Entrepreneurship is a journey that begins with an overwhelming sense of courage, risk taking and passion. It starts with that aha moment of a clear idea or vision and it gives excitement and an unshakable belief in an original idea. The natural inclination is for the entrepreneur to get down to work and build momentum quickly. Most entrepreneurs can attest to the fact that they went all head in to get things running, however one learns that starting a business is a long marathon. Passion and enthusiasm are admirable traits and highly valuable in the entrepreneur world however they can not substitute for knowledge and skill.
Passion and enthusiasm help the entrepreneur to take the initial risk and to get started, however the journey demands knowledge and skills. Business funding is a critical building block in the entrepreneur journey and seeking funding requires knowledge more than simple passion. Most businesses tend to start seeking funding before they are ready, and that can lead to wasting of time and resources.
Most businesses are not investment ready. This is because they do not meet the minimum eligibility requirements for developmental or commercial funding opportunities. Owners are unwilling to seek external equity finance and those who are willing do not understand what equity investors are looking for or how to ‘sell’ themselves and their businesses to potential investors. Attracting appropriate financing options is not always easy! It requires you to really ‘build a good business’ and present a compelling investment case to potential investment partners.
Investment readiness is more than just “getting your hands on the money”, it is a measure of business maturity, professionalism, and financial stability, and is a critical step towards engaging with large-scale market opportunities and prospective investment partners. It is also critical for businesses to understand the kind of finance sources that are available to them (Grant, Debt, Equity) and the suitability for their business and be able to propel their business to the next level.
This then implies that investment readiness is an important concept to small businesses. Readiness means that small business must be empowered with knowledge. With the B-BBEE codes driving investment through Enterprise and Supplier Development and the abundance of investment opportunities, there are still a lot of SMME missing out on these opportunities. The gap between funder and SMME can be narrowed through skills development as well as fund readiness awareness. Also, the easier and more transparent access to funding becomes, the greater the opportunity for sustainable small businesses. We must then brood over the question ‘‘how do we narrow the gap between the funder and the SMME’s “?