Banking Support for Entrepreneurs

One of South Africa’s major banks recently announced increased levels of small business support, beyond what is normally expected from the banking industry. As one of the major stakeholders of the small business industry banks have for years benefited in many ways from the boom in entrepreneurial activity, often providing very little but high interest rates and tough terms to especially new businesses. In South Africa, small businesses account for about 40% of economic activity and provide a massive 60% of employment. Looking at the stats makes it easy to understand why banks would want to appear as small business friendly and this move hence comes as little surprise.


Nedbank Small Business Services recently announced that it is now offering a number of banking and nonbanking interventions to assist entrepreneurs as well as national social transformation. Business registration is a key focus area and the bank offers entrepreneurs the ability to register as a formal business entity through any Nedbank branch. 
The entrepreneur will simultaneously be able to register a business and register for 
value-added tax. 
The bank does not earn anything from the registration, but merely plays a facilitation role by using its technology to allow entrepreneurs to link with service providers, such as com-
pany registration business SwiftReg.

Enterprise development is also a focus point for the division and it has partnered with government financial institution Khula Enterprises to enable entrepreneurs who have inadequate collateral access to finance.



Further, Nedbank has noticed that South Africa has gone from being a largely resource-based economy to emerging as a sales-type industry. 
More Internet and service driven businesses, are emerging and there is a move away from heavy retailing to an emergence of manufacturing and a large services component in the country.

South Africa of course has a large range of business support organisations, with a real culture of entrepreneurship starting to develop within our nation. South Africans are naturally entrepreneurial, both from a necessity point of view as conditions for finding employment has been challenging for many years as well as from an opportunity perspective where the rich mix of races and cultures have brought about a wealth of idea and resulted in a breeding ground for entrepreneurs.

The bank says that they have started to play more of a facilitation role by using its technology to allow entrepreneurs to link with service providers, such as company registration business SwiftReg.

Together with the various other nationwide service providers such as SEDA, the IDC, SA Business Plans and the Investors Network we are confident that entrepreneurs in South Africa have a wealth of support that they can rely on and that, going forward into the next decade entrepreneurship will play an even bigger role in the growth and sustainability of the country.

The Business Plan

Just why the business plan has become such an important part of the business financing process in recent years comes as little surprise. Very seldom do we find that entrepreneurs are all-rounder’s and have skills and experience in all the different functional areas of the business. Most often the potential business owner may have both an interest and experience in a certain area and for that reason that they may have come up with a solution to a current problem or challenge that he/she may have come across.

Most entrepreneurs are in essence advanced problem solvers and due to their strong self-belief and resourcefulness may take their solution further to the point where a new venture is created. Think about eh entrepreneurs that you know, consider their ideas and you will quickly see that they have really come up with a solution for either themselves, or someone they may know, whether that is a friend, customer or family member. So the point I’m making here is that the solution obviously comes from their area of expertise, plus of course a healthy serving of imagination and creativity.

When it comes to the actual starting and running of the business, numerous other skills are also involved, whether those are marketing, finance, operational, customer service or service delivery skills seldom would you have thought through the processes involved in addressing these areas. This is where the business plan becomes such an important issue.

Banks and business investors are very well aware of the large failure rates for start-ups. It’s their business to understand the risk that they are taking on and hence believe that one way for the risk to be managed is to ensure that the entrepreneur have actually through thought the various issues while engaged in the process of writing he business plan. The plan will require you to look at just about everything from marketing, to ecommerce, operational aspects, sourcing suppliers and even the legal issues involved in starting and running your business.

It’s a pity then that too often today, the only reason why someone may draw up business plan would be to comply with the demands from the bank or investor as it really can serve as a major tool to ensure that the all too often mentioned business failure rate can be improved and more entrepreneurs can make a success from all the initiative, energy and capital that goes into starting a new business.

Necessity Driven Entrepreneurs

After an interview almost three months ago, I recently found this great article on Necessity Driven Entrepreneurs, and as always, happy to be mentioned.

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Academics call them entrepreneurs motivated by Push factors. We call them necessity-driven entrepreneurs, they have different motivations than opportunity-driven entrepreneurs, and yes, we’re seeing more of them.

