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Thread: Start-up Business Finance

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    Start-up Business Finance

    Hello,

    I would like to know which options I have to get finance for my start up business.

    Business Partners was unfortunately not successful since they expect me to get a huge order in advance of the product I'd like to import. No pharmacy wholesaler is buying 1000s of units to put it in their warehouse and hope they gonna sell it.

    I also tried it at Nedbank, but since I am not South African citizen I don't qualify for Khula. Standard Bank said they could help me if I had a bar coded ID book (which takes ages to receive from Home Affairs). ABSA and FNB also work with Khula, so it doesn't work.

    Is there anything else I could try?

    All of them told me I have a great business plan, well researched, bla bla bla. Last friday the first pharmacy wholesaler already agreed to list my product.

    What else can I do? I am 100% convinced this business would work out, I just need cash to finance initial stock and start up marketing. (250k in total)

    Help is highly appreciated.

    Thanks

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    just me duncan drennan's Avatar
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    Have you considered the 3Fs? Family, Friends, and Fools.

    Or maybe you have any property that you could rebond?
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    Turn ideas into products | The Art of Engineering blog

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    Family? Unfortunately not.

    Friends? Don't have any, live in SA for only 2 years, and I actually wouldn't want that anyway.

    Fools? Don't know any either.

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    Platinum Member Chatmaster's Avatar
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    Did you do a needs assessment?

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    Yes Chatmaster, I did do a needs assessment.

    The product I intend to import treats the condition that about 3% of the population suffer from. This means, that approximately 1.4 million South Africans could use it.

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    Bronze Member Karenwhe's Avatar
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    Here is my two cents. Two cents because I do not know your business, therefore I may be wrong in all of this stuff.

    First of all why can't the people you sell to buy direct? What is your value in it? If they can buy direct at any point in time, may be the reason why they won't give you money.

    Then if they can't, why can't you bring small amounts, something that you can afford to give to pharmacies to start it out as you get the money you buy more and sell more.

    Then you can have deposits on orders.

    Lets say a pharmacy would only try X amount of product. You say sure thing 20% to secure the order you will get your first deliver in Y time (you import in Y time the equivalent of the 20% you have been paid).

    Then if they like and sell it, you say.... please the rest of the money 80% and you order more. Of course in these 20% and 80% of money paid you have your markups so that you can have a little money for yourself to grow your business. May not be enough to take you far, but it is a start nonetheless.

    Again maybe I am wrong, I don't know your industry at all.

    But I do know that starting a business by giving credit to a big or small company to import products is risky. That is probably why they won't give you the money you request.

    About your ID, I don't know where you are from but I am a permanent resident from the EU, and after yelling enough at home affairs (in alberton at that time), I got my ID in 3 weeks. And I visited for this during 3 months home affairs many times sitting on their head until they got a bit sick of me getting angry with them and eventually called pretoria and I got my ID around 3 weeks after that. It was irritating, nerve recking, but it got done.

    It is doable and necessary if you are to live in this country, imho, as a first step to success.

    Another thing I have seen done...... But this is in telecommunications not pharmaceuticals: is people getting money on letters of intent.

    In other words the customers gave the supplier a letter of intent, that they indend to try this product and if it meets XYZ conditions (sell so much, do XYZ etc), they are planning to buy this and that amount in the future. This has been done A LOT in IT and telecoms with start-up to secure venture capital. But it is not easy either because the "letter of intent" has to come from some of the highest ranks to be credible to banks and to VCs (venture capitalists).

    The other thing is to guarantee their money back for this product (but only if you believe in it 100%) and say order XYZ amount, if it doesn't sell, etc. I will personally stay surety and pay all your money back for all the products you did not sell in ....... XYZ time... lets say 6 months. - But BE AWARE - no one does this unless they are 1,000,000,000 % sure about the product. Short of this, no go, it may just bring you to ruins.

    Then, depending on what this product is you can just pre-sell and then sell it yourself. Again, I have no clue what this product is at all. Therefore this option may be a load of BS, it depends on the product really.

    Hope this helps.

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    First of all they can't buy directly because the initial order of x amount units secures exclusive rights for South Africa.
    That is also the reason why I can't start with small amounts of the product. I am not the only South African company who is keen on the exclusive rights for this product but I could convince the manufacturer that I am the right one. If I don't solve this problem quickly I'm gonna lose the chance and I can watch the next company making money.

    Secondly, the agency in Germany started 2 1/2 years ago. They sold 75.000 units in year 2 and forecast 150.000 units in year 4. This product is the best in the world of it's kind and it proves it by being successfuly on the market for 35 years already. It is probabaly the only one at all that's on the market for such a long time already. It is the only one that guarantees it's effectiveness AND has a 45 day money back guarantee.

    ID book? Different story. It's our second attempt already. The first time they lost it somewhere in Pretoria. But sooner or later it will probabaly arrive. It was just Standard Bank who needs it anyway.

    I am telling you why I think they didn't give me the money. Because the lady who received my Business Plan sent me an eMail that my application was unsuccessful 4 hours after she received it. She wrote that after research was done... (?). Research? Within half a working day? I made research for 2 months before getting started! BTW she was the only one who wasn't convinced that this business is gonna work.

    I have only positive response, from bankers, from friends, from the wholesalers, from pharmacists and doctors...

    As I already said, pharmacy wholesalers never buy huge amounts of a product that's new on the market, thus they don't write letters of intent or similar. The General Manager of Alpha Pharm (830 pharmacies) confirmed that I have a great product and I guess he knows about the business.

    I am a little bit ****** off since this lady just wasn't convinceable. They didn't even give me the chance to present my business plan personally (like all the banks do).

    Thanks for your two cents. 5:04 AM? Should go to sleep again. See? All that stuff makes me nervous and is waking me up in the middle of the night.
    Last edited by Wolf; 21-May-08 at 12:57 PM.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by ExoPacific View Post
    The General Manager of Alpha Pharm (830 pharmacies) confirmed that I have a great product and I guess he knows about the business.
    That depends a bit who you are dealing with - their main goal is to make money selling your product. Are you dealing with the Western Cape, or Eastern Cape office?
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    It's the Western Cape Office.

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    Diamond Member wynn's Avatar
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    Have you considered raising the finance offshore?

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