Bridging the expectations gap between SMEs and banks to facilitate finance

| 0 Comments

 

SME_BusinessCase.jpgFinding a solution to the perceived “shortage” of ready finance available to local start-ups, could involve assisting entrepreneurs to better understand the role of money in their businesses, and giving them the means to manage it appropriately. If SMEs have viable operating models in place prior to approaching finance institutions, and can clearly define the innovation and value of their idea, there is a far better likelihood of them securing finance says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme), in this month’s SmartProcurement.


Having a reliable source of finance is a critical aspect of any business’ continuity, especially when one is operating a start-up. “Between investing in infrastructure and financing the day-to-day operations of one’s business, entrepreneurs often find their cash reserves and resources stretched to the limit repeatedly,” says Theunissen. “For many, the immediate solution is to try and secure finance through a bank or other financial institution. However, what most don’t realise is that funding might be declined owed to a mismatch between their and the potential financier’s objectives.”


Property Point’s experience as an enterprise incubator has shown that most SMEs do not have the requisite business models to support and make use of the very funding they are trying to access when they apply for it, explains Theunissen. “Instead of having an operational model in place that allows the business ‘to do business’, many SMEs try to access money to put this model in place.”


In cases like this, the entrepreneur will have effectively failed to prove the “business case” for financing: if the SME is not operational, it cannot make money. If it cannot make money, it cannot repay the financier’s loan. As such, entrepreneurs need to appreciate the difference between paying for the company’s operations (i.e. all the set-up costs) and paying for the company to operate (i.e. assisting it to do business and generate cash flow).


However, Theunissen maintains that having the right operational model in place goes beyond “doing business”. It also means that an entrepreneur must have the resources and skills available to make the best possible use of the loan.

 

ShawnTheunissen2.jpg“Again, based on our experience, we have seen cases where loans become burdens as opposed to enablers in certain small businesses. This is usually owed to a lack of financial experience and accountability, with entrepreneurs either being too scared to use the money, or using it very sparingly or inappropriately.” Without knowing how to use financial products, access to these can become a moot point in many instances, with poor cash flow being confused with a lack of funding and funding opportunities.


Theunissen says that this is why Property Point works with the businesses on its programme to develop appropriate operational models that will assist them to achieve growth, and get them to a point where they are operationally ready to make use of funding. “Entrepreneurs are also equipped with the tools they need to understand management accounts and the accounting process. In this way, they stand a far better chance of not only accessing the finance they require, but of using it to make a sustainable success of their business,” he concludes.


For more information visit propertypoint.org.za.

Leave a comment


 

 

Career opportunites

Tutor and Coordinator

  • Gauteng Operations, Planning & Inventory Permanent Procurement Management Supplier / Business Development
Purpose of the job: To plan, coach, advise

Commodity Manager

  • <500 000 Commodities Gauteng Procurement Management
Are you a Commodity Manager looking for the

Supply Chain Professional

  • <500 000 Gauteng Procurement Management Supply Chain
I specialize in placing professionals in the Supply

Supply Planning

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Seeking dynamic candidates to take to the market

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Procurement Consultant
Are you an Industrial Engineer looking to make

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Supply Chain
Seeking vibrant industry specific individuals seeking new opportunities

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Procurement Management
Looking for an Operations Manager to take into

Supply Chain Systems Administrator

  • >500 000 Gauteng Procurement Management Strategic Sourcing Supply Chain
One of South Africa's leading, mining companies is

Logistics Manager

  • <500 000 Gauteng Logistics & Warehousing Procurement Management
Are you an experienced Logistics Manager looking for

Continuous Improvement Manager

  • >500 000 Gauteng Procurement Management Supply Chain
I specialize in placing professionals in the Supply

Warehouse Assistant

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory
I am currently looking for ambitious Demand Planner,

Internal Procurement Officer

  • <500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Position Available: Internal Procurement Officer Status : New ...More

Supply Chain Officer

  • <500 000 Gauteng Procurement Officer / Specialist Supply Chain
Seeking dynamic candidates to take to the market

Supply Chain Planner

  • <500 000 Free State Operations, Planning & Inventory Supply Chain
Seeking dynamic candidates to take to the market

Senior Buyer

  • >500 000 Buyer Gauteng Procurement Management
Tech-Pro specialises in placing professionals in the Supply

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer
Tech-Pro specialises in placing professionals in the Supply

Warehouse Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Supply Chain
Seeking hands on individuals that come from an

Manufacturing Purchasing Specialist

  • >500 000 Procurement Officer / Specialist Supply Chain Western Cape
A leading auto manufacture company based in Cape

Procurement Sourcing Specialist

  • <500 000 Gauteng Procurement Consultant Strategic Sourcing
A Leader in the Supply Chain industry is

Planning Manager

  • >500 000 Gauteng Operations, Planning & Inventory Procurement Management
Looking for Planning Managers to take into the