Postal Address
Private Bag X424
Pretoria
0001

 

 

9.African Contractors Finance Corporation (Pty) Ltd

A Miscellaneous Business Credit Institution

 

42 Bath Avenue
Johannesburg, 

Gauteng 2196
South Africa


Tel:  011 256 9400

 

 

10.Business Finance Promotion Agency (BFPA)

The BFPA has several products.

 

10.1Impact Bridging Financing

Funding is provided for emerging and established contractors in the form of bridging finance and performance guarantees for businesses in the construction industry.

 

10.2Khula Emerging Contractors Fund.

Financnce is aimed at departrmetn of Public works and other government contracts associated with infrastrucuture development.

 

10.3Smart Choice Order financing

This scheme does not require collateral and payments are ceded to the Business Finance Promotion Agency

 

10.4BFPA Classic Loan

Term loans up to R150 000 over a maximum period of 3 years offered

 

10.5Flexi Payroll Based Loan

Personal loans based on payroll deductions and salary advances up to  R5 000

 

CONTACT:

COMSEC COMPLEX, GRAHAMSTOWN ROAD, SYDENHAM
Port Elizabeth , Eastern Cape 
Phone : 
041 487 0190
Fax : 041 487 0192
www.bfpa.co.za

 

11.National Youth Development Agency: National Youth Fund

The fund aims to mainstream and integrate youth development for sustainable livelihoods by initiating, facilitating, implementing, coordinating and monitoring youth development interventions aimed at reducing youth unemployment and promoting social cohesion

 

Requirements:

Youth (35 and younger) must hold greater than 50% of the shares in the company;
Must be a previously disadvantaged South African youth
The youth must be operationally involved in the business;
Must demonstrate commitment to the venture;
The venture must be economically viable.
The following types of ventures are excluded from funding: Gambling, Tobacco Property development and illegal practices.

 

Contact:

Call Centre:Tel: 08600 96884Fax: 086 606 6563

 

 

12.The Land and Agricultural Development Bank of South Africa (Land Bank)

The bank is a development finance institution (DFI), wholly owned by Government, whose mandate is to support, promote and facilitate the development and transformation of the agricultural sector. It has a responsibility to support Government’s efforts to increase access to land, provide support for emerging farmers and raise rural incomes.

Products and Services

12.1Mortgage Loans, including loans to well-established commercial farmers or agri-businesses that own fixed agricultural property and want to buy land, consolidate their debts, and or other purposes linked to agriculture.

12.2Special Mortgage Bonds for Farmers who were previously denied the right to buy landand/or who

o
Have the potential to become successful farmers
o
Own land in towns or cities can get Special Mortgage Bonds
o
Are historically disadvantaged and are first time buyers of agricultural land

12.3Medium Term Loans in the form of cash credit accounts. Clients’ financing are aligned with and according to their agricultural needs.

12.4Installment Sale Finance which provides an option for farmers who want to buy movable farming assets and equipment.

12.5Installment Sale Finance (Livestock)which offers clients an opportunity to purchase large breeding livestock (e.g. bulls, cows).

12.6Establishment Loan for perennial crops, typically for establishing sugar cane plantations, citrus and deciduous fruit orchards, timber plantations and vineyards for table and wine grapes.

12.7Short term (seasonal) loans which are tailored to meet important financing needs in the agricultural production cycle including the provision of advances for crop intakes, production requirements, production credit and other related services that includes the handling, manufacturing, packing, processing, storage, transport and marketing of agricultural products.

Contact:

Email: info@landbank.co.za

 

Tel:012 686 0500