Access to funding for women’s businesses remains a big challenge. According to one survey, 88% of small businesses are self-funded, have never applied for funding, and don’t know where to apply for funding. Plus, most claim access to finance is their number one challenge.
So what can be done to support female business owners in South Africa? The answer seems remarkably simple. More specifically, it’s access to the right information that empowers female business owners to make informed financial decisions.
Challenges Affecting Female SMEs
There is nothing more satisfying than running your own business. But being your boss does come with its challenges.
- Access to finance and credit
- Cash flow management
- Marketing
- Red-tape
- Access to support
- High startup failure rate
- Access to markets
- Skills shortage
Business funding exists to help deal with some of these challenges. As an entrepreneur and business owner, you need to understand the unique challenges that face your business and determine what kind of business funding can help you overcome them.
Clearing The Fog Around Business Finance
Financial literacy and easy access to information about business funding are key to solving many of the challenges facing your business. You need to know how to plan, budget, invest and have a working understanding of the financial health of your business. It’s also important to know that applying for business finance is not an indication that your business is struggling.
Most, if not all, businesses that have been operating for some time need capital to scale. In the past, SMEs had to rely on banks to provide a range of financial services, but because of restrictions and tough requirements, actually walking away with the funding needed was difficult. Now there is a range of alternative lending options for SMEs, each with its pros and cons.
Some forms of finance, like bootstrapping, angel investors, venture capitalists, crowdfunding, and accelerator programs, are only applicable to new businesses and startups. For existing businesses, funding options include secured and unsecured loans, bank finance, and government grants. Funding intended for a specific purpose, such as a bridging loan or purchasing equipment, carries its minimum requirements.
Alternative lenders have proven a popular and more flexible option for South African SMEs looking for easy access to finance. Business credit can be a great tool for growing your business, and it’s a lot more flexible than a small business loan. A business credit facility works in the same way as a credit card, which can be a huge advantage for SMEs. It’s always there when you need it, which is great for peace of mind and means you don’t have to withdraw from your funds when you need quick access to working capital.
Using Your Funding
There is a common misconception that only new businesses require funding. The reality is that business funding can be applied at any stage in a business’s lifespan and can be used to meet many different needs.
- Expansion of your premises
- Hiring additional staff
- Equipment purchase
- Marketing
- Buying Inventory
- Managing Cash Flow
What you do with your business funding is ultimately up to you. As a business owner, it’s your job to ensure you know exactly what you need funding for and how to use it to achieve your business objectives, whether it’s growth, purchasing seasonal inventory, or buying the equipment needed to scale.
Understanding Debt
As a business owner, you need to understand how your money can work for you. This includes your business debt. It’s important to understand that there is a difference between good debt and bad debt.
Bad debt does not influence your business growth. You are drawing on your credit card to cover day-to-day expenses, luxury items, or depreciating assets like a vehicle counts as bad debt.
Good debt works for your business. Business funding that contributes to the growth of your business or ultimately increases your net worth can be considered good debt.
Accessing finance to grow your business is a big step in the right direction; capitalising on that investment is another smart move. But running a successful business is so much more than maintaining liquidity. It’s about why you decided to do it in the first place. We’ve handpicked some inside secrets from successful female SMEs to help you along the path to success:
Tell your brand story in your marketing – it will make customers (and investors) love what you do
- Define your values and let them drive your business activities
- Connect and engage with your customers, and they will return for more
- Get tech-savvy and embrace technology
- Be a disruptor and show the world what makes you different
- Network as much as possible and share your success story
- Never sell yourself short – be proud of what you have achieved
- Pay it forward and mentor other women business owners like yourself
According to our market research, 59% of SMEs say access to credit is their biggest business challenge. With Lulalend, you can access up to R1 million in business funding or business credit in as little as 24 hours. Simply apply online and complete our paperless, obligation-free application, and we’ll be in touch with your answer.
Visit www.lulalend.co.za to apply.