Ben Botes, director of program and service delivery at the South African Investors network in Gauteng, said the organization, which encourages would be entrepreneurs to start businesses, has seen so many people who have been laid off that it started a business start-up support program that regularly attracts 30 t 40 people who are looking for a helping hand with both the writing of their business plan as well as the crucial are of finding start-up finance. In 2009, attendance at the Centre’s “Exploring Entrepreneurship’’ sessions in Johannesburg, Durban, and Cape Town almost doubled in numbers from the previous year.

Barbara Nkosi was among the dozens of first-time entrepreneurs filling the seats at a beginner’s business seminar at the center. Nkosi said her job as an executive assistant will go away in March, when her employer, moves to another province and she has to find a way to make ends meat.

“Nobody is hiring,’’ she said. “I’m here because I’m taking care of my own destiny.’’

Sarah Buchannan from Durban who, between her and her husband, between them have decades of experience at local architectural and design firms, started getting together informally with a group of fellow designers and strategists last summer, after both were laid off.

“Initially, we just wanted to share our situation,’’ Buchannan said.

The group of eight women decided to collaborate, starting a business to offer clients multiple services, from print and architectural graphic design to strategic marketing. That led them to an investors network meeting.

“Because of the economy, we’re seeing more entrepreneurs who are pursuing opportunities because they don’t have to take that leap from a secure job,’’ Botes said. “They are already out of work, so why not pursue something that you’re passionate about?’’

“The people who were laid off ahead of us, none of them were getting jobs,’’ Barbara recalled. “So we knew we had to come up with a new plan, to beat the bad economy.’’

The couple honed their skills in the latest, most sophisticated 3D visualization software available, the kind that architects use to pitch projects. They also established ties to a large community of 3D designers locally. One good sign for their young business: they landed a big job before they even had a chance to print business cards or launch a website.

“It’s a little scary, but exciting at the same time,’’ Sarah said. “We’re trying to see this as an opportunity to turn adversity into an advantage.’’

John Gosling, their business coach said his advice to those planning to start a business for the first time is to give themselves “an honest self-evaluation.’’

“You should really be building on your experience, your skill sets, and your interest,’’ he said.

But he cautioned that entrepreneurship is “not a quick fix’’ for unemployment, adding that while he tries not to be “a dream crusher,’’ he often advises unemployed would-be entrepreneurs not to regard a start-up idea as 'fix all' solution.

“Even successful start-ups often don’t generate significant income for two or three years,’’ he said. “In fact, many require a significant investment up front.’’

The entrepreneurs are hoping that their fledgling enterprise will be able to overcome some of the issues that bedevil start-ups. The principals will work in “virtual teams,’’ from their home studios so overhead costs will be low.

Still the two first-time entrepreneurs admit that after years working in architectural firms, they are in unfamiliar territory as they plough through the documents that a new business requires.

They are also working through a business planning “homework assignment’’ from their SA Business Plans consultant that includes a business plan, a financial plan and a sales forecast.

“They each could have gone out on their own,’’ said Botes, “but they are better off as a team.’’

But he added that the group still has to fine tune its business plan, and possibly reduce the number of graphic services they will offer.

“They have a pretty good shot,’’ Botes said. “But it’s still a long road they have to travel.’’

The process of finding investment for a new venture

Irrelevant if you are a new or growing business, for most business owners the time will come when further business investment is needed. With many entrepreneurs realising that going to the bank for a loan is no longer the only or most beneficial avenue, other sources of business finance needs to be considered. So what are the steps that you need to take for this to happen? Michael Weaver, chief executive at investor network Beer & Partners, has compiled the following guide to securing funding.

1) Decide level of funding required
The level of funding required is largely dictated by what stage of evolution the business is at. Established companies with revenues, profits and an order book, and that are seeking working capital or replacement of bank debt will typically fall in the R350,000 to R1.5 million bracket. Broadly speaking, start-ups or early stage businesses seeking funding for final product development/take product to market will tend to require R150,000 to R450,000. In both cases, the amount must be sufficient to fund the delivery of the planned stage or end result.

When considering the amount of funding required, businesses must take the long-term view. It is important that the level of funding is sufficient to see the business through all of the identified stage of development. Otherwise they risk not achieving the desired goal and having to halt progress part way due to cash running out.

