Africans and Zimbabweans have been involved in business transactions for centuries somehow they have been overtaken by the rest of the world in terms of building successful businesses. This trend can be reversed through careful steps aimed at promoting and supporting entrepreneurship. When starting a business family support is critical for success. If married then spousal support is critical for the venture to succeed. This support is critical because those immediately close to the entrepreneur have the burden of being forced to support someone’s “dream”.
Any entrepreneurial adventure will require some form of capital. In Africa generally and Zimbabwe in particular capital is really hard to come by even if one has a solid business proposition. The starting point for the entrepreneur should be to start as early as possible to solicit support of those around you. Simply start sharing your general ideas about your business “dream” with those around you.
Some will be encouraging but most will discourage you but don’t be discouraged instead try to pick their brains and understand their source of fears which will normally help you properly plan for the rocky road ahead.
If you listen carefully to the discouraging voices within that are some of the answers that will see your dream come true.
Family support is critical as the entreprenuer is normally faced with limited resources and has to tap into family or relatives resources to see the vision develop into a viable business. When entrepreneurs start their venture normally they resort to “ bootstrapping finance” which is entirely based on family or close friends support.
According to investopedia “A situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.”
Entrepreneurs have long relied on family for help in launching new businesses, often after exhausting other resources such as personal overdrafts and personal savings, and before seeking out for bank loans or other institutional funding.
Compared to using bank loans or Angel investor funds, bootstrapping can be beneficial because the entrepreneur is able to maintain control over all decisions which allows them to shape the company. The risk however, this form of financing may place increased unnecessary financial risk on the entrepreneur. Additionally bootstrapping may not provide enough capital for the new venture to become successful at a reasonable pace especially in Zimbabwe with its fast changing operating environment.
Obviously bootstrapping involves increased risk for the founders, the absence of any other shareholder gives the founders more freedom to develop the company in the best direction they see fit with quick decision turn around. Most successful companies were founded this way with the entrepreneur starting off from humble beginnings until the business concept could attract additional capital which normally comes with additional conditions and dilution of control.
It must be noted bringing in outsiders can be beneficial. Outsiders can provide financial oversight, accountability for carrying out tasks and meeting important targets and milestones, and many can even bring highly valuable business contacts and experience to the table which will enable the business to develop much faster.
Once the entrepreneur starts using other people’s money there is greater need for accountability and responsibility. This includes having reasonable forecasts and expectations which should be clearly and accurately communicated to those who would have given you support or whom the entrepreneur is seeking funding from.
It is always a good idea to make a point of clearly explaining to friends and relatives that you couldn't guarantee their investments would pay off and that there is chances your business may fail even though you feel the venture is viable . The entrepreneur has to educate people on the risk profile of the business. Do not didn't accept funding from people who didn't understand that.
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This article was prepared exclusively for 3MG MEDIA by GMRI Capital a Division of the ENG Capital Group.
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