“Take advantage of the current optimism and positive sentiment in South Africa,” says Dov Girnun, Founder and CEO of Merchant Capital, when asked for advice for entrepreneurs looking to set up a retail outlet in 2018. “Ensure that you have sufficiently researched your target market, competition, margins, regulation etc and develop a product offering that is unique, and also scalable.” Of course, every business owner, both aspiring and current, knows that any future business growth requires upfront investment, and that is the gap that Merchant Capital seeks to fill with its business funding product. They’re there to help when business owners of retail outlets get presented with certain opportunities that typically require disposable cash. “Some examples would be a supplier offering a discount on goods for a limited period of time or another location or franchising opportunity becoming available at a good price. Conversely, as in life, unforeseen emergencies occur such as fire or flood in the retail store, a key staff member becoming sick or a new competitor setting up shop down the road. As with the opportunities, these emergencies can only be dealt with by having cash on hand,” says Girnun.
Furthermore, most retail businesses typically encounter some form of seasonality in their business cycle, whether it’s a business that is busy in summer and quiet in winter, operating out of a shopping centre undergoing a renovation, a franchisee having to do a refurbishment as part of its franchise agreement and so on, explains Girnun. “This seasonality has a significant effect on the business turnover resulting in volatile cash flow. The problem comes in during the months when their turnover is down and the business still has the same fixed expenses that they need to pay; rent, staff salaries, loan repayments and insurance premiums etc.”
An easier way to pay
The Merchant Capital offering is specifically designed to make the application process as quick and simple as possible (approval and funding in 2 working days) but more importantly, the unique Pay as You Trade collection mechanism, collects directly in line with future turnover. So, when turnover is slow, the repayments to Merchant capital reduce and when business picks up, the repayments increase.
Merchant capital does not charge an interest rate but rather agrees a fixed cost to access the funds which is agreed upfront and remains fixed over the period. Consequently, there is no fixed repayment term and the upfront fixed fee remains the same irrespective of the term. “The price of the Merchant Capital product is comparable to unsecured loans offered by the larger financial institutions,” says Girnun.
While the company has been intensely focused on getting this alternative funding solution into the hands of the people who need it most, this year they are also looking at adjacent products where the repayments are in line with turnover, in order to smooth the cash flow issues faced by the majority of business owners. “One such product is a small business insurance product where Merchant Capital has partnered up with Hollard and First Equity to offer a product called Hollard Merchant Insurance (“HMI”). Similar to the fluctuating cash advance repayments, the HMI product facilitates premium repayments in line with how the business trades. Watch
this space for more!” ends Girnun.