Remember to:

· Take the long term view
· Identify your end goal and ensure the funding is sufficient to get you there

2) Put in place a strong management team
Few early stage businesses have complete management teams and very few can claim to hold all the skills required to maximise the potential of a business. These skills include general management, finance, marketing, sales, production and licensing, to name a few.

Entrepreneurs who can recognise their weaknesses as well as their strengths and plan accordingly are well placed to raise investment. Many of the complementary skills required are available on a freelance or part-time basis, sometimes on a sweat equity basis and can on occasion be provided by an investor. Sweat equity is where someone invests time and skills in exchange for a shareholding stake in a company instead of cash.

There are different general management skills required to run a small business compared to those for required for larger firms. It may even be that the founder is not best placed to lead the company through all the stages of its growth and will at some point need to step aside.

Remember to:

· Consider what skills you and your existing team have and what needs to be brought in
· Be broadminded about your relationships with employees – putting someone on the payroll is not the only option

3) Create a business plan identifying the strategy
A solid business plan that identifies the strategy is crucial. The plan must contain a commercial idea which will provide an eventual profit for investors or, as a minimum, sufficient profit to repay the interest and the principal on a loan. However, not all plans need to be unique as many ‘me-too’ but better businesses are established to take advantage of a niche or to stake a claim for a share of an existing market.

The business plan must set out the key factors that determine success or otherwise of the business. In addition, the entrepreneur should be prepared to monitor these factors and not be afraid to set out the risks. If an entrepreneur does not recognise the risks, it may be either because they do not fully understand their own business or they are ill-prepared to manage these risks adequately.

Remember to:

· Always have a business plan
· Only include as much within the business plan as is necessary to keep you on track and to give investors a clear idea of where you are taking the business and how you are going to get there

4) Determine a sensible valuation of the business
Early-stage businesses are notoriously difficult to value. There are different ways to approach this. One rule of thumb is:

· A solid business idea alone: R10,000
· A solid business idea with a reasonably presented business plan: R50,000
· Both of the above, plus a good management team with relevant CVs: R250,000
· All of the above, plus a sale: any figure upwards of R500,000

A perhaps better approach is to apply the rule of thirds, with the valuation split between the inventor, the management team and the investment. As such, the level of funding sought determines the post-money valuation. This ensures that the management are sufficiently incentivised to drive the business forward. It also ensures that investors can retain an important stake after second and third round funding which is sufficient for them to make a respectable rate of return on final exit.

However, the bottom line is that the valuation is essentially what a willing investee will accept and a willing investor will pay.

Remember to:

· Be realistic
· Make sure you can justify the valuation
· Don’t be too greedy – remember that if you fail to secure any funds you may not have a business that can go forward

5) Define the unique selling points (USP)
Aside from coming up with a compelling business proposition, the entrepreneur must ensure that nobody else is offering exactly the same product or service, or have a particular USP which makes it different and potentially more profitable than competitors.

If the entrepreneur is certain that any competitor, even one with unlimited resources, will take at least two years to come up with the same product, then they are in a strong position to claim that they have a chance to establish their brand. However, in this example, it could be a case of weeks or a few months. As a result, the market will be saturated by other similar products, some of which may be backed by known brands.

Another valid USP is a unique management team mix. However, this would have to be very specific as it could be replicated. Alternatively, a patent or other Intellectual Property Right by definition would fit the bill perfectly. There are many further examples, but the crucial point is to have a clearly defined view of how viable the business proposition is in the long term.

Remember to:

· Research the market
· Research the competition and put yourself in the mind of the competition to figure out how they will react to you entering the market

6) Protect your business
Depending on the business, there are times when protection is an absolute must-have. An easily replicable product for example, if protected, can be a great investment. Entrepreneurs should also ensure they understand how patents and other forms of intellectual property work, which may require seeking professional advice.

Without replacing professional advice, it is worth remembering that once an idea is in the public domain, it is not possible to then apply for a patent. Therefore, it would be a mistake to assume it is possible to find the funding first and then look at a patent – if investors have told people the idea, the business will not be able to apply. There are many forms of protection for different aspects of the business and products. Patents are just one, which is why professional advice is very worthwhile.

