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In our previous Young Entrepreneur blogs, we’ve spent a bit of time offering insight into the administrative aspects of starting up a small business but how do you go funding your new venture?

Lisa Airey, a strategy analyst, perfectly summed up how to go investing in an entrepreneurial enterprise in her interview with news24.

5 investment tips for young entrepreneurs

Many young entrepreneurs say that the lack of funds (capital) is the number one reason for holding them back and starting their business.

Did you know that most South African businesses are self-funded, with very few entrepreneurs loaning money from banks? The balance of funds is usually sourced from relatives – and this is not ideal.

1. Know your investment objective

It’s important to have an accurate estimate of what your investment objective is – failing to do so means that you could run out of money before your business even starts to show a profit. Once you know how much money you need to start up your business you can save accordingly.

2. How much can you put away?

Use the 50/30/20 rule when budgeting how much you can save each month. 50% of your income should go to monthly expenses, 30% should be for nice to haves (gym fees, satellite TV subscriptions, entertainment etc.), 20% should be put aside for saving and investments.

3. Save so you can market

Developing a marketing plan for your business is crucial to its success – this plan should be budgeted for in the setup costs of your business.

4. A realistic launch date

You need time to save and invest. Setting a realistic launch date will help you choose the right unit trust investment to grow your capital.

5. Debit it

Setting up a debit order for your monthly investment contributions will stop you from being tempted to spend money that should be saved.