It is a fact.
You need money to make money. You can’t start a business without enough cash.
It is also a fact it is virtually impossible to get a loan from a commercial bank for a start-up business these days; it doesn’t matter how brilliant your business plan is.
So how do you set-up a new business if you don’t have enough funds of your own?
You have three options:
Option 1. Start a partnership – also called a Personal Liability Company (Inc.), with partners, who have enough cash to invest in the business.
Option 2. Register a Private Company [(Pty) Ltd] with partners (directors and shareholders), who share your ideas have money to invest in your venture for a slice of your profits.
Option 3. Start (register) a Public Company (LTD) and issue shares to the public for a share of the profits and payment in dividends.
NOTE: There is also a fourth option, which is a very smart option, but it is not necessarily suitable for all types of businesses. It is called a co-op.
Read more about these four (4) business entities on CIPC.CO.ZA
For now; here are the most important points:
In terms of the Companies Act, a Private Company [(Pty) Ltd] may not offer its shares to the public, and the transferability of its securities is restricted by the company’s “Memorandum of Incorporation” (MOI).
Shares may be sold to “family and friends”; however, this definition does not necessarily exclude all private investors, associates, and partners.
On the other hand, a PUBLIC Company may offer its shares to the public, and all companies listed on a stock exchange must be public companies, but not all public companies are listed on a stock exchange.
If you know anything about the stock markets and shares, then it is clear what a PUBLIC company is. It is relatively expensive to run a public company, and you will only start a public company if you need a huge amount of cash and many investors to start a big business.
How this platform works for you:
The purpose for listing on this platform is for you to seek interested individuals, groups, or companies, looking for investment opportunities, with the potential of a higher than average return on their investments.
When you list here and get enough people to look at your listing (offer), you give potential investors the opportunity to indicate their interest and make a pledge (zero commitment) to buy shares.
Here is what you want to do:
Ideally, you want your project (business ideas/plan) fully funded within the selected time-frame.
You will communicate regularly (via email) with your pledge-makers to keep them informed and updated.
You will use this communication opportunity to build a business relationship with them.
Within a few days (recommended: within 21 days) after the closing date of your listing, you will invite all the investors, who indicated their interest, to attend a “FACT-FINDING MEETING.”
At this private meeting, you will do a professional presentation to give more information to your potential investors.
It will be your ultimate goal, at this meeting, to sell your business ideas and business plans to the investors and answer their questions.
If you succeed, they will invest; if you don’t, you will go home empty-handed.
If you do well and have enough interest amongst the attendance at this meeting to raise the necessary capital for your business, your next step will probably be to appoint an interim management team to start the process of registration.
Only at this point will you be able to draw up a final “Memorandum of Incorporation” (MOI) to register your company as a legal entity with the Department of Trade and Industry as a public company, a private company, or maybe even a co-op or partnership.
Your potential shareholders also might see things differently at the meeting (fact-funding) and might want to play a bigger or smaller role in your company than you originally planned.
Whatever the case, THIS process will allow you to get funding for your business and start it with a strong foundation to increase its chances of success.
To insure you fully understand this process, you should also study the Info to Investors Guide, Here.
To get an idea of What a Standard Listing Will Cost You, Click Here.