Remember to:

· Seek professional advice

7) Prepare your business for due diligence
Due diligence is usually carried out when an investment or acquisition is going to be made and is the process of checking the facts of a business, including its market, key staff, directors, financials and legal position. Any investor and many banks who do not have a direct relationship with the entrepreneur will require a level of due diligence on their affairs before investing or loaning funds to the business. However, there is a real danger that investment deals will fall through if factors are uncovered during the due diligence process that were not already apparent. It could be that the investee had failed to recognise the point as relevant.

Companies can save themselves a lot of time and energy when negotiating an investment by completing much of the groundwork and making it available to the bank or investor during negotiations. There are certain legal advisors or financial services professionals who work with business investment networks who can provide specific assistance around due diligence. This includes providing a pre-packed questionnaire which reduces the risk of deals falling through and minimises legal costs on completion.

Remember to:

· Always expect due diligence to take place so be prepared
· Seek professional advice if you are unsure how to do this

8) Appoint a solicitor
It is essential to appoint a solicitor who has experience of similar forms of investment in small businesses. Just one example of where this is required is that, in line with the Financial Crime Prevention Procedures, the business and the solicitor will have to verify the identity of investors before accepting any investment. This will require a copy of an official photographic ID such as a passport, driving licence, services ID card or national ID card.

Remember to:

· Make sure the solicitor you choose has the relevant experience
· Make sure legal charges are commensurate with size of investment and try to obtain fixed fee for the work

9) Have an exit plan
Businesses that are a lifestyle plan for the entrepreneur often find it difficult to attract investors. One example is a business that will provide the entrepreneur with long-term employment and remuneration but which they will want to continue with until retirement. However, in these instances, a secured loan may still be viable. Having a well thought through exit plan is therefore a key element of obtaining investment. Exit strategies can take several forms, the most common of which are:

· A trade sale, which is arguably the most common
· A listing on a stock exchange, such as PLUS, AIM or London Stock exchange
· A management buyout.

It may be difficult for an entrepreneur to imagine selling their business when they are just starting it. However, most investors are looking for capital gains rather than a dividend stream so will want to know how they will make their profit. In many ways, the actual form of exit is less important than the principal that there will be an exit at some point - generally within three to seven years.

Remember to:

· Always have an exit plan in mind
· Ensure that the route to exit is front of mind when speaking to any potential investor

10) Find an investor
Arranging investments is a category of regulated activity which can only be carried out by firms authorised to do so by the Financial Services Authority (FSA). This must also be done with information authorised by a FSA-approved firm. It amounts to acting for a business with the expectation that they will be introduced to an investor. Direct approaches to potential investors by individuals can be a criminal act and result in the individual making the approach becoming personally liable for any losses incurred by an investor. This is unless the individual has received certain certifications from the investor before seeking investment.

The FSA aims to protect consumers; both companies and investors. It does this by regulating the way in which financial service providers operate, paying particular attention to the integrity, skill, care and diligence with which they are run and to the competence of those people delivering services.

Regulations under the FSA lay down, in some detail, the framework within which approaches to investors must operate in order to comply with the Financial Services and Markets laws.

Remember to:

· Take heed of the legal requirements when seeking investment
· Find a reputable business angel network or corporate finance house that has a proven track record
· Ask the right questions

To find business finance or investment in South Africa visit the SA Investors Network.

Business Plan Errors to Avoid

Writing a business plan can be a challenging yet illuminating process. If you're following this blog you would have read about the importance and usefulness of a good business many times. In as much as it is important, writing an investable business plan is also a bit of an art to many and the more plans you come across the more obvious it becomes.

When speaking at events and workshops on the topic, "what re the common errors made by entrepreneurs and what should I avoid doing when writing my plan" I'm often asked. I recently came across this useful bit of comment from the guys at Inc magazine about this exact issue and I must say that I could not have put it better myself.

1) Being All Things to All People
You cannot expect a business plan to appeal to every possible audience. With this in mind, try to pick one business model, and to focus on one industry or one problem. Otherwise, you risk spreading yourself too thin, and potentially creating a sprawling plan that makes a bad first impression.

2) Being Boring
If a potential client gets two pages into your plan and is bored, that's a terrible sign. It is important to have the reader interested right from the executive summary on the very first page. And don't neglect your cover page: a well-designed logo never hurts.


