Raising Capital: Turning Lemons into Sprite
Business funding and capital contribution have, for the most part, taken center stage when debating the topic of start-ups. Novice entrepreneurs that aren’t entirely familiar with business or a particular industry, have a misconstrued ideology that funding is the only way to boost a new venture. Local statistics show that almost one third of all new business owners seek the aid of start-up funding, leaving just over a third of them being self-funded and the rest stuck between a rock and a very hard place.
This article is coming from someone who started something with absolutely nothing. If given the choice, I would have undoubtedly saved in order to fund my brain child if the opportunity had presented itself but seeing as though it didn’t, I improvised and turned lemons into Sprite, which allowed me to appreciate the power of creativity in capital raising.
Innovation allows us to channel our inner Steve Jobs, igniting our passion and get our creative juices flowing with ideas to explore different avenues therefore generating new streams of cash flow injection and revenue. Humans tend to be more susceptible to complacency within their situation and hardly ever challenge the obstacles that they face and turn it in their favour. By using your imagination, you will find that your answers to the capital funding dilemma lie therein: in the form of new services or developing new products. Business is about finding a solution to a problem then successfully meeting the demand with sufficient supply. When we solely rely on the outside world for assistance, we tend to neglect our own capabilities and strengths in finding creative ways to raise money.
In closing, there are no right or wrong ways of being creative and capitalizing on your innovation. Always ensure that your capital raising methods are legal and of an ethical nature. Maya Angelou said it best when she wrote: “You can’t use up creativity, the more you use, the more you have”.
Case Study: “3 Butch Boys”
Three friends wanted to own a butchery in their hometown due to the lack of fresh meat being in close proximity. They had their sole producer of the meat and all they needed was a sufficient cash injection to pay for the equipment and renting space of their future butchery. With very little savings and no interest in sourcing investors they decided to put the butchery on hold while they seek other ways to get revenue and people talking about their brand.
With their initial savings, they started a mobile car wash business which saw them purchase car cleaning agents in bulk, as it was cheaper, and travel door to door washing people’s cars for a good price. With the money they generated during the week, they saved 70% of all proceeds, to put towards the butchery, and used the 30% to reinvest and generate an additional income stream.
The 30% profit from the car wash business was used to purchase bread rolls, savoury sauces and serviettes. The plan was to sell boerewors rolls, hotdogs, prego rolls and burgers at the local stadium over the weekend, as they held many soccer matches and tournaments there. The meat that was sold was supplied by their producer and essentially this meat that they would one day use this supplier for the meat they would sell in their butchery. This allowed the community to taste their products and ultimately build a brand that people would know and love. The serviettes that came with the meals had “3 Butch Boys” printed on them, along with their contact details and social media pages. This allowed people to get to know the brand in preparation for their butchery. One of the boys’ fathers had a friend who worked at ABI and sponsored the boys with free beverages, which allowed their stadium meals to come as a combo, meat roll and cold drink. This allowed the boys to make a higher profit as they didn’t have to pay for the beverages. With the proceeds made, the boys saved all their funds to achieve their dream.
After months of having the mobile car wash business during the week and the combo meals at the stadiums on weekends, the boys had enough to start their butchery business. By this time, everyone was familiar with their products and services and a new demand was created. Not only did the boys have their long awaited butchery, they also had opened a car wash and a recreational lapa with music, seating areas and a place for their customers freshly purchased meat to be grilled for them. This became a place where members of the community would go to have a good time as everything that they needed was close by.
The 3 boys had a dream to have their own butchery which saw them have 2 additional businesses in line with their initial goal. Had they received funding in the beginning stages, they most likely wouldn’t have thought of having a successful car wash and recreational braai business. Creativity allowed their dream to manifest and paved the way for more successful ventures.