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Question
Posted by: lopang | 2012/01/11

career change

im 34yrs and work as a HR practitioner for a big company. during the holidays i thought that its best i start to set up a business in microlending then i can leave my job if the business is making profit. i saved R50 000 to start this business venture. i am going to call ncr to find out what if i need to register since i will be a very small micro lender offering small loans (R500 to R1000). this issue is stressing me but i made an appointment to see a shrink.

the reason for this change is becos of de heavy workload and working long hours overtime, sometimes on weekends. the bullying communication and embarassment from the bosses. the company offers very good career exposure though. but i believe it will work best if i am my own boss. i have two kids in primary school and do not get time to do homework with them.

now its quiete at work but next week the rush hour will begin when all is back and the stress in kick in. last year things were very hectic and im happy i am still sane. we talked with manager several times and she said its ok to work like dat its part of life,

my coworker thinks im crazy so i am keen to see shrink and talk this matter out. but i am applying for less-hectic jobs as well. please guide me. am i unrealistic?

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Our expert says:
Expert ImageCyberShrink

Maybe you are being unrealistic, both about the practicality of starting any microlending enterprise at all, and about doing so with such modest capital ; and about trying to do something so complex while holding down a complex and busy full time job.
Get FAR more expert advice about microlending, developing a small business, finances, etc., before even thinking further of giving up all the benefits of your present job. As jmo points out, this is an especially difficult time to try such a business, and you could easily find you will rapidly lose your savings, and inherit other people's debts.
I tried to post this answer promtly, two days ago, but the system was chirning and didn't accept it. So I hope you now receive my view

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Our users say:
Posted by: cybershrink | 2012/01/14

Maybe you are being unrealistic, both about the practicality of starting any microlending enterprise at all, and about doing so with such modest capital ; and about trying to do something so complex while holding down a complex and busy full time job.
Get FAR more expert advice about microlending, developing a small business, finances, etc., before even thinking further of giving up all the benefits of your present job. As jmo points out, this is an especially difficult time to try such a business, and you could easily find you will rapidly lose your savings, and inherit other people's debts.
I tried to post this answer promtly, two days ago, but the system was chirning and didn't accept it. So I hope you now receive my view

Reply to cybershrink
Posted by: lopang | 2012/01/12

thanks so much for your advice. i will take it. also i will apply for a job in another company as well. at my current company im extremely unhappy and it feels abit like jail.

Reply to lopang
Posted by: Obvious | 2012/01/12

Legally l wasnt just talking about just the FSB registration fee
You would have to be FAIS qualified - these exams r not cheap.
All your applicants have to have credit checks - the credit beareus charge.
All contracts have to be be drawn up by a lawyer even if you reuse a standard contact - lawyers cost
Your books have to audited

Reply to Obvious
Posted by: Liza | 2012/01/12

Obvious is incorrect in his assessment of the costs to register as a financial services provider. As long as your loan book is less than R1 million, you will pay the following:

Application fee: R500
Branch fee: R250 for each branch of your business (I''m guessing you''ll start with one)
Registration fee:: R1500

The most expensive part of starting a new business, is having enough money to run the business for 6 months before expecting to bring in profits. And R50 000 will not be enough for that. You have to have additional money so that you can afford to pay the business bills for those six months without dipping in to the capital that''s supposed to be used to pay out the loans.

There are also a host of legal requirements that you''ll need to know about to ensure that your loan contracts are legal and binding. Before lending anyone any money, you have to ensure that they have the ability to pay it back - otherwise they can stop paying and there''s nothing you can do about it.

It''s very stressful to start a business. Especially in a down economy. Frequently people think that working for themselves will be less stressful than working for a boss. The truth is that it''s often the opposite. As an HR practitioner, would it not perhaps be less stressful to find a job with a different company?

Also remember, if your business should fail and you need to find another job, it might be difficult to get a job again.

If you feel up to all this, by all means start the business.

Good Luck
Liza

Reply to Liza
Posted by: Just my opinion | 2012/01/12

I am in my own small business and find people cannot pay me. My terms are 7 days from statement and I get stretched to more than 60 days. I have to pay school fees for my 2 kids and sometimes cannot manage that. I was actually thinking of looking for a job in the formal sector so at least I can have a stable salary.

There is no money in the system now and I think you will struggle to recover your money loaned. Why not enter the property market? Look for distressed properties that are going up on auction and put in a tenant and get an instant return on your money.

I wish I had R50 000 saved. Today I have R18 in my bank account...

Reply to Just my opinion
Posted by: Obvious | 2012/01/11

l also agree with your co worker!
With the National Credit Act and having to register with the Financial Services Board R50,000 is no where near enough to start this sort of business within the legal requirements.
You would be losing employee benefits of your job, ie life and disability insurance, pension/provident benefits and a regular salary or retrenchment payout.
Your business plan should allow for no profits for some time but with enough capital to cover all expenses during this period.

Along with a shrink l suggest you also meet with a business analyst, accountant and lawyer - and talk to as many finacial advisors/experts as u can...........

Remember you will be competing with the likes of Capitec who charge low interest etc.

If u are stressed with formal employment you will find running your own business during a recession as the stuff of heart attacks.................

Reply to Obvious

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