3) Measuring the Size of the Market Too Optimistically
Although it may seem impressive if you project vast markets and the potential for huge sums of revenue, outsize financial estimates often appear gimmicky to investors. Worse, big numbers often make you sound as if you don't know what you're doing or how hard it will be to penetrate your target market. Don’t make big promises unless you're absolutely sure you can keep them.


4) Lacking the Confidence to Sell Your Product
In an effort to portray confidence, too many business plans ignore the competition that a new business will face. Doing so betrays a lack of sophistication. Few if any ideas face zero competition. Even if your concept is completely original, you should take into account forces that compete with your product or service, including different solutions to a problem, different ways that customers might choose to spend their money, and inertia in the marketplace.

5) Repeating Yourself Too Much
Avoid repeating a few catchphrases and a few simple ideas in ten different formulations. Nobody wants to hear the same thing over and over again. Be sure to keep your plan's fundamental message consistent throughout, but employ creative language and appealing imagery to flesh out your ideas.

6) Using Too Much Jargon
Remember that not everyone in business is familiar with cross-industry lingo. If you have a background in a specific industry – this is especially true in science and engineering – try to use simple, specific, and concrete phrases to describe your business. Rely on general terms that most everybody will understand.

7) Not Being Consistent
Eliminate contradictions. Make sure that the information in your plan is consistent — that, for example, a financial chart deep within the plan does not undermine a fact used in an earlier section. Make absolutely certain that every fact about your industry, the market, and key competitors is accurate and readily verifiable.

8) Failing to Incorporate Feedback
Presenting a business plan about which you have not received feedback is an easy amateur mistake to make. Remember: Presenting to a top investor a draft business plan that contains silly errors or gaps in logic is worse than presenting no plan at all. Try reaching out to a few friendly contacts who have vetted business plans in the past before you begin to share it with qualified potential investors. However....

9) Taking Too Many Perspectives Into Account
...Do not go so overboard in anticipating lines of questioning or identifying possible flaws in your thinking that a reader will have a hard time following the narrative thread. Make sure you address some likely investor objections, but balance the desire to be clear-eyed with the overall objective, which is to make a persuasive pitch.

10) Failing to Acknowledge the Competition
Successful plans come in all shapes and sizes and formats, so don't worry about crafting one that looks and reads exactly like every other plan that's out there. Your goal isn't to fit in; you want your business plan to stand out. Remember: If you create a proposal that expresses your idea and your personality, you will be more comfortable and confident when you are called on to present it.

Happy planning!!

Supporting more than 14 000 small businesses

Latest figures suggest that various government incentives with services like business finance and business plan support have helped over 14 000 small firms in the last 12 months alone. SEDA, with the help of well chosen alliances such as SA Business Plans and the South African Investors Network is delivering on its promise of supporting the economy of South Africa through helping small business owners everywhere.

A recent article on the SouthAfrica.info website explains:

South Africa's Small Enterprise Development Agency helped over 14 000 clients with services ranging from business planning and registrations to cooperatives support and access to markets in 2008/09.

In all, 199 830 potential and existing small businesses accessed the agency's services through its 42 branches countrywide, an increase of 7.3% over the previous year.

Briefing a National Council of Provinces committee in Cape Town this week, Seda CEO Hlonela Lupuwana said that out of those, 46 695 clients' needs were assessed and 14 373 were helped.

The Seda technology programme assisted 835 small businesses with a total turnover of R129-million, through its network of 27 incubators, and also helped to create 224 new small enterprises, Lupuwana said.

Its Community Private Public Partnership programme, which offers support to co-operatives and community-owned projects, has also been revived.

In-house advisors
Seda had decided to limit the use of consultants to the supply of more technical services, and to 20% of all services offered by Seda, with the remainder being offered by in-house advisors, Lupuwana said.

Last week, a group of 25 Seda business advisers embarked on a seven-day visit to Taiwan, where they were expected to gather more diagnostic skills and training on helping business owners.

Another group of 25 advisers were expected to visit Brazil later this year, Lupuwana said, adding that the visits were a cost-effective way of supporting advisers as Seda only had to pay for "minor expenses".

Forging partnerships
Lupuwana said a random survey of 902 clients had shown that 80% of clients found that Seda's assistance had a positive effect on their business.

