Access to financing and credit, and making an inroad into markets remain two key challenges for entrepreneurs going into 2017. In an article in Techfinancials.co.za, Dominique Collett, head of AlphaCode, a Rand Merchant Investments club for fintech start-up entrepreneurs, says while politicians and economists say the economic future of the world is in the hands of small business owners, financing in this sector is almost just as often mentioned as a major stumbling block. She predicts that interesting funding models such as invoice and discount financing and digital lending models will continue to gain traction aided by rapid developments in technology.
As an entrepreneur in the interior design sector, Hassan Shaikh, founder of Revolve, agrees saying financing can be a huge stumbling block when the business gets to the point of growth. Funding is lagging particularly in the area of early stage angel investors. Significantly, the other underlying factor is that the venture capitalist (VC) market is still not confident enough in entrepreneurial development across all sectors. “Acquiring finance for equipment, machinery and even creating a productive office space requires a substantial amount of investment. The challenge is deciding if you should be using your hard-earned cash in the bank to fund the growth of the business or using it as working capital. Many of us often choose the latter for obvious reasons.”
Shaikh believes that interesting funding models are key in this sector, as mentioned in the Techfinancials article. “Cost is always, even with large corporates, the deciding factor that determines how effectively design can serve and create value for businesses. In spite of the challenges, there are still many options available to SMEs to overcome financial constraints when it comes to workplace interior design and office fit outs. As an expanding small business ourselves, we recognise the need to create products, services and design elements which can enable growth and transformation. The challenge has always been finding a financing solution.”
Through its business solution, Revolve is now able to extend a finance facility for businesses that want to benefit from a high-performing interior designed environment. “The cost of refurbishment and creating a new workspace is a large investment for most businesses. This financing option allows clients to spread the load of having to outlay the capital investment by breaking the repayments down into a client-specific repayment period. We can create an office space using our custom design methodology that can be entirely financed in a creative solution that we have packaged. Clients do not have to dispose of their working capital, nor do they need to be overly concerned with stringent credit worthiness barriers,” says Shaikh.
“Through the financier, we are in partnership with, SME businesses that are credit worthy and are calculated and conservatively risk clients are considered for possible financial assistance. The financier is more open to risk than most other banks, is purely focused on the SME market and sees value in design assets.”
Revolve produces a detailed cost analysis including costing for all removable assets. The financier uses this project spec to then establish a recoverable amount through the assets’ value. “Because the financier is focused on the SME market there is an option to finance portions of the project or even just select items involved in the design. Considering the loan amounts are generally smaller than those required for major corporate office fit outs the approval process is faster,” explains Shaikh. He adds that Revolve works towards including as many removable and reusable assets in the design plan as possible to assist with the financing thereof and to add value to the clients spend. “We prefer to use demountable partitioning rather than dry-walling, for example, because not only does demountable partitioning offer greater flexibility it can also be included in the removable asset item list. Businesses can take it with them should they move premises.”
“As an entrepreneurial business, we understand the need for creative financing options and our focus is on being a partner to other small to medium businesses through the entire interior design fit-out process. Creating an appealing and productive office space projects the image of a growing and profitable business,” concludes Shaikh.