The other day I had the pleasure of chatting to Nicolette Mashile - the founder of Financial Bunny, television talk host, YouTuber, and serial entrepreneur. She’s built a name for herself having frank conversations about money and helping to improve the financial literacy of South Africans.

The topic? Entrepreneurship for women – the good, the bad and the challenging – and the lessons she’s learnt on her journey from her very first business venture in her varsity days, to her current media and business empire. What stood out in the conversation, and something she was very passionate about, was new business funding and building up the capital you need to start your side hustle or own thing.

How Much Does It Cost to Start a Business?  

Before you even think about capital and costs to start your small business, Nicolette believes you need to make sure you’ve nailed the concept and approach. “I think a lot of us worry that capital is our biggest need when it comes to businesses. Capital is not always going to be your biggest need – no amount of money or marketing or funding is going to make up for a bad service or a mediocre business,” is Nicolette’s belief.

Her advice is to start small with an ‘MVP’ (a minimum viable product) that is the smallest, most basic version of your idea that doesn’t cost much to build or set up, and helps you prove your concept.

The benefit to that is twofold: you get to prove your idea to yourself, and you’ll have more luck raising capital. Whether you’re getting funding from a source, or funding your business yourself (we’ll get to that in a bit!), it becomes so much easier to raise capital if you’re looking for a smaller amount. “If you're looking for R10,000, not a million Rand, then your opportunity or your options become far more larger,” says Nicolette.

Here are a few small business startup costs you might need to factor in and cost for when you’re planning the MVP of your business (some of these things you can source for free whilst some you can delay until you really need them):

- Material, equipment or tools you need to make the product or conduct your service

- Software (like accounting or point-of-sale software)

- Insurance (this goes up if you need more expensive equipment)

- Licence or permit fees

- Travel or shipping of products

- Office or retail space (including furniture and infrastructure)

- Website build and hosting

- Professional help or consultants

When you’re budgeting for each of the items that are relevant to your business, identify what’s a once-off cost, and what will be recurring, and factor those into your long-term projections.

And when you’re working out your business capital costs, consider all the things you might need to make that business succeed. The most-often missed cost an entrepreneur forgets? Nicolette believes it’s marketing. “Where a lot of entrepreneurs fail is when they're doing their pricing. Many of us price based on input costs. The issue that they don't often factor in the wider cost of sale. And the cost of sale is how much it costs you to sell this product or service? How much is the marketing?”

Alternative Ways to Fund A Business

While she’s an advocate for building your income streams and starting your own business or side hustle, she believes far too many women – and South Africans in general – have the preconceived notion that they have to get an ‘investor’ to make their business a success. She believes starting scrappy and working your way up is a better approach.

That means startup business funding that doesn’t come from angel investors, government funding or the bank. Before you go down those avenues, Nicolette believes you should consider these three options instead.

1. Build a Cash Cow Business to Fund Your Next Business

What’s a ‘cash cow business’, you ask? I had to look it up, too. It’s essentially a low-maintenance business that is quick and easy to set up and is almost guaranteed to give you a consistent cash flow. It’s not the kind of business you intend to grow or scale for the long term.

Nicolette’s first business – an agency placing sports coaches, sports coordinators or referees into different jobs at schools, was a cash cow business. “We weren’t intending to, you know, grow the business and make it huge. And it was really a cash cow business because we wanted to do other things,” she explains.

What cash cow business can you start? Look at some easy ways to tap into your skillset or contacts to start a service business. “I think service businesses work very well to be cash cow businesses, because they generally don’t require a lot of upfront costs,” says Nicolette.  Alternatively, look at easy income-earning side hustles that don’t require much upfront investment, like buying pre-worn clothing and selling it on Instagram as vintage pieces. Whatever it might be, make sure you come to terms with the fact that it’s not your long-term plan: it’s a stepping stone to the business you really want to build.

2. Take your Time To Save Up What You Need

Nicolette is a big fan of responsible money management and saving for what you need – and that relates to funding your small business, too. The key is to determine how much you need to save, map out a plan to get to that figure, and just start. “For me, it's that thing of smart planning and smart goal setting to understand what your capacity is right now. If your capacity is to only save R1,000 a month, that’s a good start. You won’t have R10,000 today, but you can have it in 10 months.”

💡 Find out how much money you can afford to save by using our budget tool

Saving your money in an interest-accruing investment or account will also help you make your savings work that much harder for you. Based on our returns calculator, if you put R1,000 in the Franc cash fund every month for the next year, you’ll earn R12,381 – which means you’ve earned an extra R381 that you didn’t put in!

The biggest pushback she gets when she offers this solution to her coaching clients is time: they’re impatient to get started with their business! “The problem is that people think, okay, if I'm saving R10,000, for instance, and saving R1,000 a month, it will take them 10 months to get there, right? But how many people have kicked themselves for not starting 10 months later!”

The bonus to taking your time to save? You get to use that time to plan your business. “If I’m saving for 10 months, I’m going to use those next 10 months to do everything else that is non-financed to build this business. Getting somebody to give me a look and feel, get a logo. Start looking at the clothes you want to sell, go to the shop. Because let me tell you, I've just started a boutique, and I should have started doing my research and all of the work six months before!”

3. Ask Friends and Family To Chip In

Convinced you have the next big idea that is guaranteed to lift off? There are no guarantees in business, but it helps to have the support and encouragement of your friends and family. “Your network is your net worth, so your family and friends should also be your point of contact when you think about funding,” believes Nicolette. “The secret is to ask for a little bit of money, not a lot. If you're asking for a little bit, you can get a bunch of people crowdfunding for you to be able to get you the money that you need, right? It's R1,000 per person versus R10,000 per person. So I think people are more than willing to take out a R1,000 if you have a good business case.”

If you’ve exhausted these other options, there’s always the more traditional funding route to go through – but that should be your last resort. “If you're going to go to the bank to borrow, make sure you get credit education. I cannot stress enough how important credit education is, and too many people are borrowing money from the bank without it,” says Nicolette.

💡Read our beginner’s guide to credit on the Franc Academy

“And then probably the last one is obviously your funding institutions, the likes of NYDA, The Gauteng Enterprise Propeller, or the Mpumalanga Economic Growth Agency,” concludes Nicolette.

Long story short? Focus on what you have for now, take your time to save and plan, and resist the urge to make loans and government funding your first option. Thanks for the tips, Nicolette!