This support had come amid limited resources, and despite a six-month moratorium on the provision of all services by the agency to small enterprises.

The limited budget – the agency received R331.2-million for 2009/10 – was a "major problem" in terms of meeting the agency's targets.

Lupuwana said the key to widening the agency's support on a limited budget would be the partnerships it could forge with key partners such as provincial and local governments.

In the Eastern Cape, for example, a number of municipalities had donated buildings and paid for rent so that Seda centres could be set up there.

Source: BuaNews

Business Plan help: writing the executive summary

Today, with many organisations, especially those with much at stake preferring to opt for professional business plan consulting firms for business plan help, the art of writing a good executive summary for a business plan has largely been lost. With banks and business investors in countries such as South Africa, the US and a number of others, requiring a business plan before funding or business finance is considered, its easy to see why. So how do you write an effective and professional executive summary for your business plan?

The executive summary is the most important section of your business plan. It is normally the first section of your business plan that investors will read, and could be the last if it is badly written. An executive summary should describe the company, the product or service, and the unique opportunity your company is offering. It should also provide a short description of your management team and a summary of the investment you are seeking. Don't forget to tell the reader why you need the money and how and when they can expect to be paid back!

It creates a first impression (remember what your Mum said about first impressions!) in the Angel’s mind of both you and your business. Use clear and concise language and words that command attention, and excite your Angel.
Be honest. It is often tempting to exaggerate or Gild the Lily, but you WILL get found out eventually and Angels will not be happy. Angels like the truth. Your summary should promote trust and if "just one little white lie" creeps out, Angels start to look for the others. Now you are on the back-foot.

The executive summary is neither an introduction nor an abstract; it IS the business plan in miniature. It should stand alone and be interesting, concise and clear. It should take no more than 5 minutes to read and when finished the Angel should be able to say "So that’s what these people are up to"

Here are several common mistakes that can make your executive summary less effective:
Too wordy, and failing to get to the point. Angels are busy.
Trying to be all inclusive (it should be a summary)
Failing to show a unique or exciting opportunity
Failing to summarise the investment sought
Failing to generate interest in the reader

Some suggestions to combat these problems:
> Limit your executive summary to a maximum of 3 pages; 1-2 pages would be best
> Focus on the opportunity and explain why it is special
> Make certain that the opinions and claims in your executive summary are fully backed up by the other sections of your business plan.
> Use only concrete facts and figures that explain your business concept, market niche and financial projections.

Don't forget to include the details of your investment (the amount you need, what you will spend it on, and the return you offer your Angel)
Keep the Angel Investor in mind - why are they reading the plan and what response are you hoping to generate?

A good executive summary should demonstrate:

A business opportunity that makes sense

A clear plan for success

A capable management team

A clear, specific, and definable market

Significant competitive advantages

A solid and believable summary of the financial projections

An excellent chance for Angels to receive a healthy return

The outline of your executive summary will vary based upon your particular business. But regardless of the format, every executive summary should include the following areas:

The Opportunity
It should immediately grab the attention of your Angel. This is often best achieved by explaining why your business is different or unique. Clarify your business advantages, how you can break into your market first, the benefit of your proprietary product, or how research supports a significant customer demand for your product or service. Essentially, what differences or characteristics will lead to success?

The Product or Service Description
Describe your product or service in terms of its benefit to your potential customers. How does it work? What is it used for? Where is it sold? How much does it cost? How does the customer benefit? Remember to limit yourself to highlights in this section. Be brief.

The Market
Who is your customer? How large is your market? Who are the competitors? Why are you better? What are your market share projections? Your reader must be convinced that potential customers will have the want, need, and ability to purchase your product. Don't try to avoid the fact that you have competitors. Instead, explain how you can gain market share with your business advantages.

The Management Team
Describe the management and how they will lead to your success. Is it clear your team is well-rounded with the experience, expertise and capabilities to achieve the goals outlined in your business plan? Does your board of directors or advisors bring credibility and experience to the table? Be warned – management weaknesses will ensure that Business Angels will go no further.

