Entrepreneurs are faced with a myriad activities—product development, strategy, branding, hiring, administration, customers. After managing all of these, and winning a big order, what blocks many entrepreneurs from growing their businesses? Working Capital.
While developed countries typically have banking services to address this timing, developing markets often lack this access, preventing small businesses from growing. Tweet This Quote
For those less familiar with the topic, if a clothing company wins a $50,000 order, it may require $20,000 of upfront costs—customers typically only pay for final products. That means the entrepreneur needs to spend $20,000 on fabric, materials, employee labor, then ship the final product, and finally wait 30-120 days for the customer to pay the $50,000.
While developed countries typically have banking services to address this timing, developing markets often lack this access, preventing small businesses from growing. Even though the company has a great product that customers want, nothing happens because there isn’t enough extra cash to buy the raw components for an order.
What are the problems preventing entrepreneurs from accessing working capital in developing markets? Tweet This Quote
Many groups in the social impact space are creating innovative solutions for working capital in developing markets, several of which are being actively discussed during the Skoll World Forum. This involves coordination of hundreds of millions of dollars, across multiple geographies, in areas where regional banks may not have refined standards. Finance teams here would love to hear more from entrepreneurs in developing markets about working capital problems that prevent your companies from growing. Please comment below (or tweet: @SkollWorldForum #skollwf), and I’ll make sure to share this with people who are working diligently to create solutions.