Business plan is No 1 drawcard
START-UP FUNDS: INVESTORS MUST SEE CONCEPT AS SOUND AND ENTREPRENEUR AS CAPABLE
How wedding planning start-up gets R400 000 on Shark Tank SA TV show.
Funding for early-stage start-ups is notoriously hard to find as not many financiers are prepared to invest, given the inherent high risks involved in backing a business with no proven track record. This, coupled with statistics revealing that one in five start-ups fail within the first five years, makes it even more of a challenge for a first-time entrepreneur to convince a financier to approve funding.
Christo Botes, executive director at Business Partners Limited, says that while a concise business plan is often the deciding factor for a financier when approving business finance applications, more established entrepreneurs have the added benefit of industry and work experience that a startup entrepreneur may not possess. “When considering whether or not to grant funding for their start-up venture, this decision is often based solely on the business plan and the research put into it, thereby highlighting the importance of this document.”
He points to start-up entrepreneurs Chelsea Evans and Jason Newmark as proof of how the strength of a business plan and concept can impact a financier’s decision. “Recent participants in the venture-capital television show, Shark Tank SA, they raised R400 000 based purely on the business plan for their internet start-up business, PlanMyWedding.com – a complete projectmanagement tool that allows couples to get quotes from service providers, draw up a budget and manage an interactive gift registry, among many other functions involved in planning a wedding.
During the episode, which recently aired on M-Net, the startup entrepreneurs pitched their business concept and convinced two of the sharks to invest R200 000 each, in return for 25% each in the business. Newmark says their success on Shark Tank SA is testament to the strength of their business concept, which is based on many years of hard work and research, as well as actively networking and seeking business support.
Evans and Newmark attended a day-long business-planning workshop by Business Partners as part of their SME toolkit/business plan competition for aspiring entrepreneurs. Evans says the interactive workshop put them through several business-planning exercises, after which they presented their plan to about 30 participants. “It was especially helpful for refining our financial plan.”
When they saw an advertisement calling on entrepreneurs to apply to appear on the TV show Shark Tank SA, their concept was developed as far as it could be without funding so they entered. They were shortlisted and notified
they’d been chosen for the programme. Then came another notification that it was off. Finally, they got a sudden call to say they could participate after all, but that they only had a few hours to catch a flight to Johannesburg.
With no time to rehearse their pitch, the entrepreneurs say all the hard work on their business concept prepared them for the grilling on Shark Tank SA and secured them funding. Newmark says another invaluable advantage of having outside investors is the new energy and momentum
that’s injected into the venture.
Botes says: “An investor needs to be reassured the entrepreneur behind the start-up concept has necessary skills and resources to take a specific business idea and turn it into a successful start-up business with growth potential.
“We encourage all entrepreneurs considering starting a new business to use the resources at their disposable. The SME Toolkit website (http://southafrica.smetoolkit.org/sa/en) has comprehensive guides on how to start and build a successful business.”