The Finance Requirements
How much money has been invested to date? What are your earning projections for the next three years? What amounts are currently required? What will the funds be used for? From whom do you expect to receive your investment? What specific return do you offer an investor? What is the exit strategy, in terms of both time and return?
At what point in the writing process is it best to write your executive summary? There are three schools of thought. The first says prepare it before you write the rest of the business plan. The second says write it before, then again afterward to combine the best of both. The third says prepare the executive summary only after the rest of the plan is complete.

Which approach is correct? It's really a personal decision, but it has been our experience that preparing the executive summary when the rest of the business plan is complete is fairly effective. This allows us to summarize the plan after all the information has been laid on the table with the hindsight of compiling the entire plan.

Remember to review your executive summary many times and ask yourself whether it grabs the reader's attention. Will they be excited about your business? Will they want to read the rest of the business plan? If the answers to these questions are no, rewrite it. Show it to a friend or business associate and ask them to be critical. Many times after someone reads your executive summary they will say "It's great, but what about…?"

Most business plans are only given any concideration once the executive sumary has been read and created enough interest for the business finance provider or investor found what they were looking for within the executive samary. Best of luck with your business plans and for business plan help, don’t be afraid to ask or seek help.

Tips for Young Entrepreneurs

One of the ma great things about becoming an entrepreneur is that there is no age limits. Any one young or old can be an entrepreneur and if I knew what I know now when I was 15 I would have started then. Young people often have few responsibilities and less to lose, plus with your whole life ahead of you, why not give it a try?

The entrepreneurial landscape today is of course much different from the one 20 years ago. With the benefit of the Internet and an electronic commerce not only have entrepreneurs have almost instant access to a world wide market but startup costs are of corse much lower.

In a recent interview with Business Link, Internet entrepreneur Marc Day, founder and creator of SwapGame.com spoke about the joys of being an entrepreneur, his challenges and what he would do differently if he started a business again:
 
Marc Day founded SwapGame.com Limited, an internet-based, games-rental subscription service, two years after graduating. A professional attitude and thorough research has helped him finance and build his business, set to achieve a turnover of £1 million in its fourth year.

What I did
Take time for thorough research
"After I left university I took on admin-type jobs just to get by. During this time I did lots of research into my business idea. I also carried out field research, questioning people coming out of video games shops. I got as many facts and figures together as I could and found out all the costs involved before I approached anybody for money.

"It took about 16 months. I wanted to go into the market as quickly as possible, but I knew I needed to cover every angle before I did. I knew people weren't going to throw money at me and that they'd want to know all the details. Besides, it was important I knew that the business was going to be viable too."

Explore all funding possibilities
"When I was first looking for start-up capital I approached private investors and venture capital companies, but they all wanted to see more experienced management in the company. It was a difficult situation because I didn't have the money to bring that experience on board. The feedback was always that I had a great idea, but they'd like to see me start the company and how it went first. It was very frustrating. "But I plugged away and eventually I got the money through loans - personal and family ones.

Importantly, I also secured a R300,000 bank loan. The bank was apprehensive, but I was able to use my parents' property as security and I made my father chairman of the company, which gave the bank more confidence. My father was experienced in business and I used him as a sounding board anyway.

"Two years later I wanted to raise working capital for expansion, so I used the Department for Business, Enterprise and Regulatory Reform Small Firms Loan Guarantee scheme (now replaced by the Enterprise Finance Guarantee). Age wasn't a factor at all. It was my track record that counted, the partnerships I'd made and my growth strategy. We got R1 000,000 and can go back for another R1 500,000 if we reach certain targets."

Show confidence
"A lot of my contact with people when I started was over the telephone and nobody questioned my age because I came over in a professional manner, knew what I was talking about and wasn't frightened of negotiating with people. I think that makes a big difference."

What I'd do differently
Scrutinise my business plan regularly
"I finalised my business plan when I got my finance and though I kept figures in my mind that I had to achieve I didn't look at the plan again properly until I entered the Shell Livewire competition. It was then, a year after starting up, that I discovered how high my packaging costs were and how that was impacting the business on a daily basis.

"I managed to trim those costs down by about 40 per cent and it really affected profitability. If I'd looked at my business plan after, say, six months, I could have made the business leaner much sooner."

Marc's top tips:
• "Get as many facts and figures together as early as possible to back up your ideas."
• "Find a mentor you can ask for advice and run new ideas past."
• "Keep plugging away - even when you come up against obstacles."