Funding and its challenges
Actual Situation <ul><li>70 - 80 % of SMEs fail!  </li></ul><ul><li>Access to finance is critical factor for entrepreneuri...
<ul><li>Funders risk averse </li></ul><ul><li>Onerous requirements of funders </li></ul><ul><li>Structure within banks & h...
<ul><li>Scarce knowledge about government agencies </li></ul><ul><li>Impact of indemnity admin fee </li></ul><ul><li>Focus...
<ul><li>Not enough security available </li></ul><ul><li>Khula only option </li></ul><ul><li>Processes take too long </li><...
<ul><li>Clients not aware of funding sources </li></ul><ul><li>Clients expectations too high </li></ul><ul><li>Lack of ent...
<ul><li>Annual Financial Statements – once a year  </li></ul><ul><li>Do not understand difference between profit and cash ...
<ul><li>Independent contracts between service  providers and banks </li></ul><ul><li>Importance of bank accredited service...
<ul><li>Clients need to be better informed about funding implications (taking responsibility)  </li></ul><ul><li>Encourage...
<ul><li>Establishment of a forum – BDSP Forum  </li></ul><ul><li>BDSP professional body to accredit service providers – qu...
<ul><li>Role BDSP to play in funding cycle: </li></ul><ul><li>Client compliance – business administration, financial, lega...
Hlumisa – Small Business Solutions cc Solly Fazel-Ellahi  Cell: 082 780 8994 Landline: 021 419 2477 Ascend Business Soluti...
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Ascend Business Solutions presentation 09

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Ascend Business Solutions Presentation"feedback 2008 forum and current small business climate".

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Ascend Business Solutions presentation 09

  1. 1. Funding and its challenges
  2. 2. Actual Situation <ul><li>70 - 80 % of SMEs fail! </li></ul><ul><li>Access to finance is critical factor for entrepreneurial success </li></ul><ul><li>40 % of entrepreneurs are not aware of govt. funding services </li></ul><ul><li>Less than 10 % of applicants get funded </li></ul><ul><li>75 % of SMEs with positive cash flow get funded </li></ul>
  3. 3. <ul><li>Funders risk averse </li></ul><ul><li>Onerous requirements of funders </li></ul><ul><li>Structure within banks & handling of SMEs </li></ul><ul><li>Less flexibility & no tailor made packages </li></ul><ul><li>Turnaround time too long </li></ul><ul><li>Little passion about client </li></ul><ul><li>Insufficient communication & cooperation </li></ul>Challenges Experienced by BDS Providers with Funders
  4. 4. <ul><li>Scarce knowledge about government agencies </li></ul><ul><li>Impact of indemnity admin fee </li></ul><ul><li>Focus on larger and existing business </li></ul>Challenges Experienced by BDS Providers with Funders
  5. 5. <ul><li>Not enough security available </li></ul><ul><li>Khula only option </li></ul><ul><li>Processes take too long </li></ul><ul><li>Administrative costs </li></ul><ul><li>Need of Tax clearance certificate (vicious cycle) </li></ul><ul><li>Working capital vs. long term funding </li></ul><ul><li>Limited overdraft facility </li></ul><ul><li>Funders not prepared to visit clients premises </li></ul>Challenges Experienced by Clients
  6. 6. <ul><li>Clients not aware of funding sources </li></ul><ul><li>Clients expectations too high </li></ul><ul><li>Lack of entrepreneurial skills </li></ul><ul><li>Lack of commitment </li></ul><ul><li>Short term view of business </li></ul><ul><li>Bad or no credit history </li></ul><ul><li>Don’t have own accounting package </li></ul><ul><li>Lack of monthly management reports </li></ul>Challenges by BDS with Clients
  7. 7. <ul><li>Annual Financial Statements – once a year </li></ul><ul><li>Do not understand difference between profit and cash flow </li></ul><ul><li>Do not understand break-even </li></ul><ul><li>No marginal costing done </li></ul>Challenges by BDS with Clients
  8. 8. <ul><li>Independent contracts between service providers and banks </li></ul><ul><li>Importance of bank accredited service provider </li></ul><ul><li>Structures to enhance cooperation between service providers and funders </li></ul><ul><li>Funders should pay regular site visits (with service providers) </li></ul><ul><li>Financial and management trainings for SMEs </li></ul>Solutions - Funding
  9. 9. <ul><li>Clients need to be better informed about funding implications (taking responsibility) </li></ul><ul><li>Encourage SMEs to have an accounting package </li></ul><ul><li>Funders should pay regular site visits (with service providers) </li></ul><ul><li>Better linkage with service providers </li></ul>Solutions - Funding
  10. 10. <ul><li>Establishment of a forum – BDSP Forum </li></ul><ul><li>BDSP professional body to accredit service providers – quality, standards, voice of BDSP </li></ul><ul><li>Establish relationships between FI and BDSP </li></ul><ul><li>Closer working relationships between banks and BDSP </li></ul>Solutions – from BDS Finance Forum SBW 2008
  11. 11. <ul><li>Role BDSP to play in funding cycle: </li></ul><ul><li>Client compliance – business administration, financial, legal, taxation, secretarial etc. </li></ul><ul><li>Requirements of the FI – ratios, security, sensitivity, risk assessments etc </li></ul><ul><li>Unique requirements of FI. </li></ul>Solutions – from BDS Finance Forum 2008
  12. 12. Hlumisa – Small Business Solutions cc Solly Fazel-Ellahi Cell: 082 780 8994 Landline: 021 419 2477 Ascend Business Solutions Jayant Gajjar Cell: 082 859 1785 Landline: 021 674 7690

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